The Relation between Industrial Development and Industrial Policy in Korea's High Economic Growth Period

From the early 1960s till the late 1970s, the Korean economy achieved high economic growth. During that period, industrial structure changed dramatically, as the proportion of the manufacturing industry, especially heavy and chemical industries, rapidly increased. It is generally accepted that industrial policy is the main cause of such change.

In this paper, the effects of industrial policy for industrial development are analyzed, dividing the high economic growth period into three intervals. For the 1960s, I analyze the relationship between export-oriented light industry promotion policy and the development of the textile industry. In the 1970s, a policy to promote the heavy and chemical industry was achieved, and I analyze how the shipbuilding industry is affected by that policy. Finally, for the 1980s, I examine the automotive industry which was the target of industrial rationalization policy.

From the analysis, I find that the role and effectiveness of industrial policy differ depending on period and industry. Compared to the private sector, the amount of information that the government possesses could explain the effectiveness of industrial policy.