Industrial Development and Technology

  • Sanjaya Lall
Part of the St Antony’s Series book series


South Korea is probably the most successful industrialiser among the developing countries. Her success lies not just in achieving and maintaining very high rates of growth of manufacturing output and exports. She is remarkable also for the diversification and deepening of her industrial structure into complex activities in a relatively short space of time.1 Today Korea possesses arguably the most efficient, broad-based and technologically advanced manufacturing sector outside the leading industrialised countries. This chapter describes the achievements and stages of Korean industrialisation, relating them to the issue of the role of the government: the question of industrial policy continues to be intensely debated and the Korean experience offers perhaps the most penetrating insights into this of any developing country.


Foreign Direct Investment Korean Peninsula Industrial Development Industrial Policy Korean Government 
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  1. 1.
    There is a large literature on Korean industrialisation. See in particular: World Bank, Korea: Managing the Industrial Transition (Washington, DC: World Bank, 1987);Google Scholar
  2. H. Pack and L. E. Westphal, ‘Industrial Strategy and Technological Change: Theory versus Reality’ in Journal of Development Economics (1986);Google Scholar
  3. L. E. Westphal, ‘Industrial Policy in an Export-Propelled Economy: Lessons from South Korea’s Experience’ in Journal of Economic Perspectives (1990);Google Scholar
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  6. On a more general analysis of the pattern and determinants of Korean industrialisation, see Sanjaya Lall, ‘Explaining Industrial Success in the Developing World’, in V. N. Balasubramanyam and S. Lall (eds), Current Issues in Development Economics (London: Macmillan, 1991).Google Scholar
  7. A recent publication of the World Bank, The East Asian Miracle: Economic Growth and Public Policy (New York: Oxford University Press, 1993), re-examines Korean industrial strategy. However, it is a biased analysis of the contribution of government, as noted in my review, ‘The East Asian Miracle Study: Does the Bell Toll for Industrial Strategy?’ in World Development 22 (April, 1994).Google Scholar
  8. 2.
    Yung Whee Rhee et al., Korea’s Competitive Edge (Baltimore: Johns Hopkins Press, 1984);Google Scholar
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  10. John Enos and Woo Hee Park, The Adaptation and Diffusion of Imported Technologies in the Case of Korea (London: Croom Helm, 1987).Google Scholar
  11. 3.
    For a recent analysis of the subject see P. E. Tolentino, Technological Innovation and Third World Multinationals (London: Routledge, 1993).Google Scholar
  12. 4.
    The Korean Government preferred to rely on private groups that it had close relationships with rather than to follow the more usual path of setting up a multitude of public enterprises. On the development of Korean entrepreneurship and the chaebol see Leroy Jones and Il Sakong, Government, Business and Entrepreneurship in Economic Development (Cambridge, MA: Harvard University Press, 1980).Google Scholar
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    See M. Dailami, ‘Korea: Sucessful Adjustment’ in V. Thomas et al. (eds), Restructuring Economies in Distress (Oxford University Press, for the World Bank, 1991).Google Scholar
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    World Bank World Bank Support for Industrialization in Korea, India and Indonesia (Washington, DC: World Bank Operations Evaluation Department, 1992) para. 3.02–3.03.Google Scholar
  15. 8.
    For the analytical framework of industrialisation that is determined by the interplay of incentives, capabilities and institutions see Lall, in Balasubramanyam and Lall (eds), Current Issues in Development Economies (London: Macmillan, 1991).Google Scholar
  16. 9.
    For an interesting characterisation of Korean and other developing country trade strategies that goes beyond the over-simplified dichotomy between export-orientation and import-substitution, see Neng Liang, ‘Beyond Import Substitution and Export Promotion: A New Typology of Trade Strategies’ in Journal of Development Studies 28 (April 1992) pp. 447–72.CrossRefGoogle Scholar
  17. The World Bank’s ‘The East Asian Miracle (New York: Oxford University Press, 1993) has a detailed description of the trade interventions and stresses the role of export orientation in disciplining the enterprises as well as the government.Google Scholar
  18. On the conduct of trade strategy, and an instructive comparison with Brazil where this discipline did not exist, see M. Moreira, Industrialization, Trade and Market Failures: The Role of Government Intervention in Brazil and the Republic of Korea (London: University College, PhD Thesis, 1993).Google Scholar
  19. 11.
    Ministry of Science and Technology (MOST), Introduction to Science and Technology: Republic of Korea (Seoul: 1990) p. 28.Google Scholar
  20. 12.
    See Lall, in Balasubramanyam and Lall (eds), Current Issues in Development Economic (London: Macmillan 1991).Google Scholar
  21. 14.
    See S. Lall, Building Industrial Competitiveness in Developing Countries (Paris: OECD, 1990).Google Scholar
  22. 15.
    See the World Bank, Staff Appraisal Report: Third Technology Development Project (1988) para. 2.18.Google Scholar
  23. 24.
    On the requirements of efficient state action see T. Biggs and B. Levy, ‘Strategic Interventions and the Political Economy of Industrial Policy in Developing Countries’ in D. Perkins and M. Roemer (eds), Economic System Reform in Developing Countries (Cambridge, MA: Harvard University Press, 1990) andGoogle Scholar
  24. the World Bank’s The East Asian Miracle (New York: Oxford University Press, 1993).Google Scholar

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© Palgrave Macmillan, a division of Macmillan Publishers Limited 1997

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  • Sanjaya Lall

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