A Multicriterion Optimization Model for Industrial Promotion: The Case of Korea

Abstract

Industrial policies form major parts in a country’s national economic development plan. Countries like Korea, where manufacturing is a prime engine of economic growth, need sound industrial policies to promote balanced growth of industries. This paper develops a generalized goal programming model for selecting which industries need, and to what extent they are, to be promoted in line with national economic goals. The national economic objectives pursued in the model include the following: Foreign Exchange Earnings, Employment Opportunities, Domestic Content, Energy Consumption, Import Substitution, and Productivity. The model is applied to six industrial sectors, namely, Fabricated Metal Products, General Industrial Machinery and Equipment, Electrical Equipment and Apparatus, Electronic and Communication Equipment, Transportation Equipment, and Measuring, Medical and Optimal Instruments. The generality of the model makes it possible to be applied to any industrial sector or subsectors, and it can serve as a software laboratory for selecting types of industrial activities which need to be given promotion. It can also be applied to other countries with appropriate modifications.