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Journal of Economic Perspectives: Vol. 4 No. 3 (Summer 1990)

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Industrial Policy in an Export-Propelled Economy: Lessons from South Korea's Experience

Article Citation

Westphal, Larry E. 1990. "Industrial Policy in an Export-Propelled Economy: Lessons from South Korea's Experience." Journal of Economic Perspectives, 4(3): 41-59.

DOI: 10.1257/jep.4.3.41

Abstract

Korea 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 used 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 industrialization. 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 competitiveness in a number of industries. Though accepted by many knowledgeable observers, the conclusion is controversial—inherently so owing to insufficient historical information and lack of agreement about the required counterfactual.

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Authors

Westphal, Larry E. (Swarthmore College)

JEL Classifications

121: Economic Studies of Developing Countries--Asian Countries
616: Industrial Policy
112: Economic Development Models and Theories

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