Journal of Economic Perspectives—Volume 4, Number 3—Summer 1990—Pages 41–59

Industrial Policy in an Export-

Propelled Economy: Lessons from
South Korea's Experience
Larry E. Westphal

K orea provides an illuminating case of state intervention to promote

economic development. Like many other third world governments,
Korea's government has selectively intervened to affect the allocation
of resources among industrial activities. It has also used similar policies: taxes
and subsidies, credit rationing, various kinds of licensing, and the creation of
public enterprises, for example. But these policies have been applied in the
context of a radically different development strategy, one of export-led indus-
trialization. Moreover, Korea's economy has experienced exceptionally rapid
development with relatively equitable distribution of the gains.
This paper argues that the government's selective industrial policies have
contributed importantly to Korea's rapid achievement of international competi-
tiveness in a number of industries.1 Though accepted by many knowledgeable
observers, the conclusion is controversial. It is inherently so owing to in-
sufficient historical information and lack of agreement about the required
counterfactual. Reasons for believing that the benefits of selective intervention
must have outweighed the costs also are considered. The discussion flags the
policy implications of a Schumpeterian approach that views industrialization as
a cascade of interlinked technological changes. The implications are no less
controversial than is the interpretation of Korean experience.
1
Many of the arguments advanced in this paper have been put forth in greater detail in Westphal
(1978, 1982) and Pack and Westphal (1986). Specific references to the sources of factual statements
made in the paper are generally omitted. Sources include the items listed as references and
standard Korean government and World Bank statistical publications. Some of the statements
reflect well-founded knowledge that is common among close observers of the Korean economy.

• Larry E. Westphal is Professor of Economics, Swarthmore College, Swarthmore,

Pennsylvania.
42 Journal of Economic Perspectives

The arguments presented here do not suggest that selective industrial

policies must necessarily succeed, either to foster international competitiveness
or to increase welfare. Indeed, from my reading of the evidence around the
Third World, I am fully persuaded that such policies have generally inhibited
effective development (Bell, Ross-Larson, and Westphal, 1984). Thus it is
critical to specify the underlying differences that would explain how and why
Korea's government has succeeded where many other governments have failed.
The differences are found in policies and in politics. Policy differences
relate to the ways that similar policies have been used, where the most
important—but by no means the only—difference is in development strategies.
Political differences, in turn, pertain to political processes that have conditioned
the use of policy. Primary significance attaches to the political differences, for
they imply that attempts to institute effective industrial policies elsewhere in the
Third World would generally require drastic changes in domestic political
processes before they could succeed. Correspondingly, one has to be extremely
skeptical about the prospects for replicating the Korean government's success-
ful use of selective intervention.
The discussion below proceeds as follows. The first section presents a brief
sketch of Korea's economic development since the Korean War ended in 1953.2
The second examines Korea's industrial policies. The contribution of these
policies is considered in the third section. The concluding section discusses the
lessons to be drawn from Korea's experience.

Korean Development Performance

Observers of the Korean economy in the late 1950s did not expect it to
become one of the world's most dynamic. Quite the contrary, it was considered
something of a basket case. The economy had been sustained by large inflows
of foreign assistance, with annual inflows exceeding two-thirds of both imports
and investment. Moreover, its growth had been erratic, and the trend was
clearly downward. Because of its apparent inability to generate adequate levels
of exports and savings, the economy was expected to remain in a dependent
status over the foreseeable future. Policy makers behaved in ways that were
consistent with this view and helped to reinforce it. Their overriding concerns,
apart from controlling inflation, were to solicit foreign aid and to manage the
flow of imports. With respect to foreign trade, these concerns prompted
policies of substantial currency overvaluation, high tariff rates, and quantitative
import restrictions, policies that discouraged exports and encouraged import
substitution.
2
Mason et al. (1980) provide the most comprehensive review of Korea's economic development
through the mid-1970s. There is no comparable reference covering the last 15 years, though
Amsden (1989) and Corbo and Suh (forthcoming) provide notably insightful accounts of industrial
and macroeconomic development, respectively, over the period.
 Larry E. Westphal 43

Korea's economic takeoff occurred toward the end of a period of major

policy reforms, a period that began after the ouster of its first president in 1960
and continued for several years after Chung Hee Park took control of the
government in 1961. The reforms were motivated by the views of those who
thought the only way to negate Korea's dependent status was by fundamentally
changing the economy's trajectory, away from one of industrialization focused
on the domestic market. Underlying these views was a recognition of the
poverty of Korea's natural resource base and a perception of the rapidly
diminishing returns that characterized the existing trajectory. The reforms had
two major effects; they led to rapid increases in the rates of savings and
investment and they initiated a change in development strategy.
Having adopted a strategy of export-led industrialization in the early
1960s, the Korean economy has experienced remarkable development over the
past three decades. The compound annual growth of per capita income was
well in excess of 7 percent, making it one of the fastest growing economies in
the world during this period. Though income inequality increased, the change
was modest, so that Korea was at least among the better performers with
respect to distributing the fruits of development widely. More generally, Korea's
economy has experienced one of the most rapid structural transformations ever
to have occurred.
In 1960, the Korean economy was dominated by agriculture and mining.
With few exceptions, the manufacturing sector supplied only simple consumer
products. Exports amounted to about 3 percent of GNP and consisted almost
entirely of primary products such as seaweed, ginseng (a medicinal herb), and
various minerals. Today the economy is dominated by the manufacturing
sector. Major industries established since 1960 range from chemicals and
electronics to automobiles and heavy electrical equipment. Exports exceed 40
percent of GNP, with manufactured products constituting over 90 percent of
the total.
The composition of Korea's manufactured exports has changed dramati-
cally over the past 30 years. Early export successes in simple manufactures such
as wigs, textiles, and plywood were followed by rapid gains in other products
like shoes, steel, ships, and electronic products. More recently, Korea has
penetrated markets for sophisticated durable goods such as automobiles and
computers (including memory devices). Multinational corporations have played
a distinctly supporting role in the evolution of Korea's comparative advantage.
Quantitative evidence indicates that their contribution to industrialization in
Korea has been less than in many middle-income countries, like Brazil and
Taiwan (Westphal, Kim, and Dahlman, 1985). Korea's export performance thus
attests to the speed at which Korean firms have acquired increasingly more
diverse and more sophisticated industrial capabilities. They quickly established
a position among the world's most competitive suppliers of many skill and
technology intensive products.
44 Journal of Economic Perspectives

Korean Industrial Policy

Since the early 1960s, Korean industrial policy has had two proximate
objectives: encouraging exports and promoting infant industries. Exports from
well-established industries have been encouraged using policies that are largely
neutral. Here and below, "neutral" refers to the absence of differential effects
on the allocation of resources among activities relative to the putative circum-
stances of perfectly free trade. Non-neutral policies have focused on promoting
infant industries. Insofar as government policies have affected economic out-
comes, Korea's outstanding development performance stems from the coordi-
nated use of both kinds of policy. Thus they are first described separately and
then considered jointly.

Encouraging Exports Using Neutral Policies

The policy reforms that put Korea on a path of export-led industrialization
centered on fostering exports. For well-established industries, those in which
Korea had either a real or a readily achievable comparative advantage, the
reforms insured that production for export would be profitable, no less prof-
itable than production for the domestic market. They did not achieve this
result by the conventionally prescribed approach, which is to reduce greatly (if
not eliminate) the domestic market's insulation from import competition.3
Instead, they accomplished it by insulating export activity from the otherwise
adverse consequences of policies motivated by other concerns.
A virtual free trade regime for export activity was established, so that
capital and intermediate inputs used in export production could be imported
without tariffs and outside the quotas which applied to imports for other
purposes; regardless of their source, tradeable inputs were exempt from indi-
rect taxes. The existing multiple exchange rate system was abolished, and the
new, unitary exchange rate was set and then managed to maintain relatively
close agreement between domestic and world prices for the output of "com-
paratively advantageous" activities. In addition, through its control of the
banking system, which was in the public sector, the government assured
availability of adequate finance, by enabling exporters to borrow working
capital in proportion to their export activity. All of the foregoing export
incentives have remained largely intact down to the present. Though the
banking system was converted to private ownership in the early 1980s, export

3
Luedde-Neurath (1986) provides the most detailed description of the protectionist policies that
remained in place after the reforms. However, his interpretive analysis is frequently overstated or
misguided. In turn, this paper's emphasis on export growth in the context of protectionist
measures should not be taken to imply that Korea has practiced openness only on the export side
of its balance of trade. In fact, Korea's pursuit of its dynamic comparative advantage has entailed
tremendous openness to imports of raw materials, intermediate inputs, and capital goods. Imports
have grown almost as rapidly as exports, so that Korea's balance of trade surplus is a relatively
recent phenomenon.
 Industrial Policy in an Export-Propelled Economy: South Korea 45

financing continued to be regulated by the central bank, under government

direction.
The foregoing incentives do not confer real subsidies insofar as they simply
exempt export activity from the effects of distortionary policies applied to other
activities. But additional incentives, ones that would be real subsidies if they did
more than compensate for currency overvaluation, were also granted (most of
them were either withdrawn or greatly reduced in value during the 1970s).
They were given primarily in the form of direct tax reductions, preferential
interest rates (see footnote 4), and privileged access to import licences. In 1968,
a reasonably representative year and one for which ample data are available,
these incentives amounted to more than 8 percent of total merchandise ex-
ports, about equal to the degree of currency overvaluation (relative to free
trade), which is estimated to have been roughly 9 percent (Westphal and Kim,
1982, pp. 217, 245). More generally, the value of these incentives appears to
have fluctuated so that it roughly compensated for the changing (but never
large) degree of currency overvaluation.
Except for privileged access to import licences and several other specific
incentive schemes, all largely meant to increase exports with low profit margins
and to develop new export markets, the export incentives so far discussed were
administered uniformly across all industries. Moreover, unlike similar export
incentives in nearly all other Third World countries, they were granted equally
to "indirect exports"—inputs produced and sold domestically that are destined
to be used in export production. The most important incentive apart from the
exchange rate was the virtual free trade regime, which accounted for more
than two-thirds of total export incentives in 1968 (Westphal and Kim, 1982,
p. 217). Such a regime does not discriminate among export activities in the
sense that it does not distort the relative values of net prices—output prices less
respective intermediate input costs, or value added (per unit of output) coeffi-
cients—from what they would be under free trade at the existing exchange
rate. Nor, applying the same norm, does such a regime distort the prices of
capital inputs relative to output prices. The other non-specific incentives were
discriminatory, but only incidentally so, because they were administered in
relation to some base other than net price; credit preferences being granted in
proportion to gross export receipts, for example. In sum, the export incentives
discussed here have been largely, but not wholly, neutral in their combined
effect.
But the government has not relied solely on market forces acting in
response to incentives. It has also used publicly announced, quarterly export
targets for individual commodities, markets, and firms. Contact between gov-
ernment and business in the day-to-day implementation of these targets has
been close. Next to the responsible minister's office, an "export situation room"
was established, laid out so that potential export shortfalls could be identified at
a glance. A large staff has maintained almost daily contact with major exporters,
and it has not been uncommon for the minister to intervene in difficult
46 Journal of Economic Perspectives

situations; for example, to obtain immediate customs clearance for imported

inputs being delayed on some pretext. Progress toward targets and the current
trade situation have been regularly reviewed at a Monthly Trade Promotion
Conference, chaired by the president and attended by ministers, bankers, and
the more successful exporters, large and small.
The highest export achievements have brought national awards as well as
material benefits bestowed through discretionary means. The latter have in-
cluded additional preferences in the general allocation of credit under a system
of government directed bank lending and relaxed tax surveillance under a
revenue system that gives government officials considerable latitude in deter-
mining tax liabilities. Material benefits have also been used more generally to
reward extraordinary efforts to increase exports; they have not gone simply to
the largest exporters. Conversely, indolence has been deterred by the percep-
tion that discretion could be—indeed, sometimes was—exercised in ways that
impose material costs or deny potential benefits in other areas of a firm's
activity.
It would be incorrect to conclude that the government has independently
set export targets to determine export levels by command. The targets have
been indicative, negotiated jointly between the government and export produc-
ers, sometimes in combination with specific export incentives to insure accep-
tance of the targets. Moreover, targets have often been exceeded. But, although
the effect of the targeting system is impossible to determine quantitatively, it
has not been negligible (Rhee, Ross-Larson, and Pursell, 1984). At a minimum,
the targets have kept the government well-informed about export performance
so that timely changes could be made in incentives. Beyond that, operating as a
means of moral and material suasion, the targets have undoubtedly led firms to
pursue many marginally profitable export opportunities, opportunities that
would not otherwise have been thought worth the effort. Where profits on
exports have been distorted to enable the achievement of simultaneously
determined targets, as they have been for promoted infant industries (discussed
below), the effect of the targeting system has been correspondingly greater.
The government has clearly exercised some degree of selective interven-
tion in encouraging exports. Non-uniform export incentives have been impor-
tant for some industries in some periods. Export targeting has influenced firms'
decisions in an intrusive way, certainly in comparison to direct incentives.
Additionally, with respect to the growth of exports over time, recognition must
be given to the government's central involvement in the allocation of invest-
ment finance through its control of the banking system and foreign capital
inflows. Did these interventions do more than simply offset distortions arising
from policies directed toward other objectives? Or to put the question another
way, did these selectively administered interventions have a non-neutral im-
pact? The available evidence indicates that with one possible exception, they
generally did not. The possible exception arises in the case of infant industries
 Larry E. Westphal 47

being promoted by additional means of selective intervention, to which the

discussion now turns.

Promoting Infant Industries Using Non-neutral Policies

For nearly three decades, the Korean government has selectively inter-
vened to promote targeted infant industries, typically by supporting the cre-
ation of large-scale establishments which were accorded temporary monopolies.
Notable examples include cement, fertilizer, and petroleum refining in the
early 1960s; steel and petrochemicals in the late 1960s and early 1970s;
shipbuilding, other chemicals, capital goods, and durable consumer items in
the mid-to-late 1970s; and more recently, critical electronic and other compo-
nents previously sourced from Japan. At their inception, targeted industries
have received preferential access to long- and short-term credit on preferential
terms as well as reductions or exemptions with respect to most or all direct and
indirect taxes (including tariffs). Per unit of sales being promoted, these
incentives, given in relation to total sales, have typically been at least compara-
ble to the incentives given generally in relation to export sales. Even so,
credit and tax preferences have not been the most important promotional
inducement.
Protection has been the dominant incentive in infant industries, except in
the few industries, such as shipbuilding, that initially lacked a significant
domestic market. In Korea, owing to the nearly inviolable policy of maintaining
a virtual free trade regime for exporters, infant industry protection has almost
always meant protection only for non-export sales; that is, protection has rarely
been extended to indirect exports and, when extended, it has been to only a
small fraction of them. At their inception, targeted industries have been granted
"absolute" protection by means of import controls designed to guarantee them
an adequate level of non-export sales as well as a satisfactory rate of return on
investment. These controls have most often been in the form of quotas that set
ceilings on imports. But they have sometimes been imposed through a de facto
"law of similars," under which an import license would be granted only if it
could be shown that the specific term could not be procured domestically on
reasonable terms. This approach is known to have been used in promoting
several machinery-producing industries, for example.
The government has constrained infant industries to pursue rapid produc-
tivity growth by using the export targeting system to insist that infant industries
sell a swiftly growing proportion of their output at world prices, either as direct
or indirect exports. Selective export subsidies given to these industries have
fallen far short of equalizing profit margins between exports (direct and
indirect) and protected non-export sales. But this does not imply that their
exports were necessarily unprofitable. By sheltering their non-export sales, the
government enabled infant industries to practice discriminatory pricing on
these sales, which had the lower elasticity of demand with respect to price. As a
48 Journal of Economic Perspectives

result, exports were profitable as long as marginal revenue exceeded marginal

cost. Where necessary to sustain discriminatory behavior leading to this result,
the government appears to have sanctioned non-competitive market arrange-
ments. In turn, the government has followed a policy of giving selective
subsidies on a declining schedule over a limited period. Thus, by insisting on
fast export growth, the government made the continued profitability of exports
contingent on an infant industry's efforts to reduce marginal cost through
rapid productivity growth.
In fostering infant industry development, the government has also selec-
tively intervened to mold and even to create market agents. Conspicuous
products of its efforts are the chaebol, Daewoo, Hyundae, Samsung and other
extremely large conglomerate groups whose activities span all sectors but are
concentrated in manufacturing and construction. They initially evolved through
entrepreneurial responses to market opportunities, but government interven-
tions during the 1970s significantly contributed to their present form and
stature (Jones and Sakong, 1980; Amsden, 1989). In the role assigned to them
as trading companies, the chaebol were the government's vehicle for decentral-
izing its administration of export incentives as well as for undertaking the
activities needed to strengthen Korea's export marketing capabilities. In their
role as producers, they were the chief agents for implementing the central
thrust of government planning in the mid-to-late 1970s, which was to develop
heavy industry. Their large-scale investments have been subject to government
efforts, sometimes quite forceful but not always successful, to encourage special-
ization among them and to promote their use of subcontracting. The automo-
tive sector, now dominated by the chaebol, has been an especially frequent
target of intervention. The government has compelled its reorganization
several times during the past 30 years by reassigning licenses to produce par-
ticular vehicle types and by forcing substantial changes in foreign partnership
arrangements.
The government has exercised strong control over inflows of foreign
investment (debt as well as equity) and proprietary technology in its efforts to
fashion industrial structure at the firm level. Since every infant industry has
been heavily dependent on such inflows, the government has been able to
select among the potential entrants and to affect the detailed outline of the
initiating venture. It has likewise been able to influence the industry's subse-
quent evolution; for example, by constraining the emergence of additional
entrants and by becoming involved in decisions to develop related lines of
activity. Industries producing chemicals and those manufacturing machinery
and equipment have been special objects of this kind of intervention.
Using other means, the government has promoted vertically integrated
industrial development at the national level. Local content regulations have
been imposed on various industries, requiring them to obtain a progressively
increasing share of their inputs from local sources. In the 1970s, for example,
to support indigenous suppliers of capital goods and engineering services, local
 Industrial Policy in an Export-Propelled Economy: South Korea 49

content provisions were instituted for all major investment projects. Working in
a complementary direction, the government has sometimes nominated a lim-
ited number of medium scale firms for cultivation as suppliers of particular
inputs to designated final product manufacturers. Such intervention has been
focused on the machinery industries.
Private agents have not been exclusively relied upon to implement key
undertakings in Korea's industrial evolution. The first producers of fertilizer,
petrochemicals, and refined petroleum products, for instance, were public
enterprises. So was the first integrated steel mill, which is generally considered
to be one of the most efficient mills in the world. Decisions to use public
enterprises to launch new industries have been made pragmatically, on a
case-by-case basis, and appear to have been reached on several grounds,
including the absence of private parties willing to undertake the venture; the
desire to exercise direct control over the start-up and operation of an industry
with multiple linkages to other industries; and the expectation that a public
agent could achieve a far more favorable outcome in negotiations with foreign
suppliers of capital and technology. Like their private counterparts, pioneering
public enterprises have been expected to achieve international competitiveness
quickly. Moreover, like all public enterprises in the manufacturing sector, they
have been constrained to operate as market agents. They have been managed
as autonomous profit-seeking entities and have contributed materially to gov-
ernment revenues.
More generally, the share of public enterprises in Korea's nonagricultural
output has been comparatively high, similar to that in India. Many public
enterprises—mining and manufacturing firms as well as utilities—have been
established for a variety of reasons unrelated to the creation of new industries
(Jones, 1975). Some of them came into being as a transitional phase in
government actions to regenerate moribund firms. In a number of these cases,
some involving quite large firms (a producer of diesel engines, for example),
bankruptcy has led to public sector ownership as a consequence of government
debt-repayment guarantees. Typically, the firms have been quickly restruc-
tured and then sold to private interests, so the set of such enterprises has
undergone continual change.

Evaluation of the Policy Mix

One can best comprehend the mix of Korean industrial policies by first
examining quantitative estimates of their impact on net prices relative to what
these prices would be under a regime of free trade. Such estimates are available
for 1968 and 1978 in the form of "effective incentive rates," which extend the
effective protection concept to include the impact of all readily quantifiable
incentive mechanisms that indirectly influence market allocations. Because the
underlying details are accessible in published form (Westphal and Kim, 1977;
1982), the estimates for 1968 are used here. Though these estimates are
confined to a single year, I am quite confident that they are representative of
50 Journal of Economic Perspectives

Table 1
Effective Incentive Rates for Manufacturing Industries in 1968
(in percent)

the central tendencies of Korean industrial policy since the reforms in the early
1960s. I do not, for example, find any fundamental differences—relative to the
stylized facts being portrayed here—between them and the estimates for 1978
given in Nam (1981).
The estimates shown in Table 1 are weighted averages (using value added
at world prices) derived from a disaggregation of the Korean manufacturing
sector into 150 industries. With two exceptions, they incorporate all of the
incentive policies operative in 1968, including currency overvaluation. The
exceptions—advance deposits on imports and special import privileges linked
to the penetration of new export markets—are known from other information
to have had relatively small effects. In the study from which these estimates
come, industries were classified as follows using 1968 data: "export," more than
10 percent of output was exported; "import competing," more than 10 percent
of domestic supply was imported; "export and import competing," both export
and import shares exceeded 10 percent; "non-import competing," neither
share exceeded 10 percent. Table 2 indicates the division of manufacturing
production among these industries in 1968. Industries in which Korea had a
well-established comparative advantage in 1968 are included among the export
and non-import competing industries. Industries that were infants as of 1968
are found primarily among industries that are either import competing or
export and import competing—industries which were being promoted with
varying levels of intensity.
In Table 1, the neutrality of Korean export incentives for well-established
industries is evident in the fact that the average effective incentive rate on
exports from export industries is only 0.8 percent. In turn, the impact of
selective export subsidies can be seen in the average effective incentive rate,
12.4 percent, for exports from import-competing industries. Average effective
incentive rates for exports from other industries are negative, but only moder-
ately so; in these industries, export incentives failed, on average, to offset the
impact of the policy regime on the prices of nontradeable inputs. Also impor-
 Larry E. Westphal 51

Table 2
Percentage Shares in Manufacturing Value Added at World Prices in 1968

tant, but not shown in the table, is the fact that effective incentive rates on
exports for individual industries are very narrowly dispersed around the
overall average, particularly when compared with the dispersion of effective
incentive rates of non-export sales (Westphal and Kim, 1982, table 8.10).
Relative to free trade, then, export incentives are indeed largely neutral, except
among import-competing industries. However, the policy regime that is re-
flected in Table 1 can be characterized as having a pro-export bias insofar as
average effective incentive rates on exports exceed those on non-export sales
for well-established (export and non-import competing) industries.
The effects of selective intervention to foster new industries are apparent in
the average effective incentive rates on non-export sales. Well-established
industries have large negative rates owing primarily to import protection
granted to other industries, which in turn have high positive rates. Protection
of other industries has discriminated against established industries by increas-
ing their intermediate and capital input costs in producing for non-export sale.
Moreover, because of competition (and government price controls in some
cases) on the domestic market, established industries have not benefitted from
the import protection which they have formally enjoyed. In fact, on average,
tariff rates on competing imports in 1968 were no less for export and non-
import competing industries than for industries of the other two types. (The
weighted average, using protected sales valued at world prices, of tariff rates
across all manufacturing industries, was 68 percent.) But prices on the domestic
market were generally a good deal lower than world prices plus applicable
tariffs. Domestic prices of products produced by export and non-import com-
peting industries were on average considerably less than 10 percent above
world prices, while domestic prices of products produced by other industries
were on average more than 30 percent higher than world prices (Westphal and
Kim, 1982, pp. 220–8, 231).
Two additional important central tendencies of Korean industrial policy
are also represented in the tables. As can be inferred from the negative average
52 Journal of Economic Perspectives

effective incentive rate on all manufacturing sales in Table 1, incentive policies

have not discriminated against the agricultural sector. On the contrary, largely
by protecting agricultural producers from competing imports and exempting
them from income taxes, the government has subsidized them to a larger
extent than it has manufacturing producers, something almost never observed
in other developing countries. In turn, Table 2 illustrates the fact that selective
intervention to promote infant industries has indeed been selective in the sense
of being narrowly focused. Import competing together with export and import
competing industries can be seen to account for a relatively small share of
manufacturing production, only 14.3 percent. (Of course, the individual indus-
tries grew in relative importance over time, as they matured into well-estab-
lished industries in which Korea had acquired a comparative advantage; as they
changed status to become either export or non-import competing industries,
they were replaced by new infant industries.) Although there is considerable
dispersion around the average effective incentive rates on non-export sales
given in Table 1, the bulk of the highly subsidized production falls within these
two types of industry. More generally, their production share can be consid-
ered a generous upper bound on the extent—at any one time—of the govern-
ment's selective intervention using direct controls.
The preceding estimates of effective incentives do not capture the full
effects of selective intervention. They do not reflect the government's direct
controls over the operation of market forces in allocating resources, nor do
they indicate how the allocation of resources responded to selective interven-
tion. Well-established industries have generally been subject to only two forms
of direct control: export targeting and capital market intervention. Exceptions
involve industries that have suffered a loss of international competitiveness,
where the government has responded by using additional direct controls. The
textile industry, where the government has several times orchestrated invest-
ments in new machinery to upgrade technology, is a prime example. Except in
such cases, the direct effect of the export targeting system on well-established
industries appears to have been rather small.
As previously indicated, the government's influence over flows of domestic
and foreign funds has stemmed from its control of bank lending and interna-
tional capital movements. Financial reforms in the mid-1960s substantially
increased real interest rates on bank deposits and nonpreferential loans. By
attracting deposits into the banking system, away from a large number of
enterprising, unregulated intermediaries, the reforms greatly increased the
government's authority over domestic financial flows (Cole and Park, 1983).
However, funds not channeled through the banking system have accounted for
a sizeable share of total domestic credit outstanding in the economy—the share
appears never to have been less than 25 percent. In turn, the government has
exercised only loose command over short-term foreign capital inflows. Thus,
the government has not had complete control over the flow of funds. Short-term
capital inflows and the activities of non-bank intermediaries have provided a
 Industrial Policy in an Export-Propelled Economy: South Korea 53

significant margin for the operation of market forces not directly constrained
by government controls. Nonetheless, credit rationing has been associated with
sizable differentials between market-clearing interest rates on non-bank funds
and nonpreferential rates on bank credit.4
Government controls over the flow of funds to established industries do
not appear to have been selectively exercised. That is, controls have been
administered on something approximating a first-come, first-served basis using
market criteria. Thus, their impact on well-established industries has been the
result of the limit imposed on the supply of funds available to them relative to
their demand for funds on market clearing terms. Demand has undoubtedly
exceeded supply, more so in some periods than others, but the extent of the
discrepancy seems generally to have been rather small. Established industries
have typically not suffered low rates of capacity utilization, and there are good
reasons for believing that the marginal efficiency of investment would generally
have fallen rapidly in response to additional capacity creation. Here it is very
important to recall that selective intervention to promote infant industries has
been narrowly focused and to recognize that the Korean government has relied
very heavily on foreign capital inflows to finance the economy's development,
so much so that it is one of the biggest debtors in the Third World.
To summarize, the Korean government's industrial policies have been used
within the framework of a consistent strategy of industrialization, one that
treats specifically targeted industries very differently than it deals with other,
internationally competitive ones. The objective of the strategy has been to build
(or sometimes to rebuild) a comparative advantage in the former industries
while exploiting the comparative advantage of the latter. Non-neutral policies
have not been the sole instruments for implementing the strategy. They have
been used selectively in an environment where prices in actively functioning
segments of the capital market and in labor markets generally have appropri-
ately reflected relative factor scarcities. Market forces acting in response to
policies that have been largely neutral, but that have clearly favored exports (in
part due to import protection given to promoted industries), have been used to
allocate resources in internationally competitive industries. Thus, the Korean
government has not attempted either to make or directly to constrain most

4
Bank interest rates on nonpreferential loans were between 25 and 30 percent (per annum) in the
late 1960s, when the interest rate on time deposits was 30 percent. These interest rates have been
reduced over time, reaching the low teens in the mid-1980s. (Real rates fluctuated between positive
and negative values as the inflation rate varied.) Interest rates in the unregulated "curb" market
have also fallen, but appear to have generally been more than twice the highest nonpreferential
bank lending rate. However, the importance of the curb market as a source of non-bank funds has
declined greatly over time, as other non-bank forms of intermediation have emerged and rapidly
grown in significance. Interest rates to borrowers from these very loosely regulated sources have
typically been much lower than curb market interest rates. The preferential bank interest rate on
working capital loans to exporters was 6 percent in the late 1960s. The spread between it and the
highest nonpreferential rate was gradually reduced during the 1970s. Interest rate preferences for
exporters were abolished in 1982.
54 Journal of Economic Perspectives

decisions about resource allocation. Its policy toward nontargeted industries

has either been promotional, primarily in relation to exports, or permissive; it
has not been overtly restrictive. More generally, the government's policy to-
ward activities not being promoted has been one of the benign neglect.

The Contribution of Industrial Policy

The facts of Korean experience are sufficient testimony that industrial

policy need not be inimical to industrialization. But are they testimony to the
effectiveness of selective intervention? Knowledgeable observers do not agree,
nor are they ever likely to—witness the endless debate on Japanese industrial
policy, the model from which the Korean government designed its own ap-
proach. But to me, the answer is straightforward: selective intervention has
greatly contributed to Korea's remarkable success. It has done so by accelerat-
ing the rate of growth with little if any compensating loss in efficiency terms.
Evidence to support this assertion is found in Korea's exceptional record of
realizing export success in a wide variety of industries as well as in the strong
overall performance of its industrial sector. In particular, I interpret the export
record to mean that Korean industry has rapidly achieved and maintained
international competitiveness in a wide variety of industries.
Because of the way targeting of both exports and infant industries has
operated, non-neutral policies have not been used in any industry to encourage
exports on a sustained basis. There has necessarily been a great deal of
uncertainty in selecting infant industries for promotion and in setting export
targets for all industries. There is ample evidence that this uncertainty has been
progressively resolved by using information gained during implementation to
evaluate and, where deemed appropriate, revise intentions. For example, plans
to build the first integrated steel mill were postponed several times during the
1960s on the basis of information contained in successive feasibility reports, and
targets for exports of automotive products were substantially reduced more
than once in the 1970s to reflect emerging market trends. Moreover, the
government has apparently paid careful attention to international competitive-
ness, meaningfully evaluated. It has understood that exports are not necessarily
indicative of international competitiveness when non-neutral policies are in
force. Thus the government has closely monitored the magnitude of incentives,
the relationship of domestic to world prices, and other relevant information
including indicators of product quality. The evidence suggests that the monitor-
ing process has assured that exports are both privately profitable and interna-
tionally competitive, at least in the medium run.
However, important theoretical questions remain largely unresolved. In
particular, what market failures has selective intervention successfully overcome
in the Korean case? Theory suggests many possibilities, but empirically the
answer is unknown—or, if known, hardly acknowledged. But some observers
 Larry E. Westphal 55

of the Korean economy, myself included, would emphasize (without excluding

other possibilities) one source of market failure that has recently received
considerable attention in firm-level case study research (as amplified in Pack
and Westphal, 1986, part 3) and that appears to have been a particular object
of the government's selective intervention.
Market imperfections associated with technological change are generally
thought to be unimportant in the context of industrialization because less
developed countries face an abundant supply of available technology. Of
course, there is abundant international trade in the elements of technology,
through transactions involving licenses, capital goods, direct investment, techni-
cal assistance, and the like. But elements of technology are far from being
perfectly tradeable in the sense that purchase is not sufficient for effective
possession. Moreover, the tacitness of much technology creates problems in
communication over long distances and across social differences, problems
which can be overcome only at some cost. Thus the price that is paid for
importing a given element from a particular location exceeds the price that
would be received for exporting it to the same location. In addition, the
tacitness of circumstantial knowledge makes some elements inherently non-
tradeable. Peculiarities in local resources, institutions, and local technological
practices cannot be comprehended without being experienced in some way.
Efforts to acquire technological capability and to tailor technology to the
circumstances often coincide. In part this is because purposefully monitored
experience plays a prominent role in both kinds of technological effort. Most of
the resulting technological changes can be characterized as minor insofar as
they increase technical efficiency or modestly alter processes and products. But
they often occur in cumulative sequences such that productivity increases of
100 percent or more within a decade do not appear to be atypical among firms
that have rapidly achieved international competitiveness. Correspondingly, the
returns to investments in technological development are potentially very high.
But it also appears that the costs are far from negligible.
Because of the imperfect tradeability of technology, externalities related to
technological development can be quite extensive. There are pronounced
economies of scope in the application of many of the capabilities acquired in the
course of industrialization. As industrialization proceeds, transactions between
domestic agents that involve elements of technology greatly increase in relative
frequency, and there is increasing specialization with respect to technological
efforts among various agents. Additional externalities can result because
demonstration effects from an initial entrant's investments to master new
technology may greatly reduce costs for subsequent, nearby entrants. The
returns to particular technological efforts may be largely inappropriable be-
cause a significant share of them derives from the application of the newly
acquired element in a cascade of subsequent technological changes.
In sum, micro empirical research done over the past 15 years, some of it in
Korea, suggests a strong theoretical case in favor of selective intervention to
56 Journal of Economic Perspectives

promote infant industries in less developed countries. If appropriately used,

selective intervention may greatly increase a country's ability to capture dy-
namic economies associated with the introduction and exploitation of modern
technology. In any event, the research leaves no doubt that investments in the
successful assimilation and adaptation of industrial technology are vitally im-
portant in the development process.
Of course, even if latent externalities are huge, it does not necessarily
follow that selective intervention as practiced in Korea is an appropriate means
to ensure their realization. That it is a possible means can hardly be denied,
however. Credit rationing, import protection, and other unorthodox policy
measures do not conform to the conventional prescription for dealing with the
"technological spillover problem," which is to use "direct and selective policy
measures" (Baldwin, 1969, p. 304). But these instruments can be coupled with
coercive interventions in decision making to compel warranted investments in
technology. Indeed, such coupling has been an integral part of the Korean
government's conduct of industrial policy, as Enos and Park (1988) convinc-
ingly demonstrate. Thus, a strong heterodox case exists for the use of unortho-
dox policy in the pursuit of industrialization, where functioning markets and
capable agents are being created rather than simply being acted upon.

Lessons
Korea's industrial performance owes much to the government's reliance on
free market institutions to provide for flexibility in resource allocation. It has
resulted in many highly profitable ventures (socially as well as privately) that
were either not foreseen or not actively promoted by the government. Included
among the successful outcomes are industries that were established by private
initiative and became quite significant as generators of income, employment,
and foreign exchange. For example, wig exports rose from nil in 1960 to about
12 percent of commodity exports in 1970. Moreover, some highly successful,
once-targeted industries—overseas construction, for example—were identified
by the government on the basis of their initial and profitable inception by
private agents.
But it is equally the case that Korea's industrial performance owes a great
deal to the government's promotional policies toward exports and to its initia-
tives in targeting industries for development. If nothing else, the policies
toward exports have created an atmosphere—rare in the Third World—in
which businessmen could be certain that the economic system would respond
to and adequately reward their efforts aimed at expanding and upgrading
exports. In turn, selective intervention has driven the fast-paced evolution of
Korea's industrial structure by fostering vertical integration at the national
level, promoting greater diversification of end-product mix, and the like. The
most visible result, but by no means the only one, has been the rapid develop-
 Industrial Policy in an Export-Propelled Economy: South Korea 57

ment of Korea's heavy industry, which now accounts for more than half of its
exports.
One way to sort out the important characteristics of Korean success with
selective intervention is to look at what happened in the late 1970s, when the
success was least. Various mistakes, largely ones of implementation, were made
in developing the heavy engineering industries which produce such things as
plant equipment and construction vehicles, like steel furnaces and earth movers.
These mistakes were a primary cause of the dramatic deterioration in Korea's
industrial performance at the end of the 1970s. Moreover, their effects lingered
after the rapid overall recovery. Differences in how intervention was managed
in these and other industries suggest several principles for the conduct of
selective intervention to promote infant industries. The same principles can
also be found in cross-country comparative evidence.
First, the overriding objective of the intervention must be the achievement
of dynamic efficiency in the sense of attaining international competitiveness
within an explicit medium-term time horizon. In the case of the heavy engi-
neering industries, there was an additional goal of achieving a considerable
degree of self-sufficiency in military procurement (not an inherently unreason-
able objective in the geopolitical context of the time).
Second, information relevant to judging potential comparative advantage
must be sought continuously from every possible source. In the case of the
heavy engineering industries, the disparate views of many knowledgeable
individuals were not sought, nor was there adequate consultation with private
industry concerning the formulation of plans for their development.
Third, detailed industry-specific strategy should be reformulated as needed
to reflect the accumulation of pertinent information and experience acquired
during the course of implementation. Plans were rigidly pursued for lengthy
periods in the late 1970s without regard to the accumulating evidence of
problems that were being encountered.
Fourth, only a small number of industries should be targeted at any one
time, so as not to spread scarce and specialized technical and entrepreneurial
talent too thinly. The number of industries that was targeted in the mid-to-late
1970s was too large to permit the achievement of a critical mass of human
resources in most of them.
Fifth, the government's intervention should not overly constrain the ex-
ploitation of comparative advantage in well-established industries. These indus-
tries were excessively crowded out of markets for labor and capital in the late
1970s by the large demands of the targeted infant industries; the result was a
sharp decline in export growth.
Of course, no set of guidelines will rule out all mistakes. Given the
uncertainties associated with developing new industries, mistakes are to be
expected even under a highly effective strategy of selective intervention. But
what counts is the total (economic, or social) return on the entire portfolio of
government-directed investments.
58 Journal of Economic Perspectives

The relevance of these guidelines for other less developed countries is

limited, mainly because following them requires an overriding commitment to
meaningful economic development, a commitment that few political leaders of
less developed countries appear capable of making. Taiwan is one of the few
exceptions, though its use of selective intervention is not widely acknowledged
(Scitovsky, 1986; Wade, 1990). One episode in Korea's history well illustrates
the commitment of its political leaders. It also serves as an example, no doubt
an extreme one, of the kinds of changes that would be necessary to implement
a program of effective selective intervention.
Mention has already been made of the fact that import liberalization was
not an important element of the reforms that put Korea on the path of
export-led development. But the rules of the importing game were nonetheless
radically changed. Prior to the reforms, rent seeking in relation to import
licensing and tariff exemptions had provided a major source of revenue for
businessmen and government officials alike. To redirect the focus of their
activities, President Park had a number of preeminent businessmen arrested
shortly after he came to power, and then threatened them with the confiscation
of their ill-gotten wealth. They were restored to grace only after effectively
agreeing to employ their wealth in socially productive development activities.
Park's authority depended on military support but he sought political legiti-
macy through the economic achievements of his leadership.
The Korean government's practice of selective intervention has entailed
tradeoffs between realizing dynamic economies and creating institutions that
will be viable in the long run. Credit rationing has denied financial institutions
the experience needed to develop adequate processes of independent decision
making. The important role given to the chaebol has produced a highly
concentrated industrial structure that is unpalatable to many Koreans. Recogni-
tion of the price being paid and a belief that selective intervention had outlived
its usefulness led the Korean government to attenuate its practice starting in
the late 1970s. Though major elements of selective intervention still remain,
others appear to have been virtually eliminated. For example, the government
still retains significant control over bank lending, but imports have been greatly
liberalized. Korean political reality has also changed dramatically since the
assassination of President Park in 1979. Selective intervention has lost the
support of important segments of the Korean public who prefer democratic
government to economically enlighted dictatorship. Thus the trend appears to
be away from the practice of selective intervention. It remains to be seen
whether Korea's economic performance will continue to be exceptional.

• I am grateful to the editors as well as to Pranab Bardhan, John Caskey, Steve Golub,
Mieko Nishimizu, Fred Pryor, Bernie Saffran, Mike Scherer, Robert Wade and especially
Howard Pack for valuable comments made in the course of my writing this paper.
 Larry E. Westphal 59

References

Amsden, Alice H., Asia's Next Giant: South dustrial Strategy and Technological Change:
Korea and Late Industrialization. New York: Ox- Theory versus Reality," Journal of Development
ford University Press, 1989. Economics, June 1986, 22, 87–128.
Baldwin, Robert E., "The Case Against In- Rhee, Yung W., Bruce Ross-Larson, and
fant-Industry Tariff Protection," Journal of Po- Garry Pursell, Korea's Competitive Edge: Man-
litical Economy, May/June 1969, 77, 295–305. aging the Entry into World Markets. Baltimore:
Bell, Martin, Bruce Ross-Larson, and Larry The Johns Hopkins University Press, 1984.
E. Westphal, "Assessing the Performance of Scitovsky, Tibor, "Economic Development
Infant Industries," Journal of Development Eco- in Taiwan and South Korea, 1965–1981." In
nomics, September/October 1984, 16, 101–28. Lau, Lawrence J., ed., Models of Development: A
Cole, David C., and Yung Chul Park, Fi- Comparative Study of Economic Growth in South
nancial Development in Korea: 1945–1978. Cam- Korea and Taiwan. San Francisco: ICS Press,
bridge: Harvard University Press, 1983. 1986, pp. 135–95.
Corbo, Vittorio, and Sang-Mok Suh, eds., Wade, Robert, Governing the Market: Eco-
Structural Adjustment in a Newly Industrialized nomic Theory and The Role of Government in East
Country: The Korean Experience. Washington: Asian Industrialization. Princeton: Princeton
The World Bank, forthcoming. University Press, 1990.
Enos, J. K., and W. H. Park, The Adoption Westphal, Larry E., "The Republic of Ko-
and Diffusion of Imported Technology: The Case of rea's Experience with Export-Led Industrial
Korea. London: Croon Helm with Methuen, Development," World Development, March
Inc., 1988. 1978, 6, 347–82.
Jones, Leroy P., Public Enterprise and Eco- Westphal, Larry E., "Fostering Technologi-
nomic Development: The Korean Case. Seoul: Ko- cal Mastery by Means of Selective Infant-
rea Development Institute Press, 1975. Industry Protection." In Syrquin, Moshe, and
Jones, Leroy P., and Il Sakong, Government, Simon Teitel, eds., Trade, Stability, Technology,
Business, and Entrepreneurship in Economic De- and Equity in Latin America. New York: Aca-
velopment: The Korean Case. Cambridge: Har- demic Press, 1982, pp. 255–79.
vard University Press, 1980. Westphal, Larry E., and Kwang Suk Kim,
Luedde-Neurath, Richard, Import Controls "Industrial Policy and Development in
and Export-Oriented Development: A Reassessment Korea." World Bank Staff Working Paper No.
of the South Korean Case. Boulder: Westview 263. Washington: The World Bank, 1977.
Press, 1986. Westphal, Larry E., and Kwang Suk Kim,
Mason, Edward, et al., The Economic and "Korea." In Balassa, Bela, and Associates, De-
Social Modernization of the Republic of Korea. velopment Strategies in Semi-Industrial Economies.
Cambridge: Harvard University Press, 1980. Baltimore: The Johns Hopkins University
Nam, Chong Hyun, "Trade and Industrial Press, 1982, pp. 212–79.
Policies, and the Structure of Protection in Westphal, Larry E., Linsu Kim, and Carl J.
Korea." In Hong, Wontack, and Lawrence B. Dahlman, "Reflections on Korea's Acquisition
Krause, eds., Trade and Growth of the Advanced of Technological Capability." In Rosenberg,
Developing Countries in the Pacific Basin. Seoul: Nathan, and Claudio Frischtak, eds., Interna-
Korea Development Institute Press, 1981, pp. tional Technology Transfer: Concepts, Measures,
187–211. and Comparisons. New York: Praeger, 1985,
Pack, Howard, and Larry E. Westphal, "In- pp. 167–221.
This article has been cited by:

1. F. Scheifele, M. Bräuning, B. Probst. 2022. The impact of local content requirements on the
development of export competitiveness in solar and wind technologies. Renewable and Sustainable
Energy Reviews 168, 112831. [Crossref]
2. Fabrice Defever, Alejandro Riaño. 2022. The Twin Peaks of the Export Intensity Distribution. Journal
of the European Economic Association 20:3, 1347-1394. [Crossref]
3. Changqing Liu, Lei Li. 2021. Place-based techno-industrial policy and innovation: Government
responses to the information revolution in China. China Economic Review 66, 101600. [Crossref]
4. Mikhail Lugachev, Kirill Skripkin. Industrial Policy and the Technological Revolution: The Case of
Russian Digitalization Program 295-309. [Crossref]
5. Atakan DURMAZ, Ümit YILDIZ. 2020. YÜKSEK TEKNOLOJİ İHRACATI SÜRECİNDE
İNOVASYONUN ETKİSİ: BRICS ÜLKE-LERİ ÜZERİNE BİR ANALİZ. Uluslararası İktisadi ve
İdari İncelemeler Dergisi . [Crossref]
6. Hye-Kyung Lee. 2020. Making creative industries policy in the real world: differing configurations of
the culture-market-state nexus in the UK and South Korea. International Journal of Cultural Policy
26:4, 544-560. [Crossref]
7. Nathaniel Lane. 2020. The New Empirics of Industrial Policy. Journal of Industry, Competition and
Trade 20:2, 209-234. [Crossref]
8. VINOD K. AGGARWAL, ANDREW W. REDDIE. 2020. New Economic Statecraft: Industrial
Policy in an Era of Strategic Competition. Issues & Studies 56:02, 2040006. [Crossref]
9. Mamica Skenderi Konstandina, Geoffrey Gatharia Gachino. 2020. International technology transfer:
evidence on foreign direct investment in Albania. Journal of Economic Studies 47:2, 286-306. [Crossref]
10. Stuart Landon. Inter-Sectoral Allocation Choices 221-282. [Crossref]
11. Paul Hong, Young Won Park. Rising Asia: Case of Japan, South Korea, China and India 39-58.
[Crossref]
12. James Gerber. A Great Deal of Ruin 87, . [Crossref]
13. Kwang Wook Gang, Byungchul Choi. 2019. Impact of Korean pro-market reforms on firm innovation
strategies. Technology Analysis & Strategic Management 31:7, 848-861. [Crossref]
14. Jaehan Cho, Zhizhuang Ge. 2019. Specialization, Firm Dynamics and Economic Growth. East Asian
Economic Review 23:2, 169-202. [Crossref]
15. Elissa Braunstein, Piergiuseppe Fortunato, Richard Kozul-Wright. Trade and Investment in the Era
of Hyperglobalization 727-762. [Crossref]
16. Zhenhuan Lei, Jeffrey B. Nugent. 2018. Coordinating China's economic growth strategy via
its government-controlled association for private firms. Journal of Comparative Economics 46:4,
1273-1293. [Crossref]
17. Camilla Jensen. 2018. The employment impact of Poland’s special economic zones policy. Regional
Studies 52:7, 877-889. [Crossref]
18. Hannah Oh, Sung-Woo Lee, Young-Joon Seo. 2018. The evaluation of seaport sustainability: The
case of South Korea. Ocean & Coastal Management 161, 50-56. [Crossref]
19. Pooya Alaedini. Toward a Capability Approach to Development and Industrialization in Iran: An
Introduction 1-28. [Crossref]
20. Murat A. Yülek. The ‘How ’ of Manufacturing: Industrial Policy 217-238. [Crossref]
21. Piyusha Mutreja, B. Ravikumar, Michael Sposi. 2018. Capital goods trade, relative prices, and
economic development. Review of Economic Dynamics 27, 101-122. [Crossref]
22. Zhenhuan Lei, Jeffrey B. Nugent. 2018. Coordinating China's Economic Growth Strategy via Its
Government-Controlled Association for Private Firms. SSRN Electronic Journal . [Crossref]
23. Admire Tarisirayi Chirume. 2018. Estimating the Causal Effects of Import Controls on Price
Formation in Zimbabwe. SSRN Electronic Journal 23. . [Crossref]
24. Don P. Clark, Luiz Renato Lima, W. Charles Sawyer. 2017. Stages of diversification in high
performing Asian economies. Journal of Economic Studies 44:6, 1017-1029. [Crossref]
25. Murat A. Yülek. 2017. On the Middle Income Trap, the Industrialization Process and Appropriate
Industrial Policy. Journal of Industry, Competition and Trade 17:3, 325-348. [Crossref]
26. Yeonjin Lee. 2017. Early-Life Socioeconomic Conditions, Height, and Functional Health Status in
Later Life: Evidence From South Korea. Asia Pacific Journal of Public Health 29:6, 475-484. [Crossref]
27. Yong-Shik Lee. 2017. Law and Development: Lessons from South Korea. SSRN Electronic Journal
. [Crossref]
28. Zaheer Khan, Yong Kyu Lew, Pervaiz Akhtar. 2016. The influence of industrial policy and national
systems of innovation on emerging economy suppliers’ learning capability. Industry and Innovation
23:6, 512-530. [Crossref]
29. Murat A. Yulek. 2016. Industrial Policies and Outcomes: A Comparison of Pre-liberalized Korean and
Turkish Economies. Journal of Comparative Asian Development 15:1, 179-200. [Crossref]
30. Wenbiao Cai, B. Ravikumar, Raymond G. Riezman. 2015. THE QUANTITATIVE IMPORTANCE
OF OPENNESS IN DEVELOPMENT. Economic Inquiry 53:4, 1839-1849. [Crossref]
31. MICHAEL O. MOORE, MARK WU. 2015. Antidumping and Strategic Industrial Policy: Tit-for-
Tat Trade Remedies and the China–X-Ray Equipment Dispute. World Trade Review 14:2, 239-286.
[Crossref]
32. Julia Cagé, Dorothée Rouzet. 2015. Improving “national brands”: Reputation for quality and export
promotion strategies. Journal of International Economics 95:2, 274-290. [Crossref]
33. Michael Moore, Mark Wu. 2015. Antidumping and Strategic Industrial Policy: Tit-for-Tat Trade
Remedies and the China-X-Ray Equipment Dispute. SSRN Electronic Journal . [Crossref]
34. Jasper J. Hotho. 2014. From Typology to Taxonomy: A Configurational Analysis of National Business
Systems and their Explanatory Power. Organization Studies 35:5, 671-702. [Crossref]
35. Piyusha Mutreja, B. Ravikumar, Michael J. Sposi. 2014. Capital Goods Trade and Economic
Development. SSRN Electronic Journal 54. . [Crossref]
36. Leonardo L. Sta. Romana. 2014. Some Lessons from Korea's Industrialization Strategy and
Experience. SSRN Electronic Journal . [Crossref]
37. J. Christian Broberg, Alexander McKelvie, Jeremy C. Short, David J. Ketchen, William P. Wan. 2013.
Political institutional structure influences on innovative activity. Journal of Business Research 66:12,
2574-2580. [Crossref]
38. Jodie Keane. 2013. Rethinking Trade Preferences for Sub-Saharan Africa: How Can Trade in Tasks
Be the Potential Lifeline?. Development Policy Review 31:4, 443-462. [Crossref]
39. Robert K. Fleck, F. Andrew Hanssen. 2013. How Tyranny Paved the Way to Democracy: The
Democratic Transition in Ancient Greece. The Journal of Law and Economics 56:2, 389-416. [Crossref]
40. Camilla Jensen. 2013. Races of Infant Industry Protection and Government Sponsored R&D Programs
in Lead Markets - Implications for (Capital) Goods' Durability and Trade Policy. SSRN Electronic
Journal . [Crossref]
41. Wenbiao Cai, B. Ravikumar, Raymond G. Riezman. 2013. The Quantitative Importance of Openness
in Development. SSRN Electronic Journal . [Crossref]
42. Gordon M. Bodnar, Costanza Consolandi, Giampaolo Gabbi, Ameeta Jaiswal-Dale. 2012. Risk
Management for Italian Non-Financial Firms: Currency and Interest Rate Exposure. European
Financial Management 10, no-no. [Crossref]
43. Seifu Zerihun, Sajal Lahiri. 2012. Modes of Exports by Sub-Saharan African Firms: Intensive Margins
and Interdependencies. SSRN Electronic Journal 47. . [Crossref]
44. Kevin Gray. 2011. Taiwan and the geopolitics of late development. The Pacific Review 24:5, 577-599.
[Crossref]
45. Arvind Panagariya. 2011. A Re-examination of the Infant Industry Argument for Protection. Margin:
The Journal of Applied Economic Research 5:1, 7-30. [Crossref]
46. You-il Lee, Wan-soon Kim. 2010. South Korea's Meandering Path to Globalisation in the Late
Twentieth Century. Asian Studies Review 34:3, 309-327. [Crossref]
47. Christian Volpe Martincus, Jerónimo Carballo. 2010. Beyond the average effects: The distributional
impacts of export promotion programs in developing countries. Journal of Development Economics 92:2,
201-214. [Crossref]
48. Jesus Felipe, Utsav Kumar, Arnelyn Abdon. 2010. Exports, Capabilities, and Industrial Policy in India.
SSRN Electronic Journal . [Crossref]
49. Frederic S. Mishkin. 2009. Globalization and financial development. Journal of Development Economics
89:2, 164-169. [Crossref]
50. Michelle P. Connolly, Kei-Mu Yi. 2009. How Much of South Korea's Growth Miracle Can Be
Explained by Trade Policy?. SSRN Electronic Journal 54. . [Crossref]
51. Phillip Garner. 2008. Congo and Korea: a study in divergence. Journal of International Development
20:3, 326-346. [Crossref]
52. Bill B. Francis, Iftekhar Hasan, Delroy M. Hunter. 2008. Does Hedging Tell the Full Story?
Reconciling Differences in US Aggregate and Industry-Level Exchange Rate Risk Premia. SSRN
Electronic Journal . [Crossref]
53. Jordan Siegel. 2007. Contingent Political Capital and International Alliances: Evidence from South
Korea. Administrative Science Quarterly 52:4, 621-666. [Crossref]
54. Jan De Loecker. 2007. Do exports generate higher productivity? Evidence from Slovenia. Journal of
International Economics 73:1, 69-98. [Crossref]
55. Jian Gao, Gary H. Jefferson. 2007. Science and Technology Take-off in China?: Sources of Rising
R&D Intensity. Asia Pacific Business Review 13:3, 357-371. [Crossref]
56. Roberto Alvarez. 2007. Explaining Export Success: Firm Characteristics and Spillover Effects. World
Development 35:3, 377-393. [Crossref]
57. Jai S. Mah. 2007. Industrial Policy and Economic Development: Korea’s Experience. Journal of
Economic Issues 41:1, 77-92. [Crossref]
58. Michael A. Landesmann, Robert Stehrer. 2007. INCOME DISTRIBUTION, TECHNICAL
CHANGE AND THE DYNAMICS OF INTERNATIONAL ECONOMIC INTEGRATION.
Metroeconomica 58:1, 45-73. [Crossref]
59. Santonu Basu. The Role of Financial Institutions in the Context of Economic Development 171-189.
[Crossref]
60. Covadonga Meseguer. 2007. Learning from Shocks and the Decision to Open. SSRN Electronic
Journal . [Crossref]
61. Doowon Lee. 2006. The Korean Economy in Transition: In Search for a New Model. Global Economic
Review 35:2, 207-230. [Crossref]
62. Covadonga Meseguer. 2006. Rational Learning and Bounded Learning in the Diffusion of Policy
Innovations. Rationality and Society 18:1, 35-66. [Crossref]
63. Roberto Alvarez, Ricardo A. Lopez. 2006. Is Exporting a Source of Productivity Spillovers?. SSRN
Electronic Journal . [Crossref]
64. Phillip Garner. 2006. Congo and Korea: A Case Study in Divergence. SSRN Electronic Journal 36. .
[Crossref]
65. Flora Bellone, Patrick Musso, Lionel Nesta, Michel Quéré. 2006. Caractéristiques et performances
des firmes exportatrices françaises. Revue de l'OFCE 98:3, 183. [Crossref]
66. Anoop Singh, Martin D. Cerisola. 2006. Sustaining Latin America's Resurgence: Some Historical
Perspectives. IMF Working Papers 06:252, 4. [Crossref]
67. Gaminda Ganewatta, Robert Waschik, Sisira Jayasuriya, Geoff Edwards. 2005. Moving up the
processing ladder in primary product exports: Sri Lanka's "value-added" tea industry. Agricultural
Economics 33:3, 341-350. [Crossref]
68. Albert G. Z. Hu, Gary H. Jefferson, Qian Jinchang. 2005. R&D and Technology Transfer: Firm-
Level Evidence from Chinese Industry. Review of Economics and Statistics 87:4, 780-786. [Crossref]
69. Ricardo A. Lopez. 2005. Trade and Growth: Reconciling the Macroeconomic and Microeconomic
Evidence. Journal of Economic Surveys 19:4, 623-648. [Crossref]
70. Julio López Gallardo. 2005. Comparative advantage, economic growth and free trade. Revista de
Economia Contemporânea 9:2, 313-335. [Crossref]
71. Richard G. Lipsey, Kenneth I. Carlaw. 2004. Total factor productivity and the measurement
of technological change. Canadian Journal of Economics/Revue Canadienne d`Economique 37:4,
1118-1150. [Crossref]
72. Arvind Panagariya. 2004. Miracles and Debacles: In Defence of Trade Openness. The World Economy
27:8, 1149-1171. [Crossref]
73. Christopher S Adam, Stephen A O’Connell. 2004. Aid versus Trade Revisited: Donor and Recipient
Policies in the Presence of Learning‐by‐Doing. The Economic Journal 114:492, 150-173. [Crossref]
74. Kap-Young Jeong, Robert T. Masson. 2003. A new methodology linking concentration dynamics
to current and steady-state profits:Examining Korean industrial policy during take-off. International
Journal of Industrial Organization 21:10, 1489-1526. [Crossref]
75. Kenneth I. Carlaw, Richard G. Lipsey. 2003. Productivity, Technology and Economic Growth: What
is the Relationship?. Journal of Economic Surveys 17:3, 457-495. [Crossref]
76. Xinshen Diao, Wenli Li, Erinc Yeldan. 2002. On the Differential Impact of the Asian Crisis on the
World Economy: A General Equilibrium Perspective. Pacific Economic Review 7:3, 519-543. [Crossref]
77. Larry E. Westphal. 2002. Technology Strategies For Economic Development In A Fast Changing
Global Economy. Economics of Innovation and New Technology 11:4-5, 275-320. [Crossref]
78. Yoon Heo. 2001. Development strategy in Korea reexamined: an interventionist perspective. The Social
Science Journal 38:2, 217-231. [Crossref]
79. Shulin Gu. 2001. Science and Technology Policy for Development: China's Experience in the Second
Half of the Twentieth Century. Science, Technology and Society 6:1, 203-234. [Crossref]
80. Abdelkader Sid Ahmed. 5. Algérie : quel développement ? Paradigme du consensus de Washington
ou paradigme asiatique ? 95-123. [Crossref]
81. Paola Bongini, Giovanni Ferri, Hongjoo Hahm. 2000. Corporate Bankruptcy in Korea: Only the
Strong Survive?. The Financial Review 35:4, 31-50. [Crossref]
82. Xinshen Diao, Terry Roe, Erinc Yeldan. 1999. Strategic policies and growth: an applied model of
R&D-driven endogenous growth. Journal of Development Economics 60:2, 343-380. [Crossref]
 83. Werner Baer, William R Miles, Allen B Moran. 1999. The end of the Asian Myth: Why were the
Experts Fooled?. World Development 27:10, 1735-1747. [Crossref]
84. Atsuku Ueda. 1999. Measuring Distortion in Capital Allocation—The Case of Heavy and Chemical
Industries in Korea. Journal of Policy Modeling 21:4, 427-452. [Crossref]
85. A. GESKE DIJKSTRA. 1999. Technocracy Questioned: Assessing Economic Stabilisation in
Nicaragua. Bulletin of Latin American Research 18:3, 295-310. [Crossref]
86. Alvin G. Wint. 1998. The role of government in enhancing the competitiveness of developing
economies. International Journal of Public Sector Management 11:4, 281-299. [Crossref]
87. Lila J Truett, Dale B Truett. 1998. The demand for imports in Korea: a production analysis approach.
Journal of Development Economics 56:1, 97-114. [Crossref]
88. Christopher M. Dent. 1998. South Korea's foreign economic policy: New parameters and pressures
examined. Global Economic Review 27:2, 59-76. [Crossref]
89. Sanjaya Lall. 1998. Technological capabilities in emerging Asia. Oxford Development Studies 26:2,
213-243. [Crossref]
90. Reza Salami, Lawrence P. Reavill. The Appropriate Policies for a Successful International Technology
Transfer (ITT) to Less-Developed Countries (LDCs) 149-175. [Crossref]
91. Jaeho Yeom. Economic Reform and Government—Business Relations in Korea: Towards an
Institutional Approach 139-156. [Crossref]
92. Takatoshi Ito. Japanese Economic Development: Idiosyncratic or Universal? 18-37. [Crossref]
93. Christopher M. Dent. 1998. New interdependencies in Korea-EU trade relations. Journal of
Contemporary Asia 28:3, 366-389. [Crossref]
94. Xinshen Diao, Wenli Li, A. Erinc Yeldan. 1998. Challenges and Choices in Post-Crisis East-Asia:
Simulations of Investment Policy Reform in an Intertemporal, Global Model. SSRN Electronic Journal
. [Crossref]
95. N. F. R. Crafts. 1998. East Asian Growth Before and After the Crisis. IMF Working Papers 98:137,
1. [Crossref]
96. Roy W. Shin, Alfred Ho. 1997. The Role of Science and Technology in Creating Korea's Electronics
Industry. Asian Affairs: An American Review 23:4, 235-251. [Crossref]
97. Judith Streak. 1997. The counter‐counterrevolution in development theory on the role of the state in
development: Inferences for South Africa?. Development Southern Africa 14:3, 307-325. [Crossref]
98. Zafiris Tzannatos, Geraint Johnes. 1997. Training and skills development in the east asian newly
industrialised countries: a comparison and lessons for developing countries 1. Journal of Vocational
Education & Training 49:3, 431-453. [Crossref]
99. Lila J. Truett, Dale B. Truett. 1997. The Korean metals industry and economic development. Journal
of Asian Economics 8:2, 333-347. [Crossref]
100. CRAIG FREEDMAN, ROBIN STONECASH. 1997. A Survey of Manufacturing Industry Policy:
From the Tariff Board to the Productivity Commission. Economic Record 73:221, 169-183. [Crossref]
101. Dani Rodrik. 1997. The ‘paradoxes’ of the successful state. European Economic Review 41:3-5, 411-442.
[Crossref]
102. Stephen S. Golub. 1997. International Labor Standards and International Trade. IMF Working Papers
97:37, 1. [Crossref]
103. Sanjaya Lall. 1996. Paradigms of development: The East Asian debate. Oxford Development Studies
24:2, 111-131. [Crossref]
104. Wan-Wen Chu, Jla-Jing Li. 1996. Growth And Industrial Organisation. Journal of Industry Studies
3:1, 35-52. [Crossref]
105. Nachoem M. Wijnberg. 1996. Heterochrony, industrial evolution and international trade. Journal of
Evolutionary Economics 6:1, 99-113. [Crossref]
106. Sanjaya Lall. Paradigms of Development: The East Asian Debate on Industrial Policy 1-26. [Crossref]
107. Sanjaya Lall. Technology Development Policies: Lessons from Asia 59-106. [Crossref]
108. Sanjaya Lall. ‘The East Asian Miracle’ Study: Does the Bell Toll for Industrial Strategy? 107-123.
[Crossref]
109. Sanjaya Lall. Malaysia: Industrial Success and the Role of Government 148-165. [Crossref]
110. Sanjaya Lall. Foreign Direct Investment Policies in the Asian NIEs 197-214. [Crossref]
111. Christopher M. Dent, Claire Randerson. 1996. Korean foreign direct investment in Europe: The
determining forces. The Pacific Review 9:4, 531-552. [Crossref]
112. Sanjaya Lall. 1995. Malaysia: Industrial success and the role of the government. Journal of International
Development 7:5, 759-773. [Crossref]
113. Jaimin Lee. 1995. Comparative advantage in manufacturing as a determinant of industrialization: The
Korean case. World Development 23:7, 1195-1214. [Crossref]
114. Rob Vos. Financial Liberalisation, Growth and Adjustment: Some Lessons from Developing Countries
179-220. [Crossref]
115. Adam Przeworski, Fernando Limongi, Salvador Giner. Political Regimes and Economic Growth 3-27.
[Crossref]
116. Rani Rodrik. Chapter 45 Trade and industrial policy reform 2925-2982. [Crossref]
117. C. Kirkpatrick. 1995. Does trade liberalization assist third-world industrial development? Experience
and lessons of the 1980s. International Review of Applied Economics 9:1, 22-41. [Crossref]
118. Gary M. Woller. 1994. Economic reform in Latin America and the prospects for distributive justice:
The market, neoliberal theory, and the state. The Journal of Socio-Economics 23:4, 383-403. [Crossref]
119. CHUNG-IN MOON, RASHEMI PRASAD. 1994. Beyond the Developmental State: Networks,
Politics, and Institutions. Governance 7:4, 360-386. [Crossref]
120. GORDON L. CLARK. 1994. The End of an Era: Asian NIEs in the Global Economy. Growth and
Change 25:4, 487-508. [Crossref]
121. Atul Kohli. 1994. Where do high growth political economies come from? The Japanese lineage of
Korea's “developmental state”. World Development 22:9, 1269-1293. [Crossref]
122. Sung Deuk Hahm, L. Christopher Plein, Richard Florida. 1994. The Politics of International
Technology Transfer. Lessons from the Korean Experience. Policy Studies Journal 22:2, 311-321.
[Crossref]
123. Jene Kwon. 1994. The East Asia challenge to neoclassical orthodoxy. World Development 22:4,
635-644. [Crossref]
124. Sanjaya Lall. 1994. The East Asian miracle: Does the bell toll for industrial strategy?. World
Development 22:4, 645-654. [Crossref]
125. Renee Prendergast. Increasing Returns and Economic Development 45-57. [Crossref]
126. D. McL. Lamberton. The Information Economy Revisited 1-40. [Crossref]
127. J.Bradford De Long, Lawrence H Summers. 1993. How strongly do developing economies benefit
from equipment investment?. Journal of Monetary Economics 32:3, 395-415. [Crossref]
128. Adam Przeworski,, Fernando Limongi. 1993. Political Regimes and Economic Growth. Journal of
Economic Perspectives 7:3, 51-69. [Abstract] [View PDF article] [PDF with links]
129. Roy W Shin. 1993. The Role of Industrial Policy Agents: A Study of a Korean Intermediate
Organization as a Policy Network. International Review of Administrative Sciences 59:1, 115-130.
[Crossref]
130. Yilmaz Akyüz. Does Financial Liberalization Improve Trade Performance? 142-164. [Crossref]
131. Ali Ibrahim, Arvind Subramanian, Luis A. Torres-Castro. 1993. Optimal Tariffs: Theory and
Practice. IMF Working Papers 93:50, i. [Crossref]
132. Iyanatul Islam. 1992. Political Economy and East Asian Economic Development. Asian-Pacific
Economic Literature 6:2, 69-101. [Crossref]
133. Bradford L. Barham. 1992. Foreign direct investment in a strategically competitive environment: Coca-
Cola, Belize, and the international citrus industry. World Development 20:6, 841-857. [Crossref]
134. Sanjaya Lall. 1992. Technological capabilities and industrialization. World Development 20:2, 165-186.
[Crossref]
135. Bradford Barham, Mary Clark, Elizabeth Katz, Rachel Schurman. 1992. Nontraditional Agricultural
Exports in Latin America. Latin American Research Review 27:2, 43-82. [Crossref]