Industrial policy dilemmas: entry barriers and cyclical adjustments

Abstract

Through its three decades of industrialization, the Korean economy has transformed into a heavily industrialized economy. In this transformation, one of the most dramatic developments was Korea's entrance into heavy industrialization due to the government's policy of HCI(Heavy and Chemical Industrialization). (Yotopoulos 1999; Amsden 1989) Heavy industrialization poses great challenges to developing economies which have capital and entry barrier requirements(Bain 1956; Singleton 1997; Seabright 1996; Ziss 1987), while most developing countries have sought such industrialization as one of their developmental goals. Challenges these sectors face range from the hurdles of technological barriers to MOS(Minimum Optimum Scale) or economies of scale to entry. While much has been discussed on the existence of such economies of scale and technological barriers, the Korean case is a clear one that shows the salience of the challenges as they are contested in the political economy.