Korea’s Industrial Policy by the Numbers: A Cross-Country Comparison and Policy Implications

In response to rapid shifts in the global economic and social environment, industrial policy has re-emerged as a central instrument of national strategy. Major shocks, including COVID-19, supply chain fragmentation, the AI revolution, and the green transition, have led major economies to adopt wide-ranging industrial policies at increasingly larger scales. Empirical understanding of these policies remains a blind spot in the literature, and this gap calls for systematic, quantitative, and evidence-based analysis. This study draws on the Organisation for Economic Co-operation and Development (OECD)’s Quantifying Industrial Strategies (QuIS) database to measure South Korea’s industrial policy, and benchmark it within a group of 20 OECD economies. Industrial policy spending is rising broadly across the OECD: fiscal support climbed from 1.34 percent of GDP in 2019 to 1.55 percent in 2023. In Korea, however, industrial policy spending moved the other way, peaking in 2021 before declining to 1.06 percent of GDP in 2023, below the OECD benchmark. The analysis finds that Korea’s industrial policy has two salient features: 1) it is typically small-scale and dispersed, and 2) predominantly horizontal. Industrial policy is spread thinly across programs, lacking concentration and heft, and is weighted heavily toward technology-oriented measures and support for small and medium-sized enterprises (SMEs) and young firms, rather than toward specific sectors. This contrasts with the global trend toward larger, more targeted industrial policy. The authors argue that Korea needs to expand industrial policy and make efforts to increase its effectiveness. The paper calls for debate on expanded fiscal support; shifting toward more concentrated support for core areas through clearer priorities and the consolidation of overlapping programs; stronger targeted support for advanced strategic industries alongside broader coverage that reaches beyond manufacturing into non-manufacturing and emerging sectors; and an evaluation system that looks past firm-level outcomes to ask whether policy goals such as industrial competitiveness and supply chain stability are actually met, weighing results against inputs and comparing the effectiveness of different instruments.