IOTL South Korea was able to avoid falling into a Japan-like bubble economy owing to Chun Doo-hwan clamping down on the country’s real estate speculation. So what if the opposite happened, with both South Korea and Japan having their economic bubbles bursting in the 1990s?
As I see this, based on the most common takes I've seen of economical PODs, there are three possible (and maybe a bit sarcastic) ways this could go in order to become a TL:
1) Lazy take.
In this TL, everything is the same as OTL except for the fact that Hallyu (Korean Wave) is not a thing. Especially recommended for those who do not want to write a treatise on macroeconomics or for those who only want to speculate about the evolution of cultural media.
2) Take “being economically incompetent makes you militarily stupid” or “Korea acts according on Pentagon assumptions for 'bad economy' countries.”
This TL assumes the rulers of South Korea begin to defecate in their pants fearing that this will cause the fall of the government and that they themselves will end up in jail for the economic problems the country is having.
So they decide that, to distract the public from wondering what their leaders are doing to fix their economy, they are going to try to provoke a war with North Korea just so that the population will be swept away in a tidal wave. of nationalist fervor.
The press and media start spewing all sorts of vitriolic rhetoric about how wonderful it would be to reunify the Peninsula and how imperative it is to do this, as well as how anyone who is against this hates Korea and wants "traitors and chinilpas win”. (Remember, it's tabloid propaganda, it doesn't have to make sense). As well as an increase in border incidents, which may or may not have been false flag attacks organized by South Korea.
The assumption here is that the United States will happily jump to the aid of South Korea and throw all its weight into it should the conflict escalate to open war, for one or more of these reasons:
A) They are the stereotypical America that will join any conflict that gives them a chance to “kill reds”,
B) Mumble mumble laced with macroeconomic jargon about how letting South Korea fall, for some unspecified reason, would wreck the American economy. So it is imperative to sustain them, even if they wage aggressive war against North Korea,
C) They sincerely believe that North Korea is the one who is acting badly here and they do not consider a de-escalation at all because "we must show our strength, the strength of our determination."
3) Take "save yourself who can."
The last TL. Let's say that in the middle of trying to implement Take 2 or before anyone else does anything, the most pessimistic predictions possible occur and South Korean society collapses so fast it looks like something out of a movie.
People start quitting their jobs and looting supermarkets, while extremists of all stripes decide that the time for a “reckoning” has come and begin openly murdering people on the streets of Seoul.
In turn, the police and the army cannot, nor do they want to, do anything to prevent it. This is because, in both forces, a third of the personnel have deserted en masse (the rumor was spread that there was going to be arrears in the payroll that month).
Another third are attempting a coup to overthrow the government by force, in the name of healing the wounded economy. According to the author's sympathies, these guys want to implement a far-right totalitarian dictatorship to “purify Korea” or an average military junta in the style of previous dictatorships.
The remaining third have decided that, since they are not going to get paid anyway, they could get an extra bonus by selling off all the police and military material that is not nailed to the walls of the base.
This rapid collapse of law and order in South Korea causes a mass flight of Korean refugees to the United States and Japan. Which incidentally allows the author to insert a bunch of rants about how the Japanese are the most racist society in existence even if the focus of the story is supposed to be the Korean crisis. This could be the end of South Korea if not for Kim himself.
Kim, the leader of North Korea, watches with amazement as his rival from the South is collapsing in on himself without his having to do anything. It is very likely that he will decide that "the time has come to reunify the peninsula" and declare that he is moving south to "help our Korean brothers"...
This, of course, causes the South Koreans to almost immediately forget that they were trying to kill each other for packets of rice, to instead band together to deal with the invader. The United States most aggressively demands that North Korea fall back to its side of the line and sends B2 bombers to fly over North Korean troops to make clear to them what will happen.