Manufacturing Revolutions: Industrial Policy and Industrialization in South Korea

Lane, Nathaniel

Manufacturing Revolutions: Industrial Policy and Industrialization in South Korea

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: I study the impact of industrial policy on industrial development by considering a canonical intervention. Following a political crisis, South Korea dramatically altered its development strategy with a sector-specific industrial policy: the Heavy and Chemical Industry (HCI) drive, 1973-1979. With newly assembled data, I use the sharp introduction and withdrawal of industrial policies to study the impacts of industrial policy---during and after the intervention period. I show (1) HCI promoted the expansion and dynamic comparative advantage of directly targeted industries. (2) Using variation in exposure to policies through the input-output network, I show HCI indirectly benefited downstream users of targeted intermediates. (3) I find direct and indirect benefits of HCI persisted even after the end of HCI, following the 1979 assassination of the president. These effects include the eventual development of directly targeted exporters and their downstream counterparts. Together, my findings suggest that the temporary drive shifted Korean manufacturing into more advanced markets and created durable industrial change. These findings clarify lessons drawn from South Korea and the East Asian growth miracle.

Keywords: industrial policy; industrial development; East Asian miracle; HCI; Heavy-Chemical Industry; South Korea; spillovers (search for similar items in EconPapers)
JEL-codes: L5 N6 O14 O25 (search for similar items in EconPapers)
Date: 2022, Revised 2022
New Economics Papers: this item is included in nep-his and nep-isf
References: View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:235845

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