Chaebol and Industrial Policy in Korea

Abstract

Although the degree of sectoral targeting changed dramatically from the 1960s to the 1970s and then from the 1980s onward, Korea maintained an outward‐oriented, bottom‐up, and integrated approach to industrial policy, relying on close public–private consultation and international benchmarking. The government and the chaebol systematically studied what had to be done to fill the missing links in the domestic value chain and move up the quality ladder, through technology acquisition, human resource development, and construction of optimal‐scale plants aimed for the global market. As the capacity of the private sector increased and sectoral targeting became a more difficult proposition, Korea shifted to a more sector‐neutral approach, which provided support for industry rationalization and R&D regardless of sectors. This was in line with a larger shift from industrial policy to competition and corporate governance policy, starting with the enactment of the Monopoly Regulation and Fair Trade Act in 1980.