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KOREAN INDUSTRIAL POLICY
Abstract
Industrialisation needs to be nourished by means of industrial policy. This paper examines the Korean experience, reporting on the course of industrialisation, the choice of technology, the structure of industry, and the application of controls. The effectiveness of industrial actions in Korea is compared with that in other developing countries. The paper concludes by inferring the principles that have directed the Korean process of industrialisation: maximising the rate of growth of capacity in industry, maintaining a reasonably stable distribution of disposable income, domesticating industry, retaining control over the allocation of investment, regulating both the structure of each industry and the conduct of its constituent firms, and atomising extra-governmental power.
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NOTES AND REFERENCES
Park W. H. and Enos J. L.. 1986. . The Adoption and Diffusion of Imported Technology: the Case of Korea . , Beckenham , Kent : : Croom Helm. .
See, e.g., L. E. Westphal, ‘Manufacturing’ in P. Hasan and D.C. Rao, (eds), Korea: Policy Issues for Long-Term Development, Johns Hopkins for the World Bank, Baltimore, 1979, pp. 233–80; and subsequent World Bank papers by Amsden, Dahlen, Kim and Westphal.
See L.P. Jones and I. SaKong, Government, Business and Entrepreneurship in Economic Development: The Korean Case, Council on East Asian Studies in the Modernization of the Republic of Korea: 1945-1975, Harvard University, Cambridge, Mass., 1980.
Introduced in R. Wade and G. White (eds), ‘Developmental states in East Asia: capitalist and socialist’, Bulletin of the Institute of Development Studies, University of Sussex, April 1984; see also L.L. Wade and B.S. Kim, Economic Development of South Korea: The Political Economy of Success, Praeger, New York, 1978.
If the standard mode of behaviour can be expressed in mathematical form (as a specific function), it may be possible to determine what objective or objectives (again expressed in mathematical form, as a functional) the standard mode of behaviour will optimise. The mathematics employed is optimal control theory (see, e.g., A.E. Bryson and Y.-C. Ho, Applied Optimal Control, John Wiley, New York, 1975.), but the method of employing it is the reverse of what is common. Commonly, one formulates mathematically the objective as an integral equation and then determines the specific function which will maximise (or minimise) the functional; in the inferential approach one takes the specific function (representing the standard mode of behaviour) and determines what integral equation(s) it maximises (or minimises). Mathematically this is the more difficult operation, but conceptually it is merely the obverse of the customary approach.
Park and Enos, op. cit.
Adelman I. and Morris C. T.. 1968. . ‘Performance criteria for evaluating economic development’. . Quarterly Journal of Economics . , Vol. 82((2)): 260––80. .
Enos J. L.. 1984. . “‘A game-theoretic approach to choice of technology in developing countries’. ”. In Technology, Institutions and Government Policies . , Edited by: James J. and Watanabe S.. p. 47––79. . London : : Macmillan. .