Korean Industrial Policy

Korean industrial policy, conducted primarily under the Park Chung-hee government from 1961 to 1979 and continued in modified form by successors, is the most successful single case of strategic developmental intervention in modern economic history. Starting from a per capita income lower than many sub-Saharan African countries, Korea built — through coordinated state intervention — globally competitive industries in steel, shipbuilding, automobiles, electronics, and semiconductors within a single generation. The policy toolkit was comprehensive: state-controlled banks directed credit to favored firms at below-market rates; import quotas and tariffs protected domestic producers during their learning period; technology transfer agreements were negotiated with foreign firms as a condition of market access; export targets were set and enforced through reward and discipline mechanisms; and massive public investment was deployed in education and infrastructure. Chang, who grew up in Korea during the period of this transformation, has documented the program in detail and treats it as the paradigmatic empirical refutation