South Korea

Abstract

As suggested in Chapter 1, Neoclassicals usually attribute the success of Korea’s industrialization to the adoption, in the early 1960s, of a neutral, hands-off, outward-looking policy regime.²⁵ The essence of the argument is that the introduction of a low and uniform rate of protection, offset by equally low and uniform export subsidies, would have led the economy back to its shadow prices, guaranteeing allocative efficiency in line with the country’s static comparative advantages. The speed, efficiency and international competitiveness of the industrialization that followed, would have been not more than an inexorable and theoretically predictable consequence. A more moderate version of this view (World Bank 1991, 1993) acknowledges that there were government interventions, but on the whole ‘getting the fundamentals right’ and the outward looking regime would have made the difference.

The preparation of this part involved a month trip to Korea (April 1991), hosted by the local Ministry of Trade and Industry. Apart from the collection of data and government documents, the field research also included interviews with government officials and academics.