Can Korea’s Economic Success be Replicated?

Many developing countries have during the last decade experienced economic stagnation and in some cases decline. Consequently there is a renewed interest in manufacturing industry, which is seen by many as the means of closing the gap between poor developing countries and the rich developed economies. Widely publicized tables of income levels of the countries of the world leave no doubt that income levels are generally higher the greater is the contribution made by manufacturing industry. Countries which have little or no industry are almost invariably poor. The lesson is plain and simple: to overcome poverty and economic backwardness a country must industrialize.1 Despite such exhortations to industrialize, there are very few examples of successful industrialization in the postwar period. Indeed, they would appear to be limited to two countries, Korea and Taiwan, both of which were resource-constrained. Other economies with seemingly better prospects for industrialization — Brazil, Nigeria, India and Russia — have failed. Korea on the other hand demonstrated how an economy was able to make the transformation from light industries to heavy industries, sustain the momentum and eventually break into more advanced form of industrialization to become a modern economy.