ABSTRACT

Over the last three decades, Korea has experienced the most successful economic growth in the developing world. The average real annual growth during the period between 1962 and 1991 exceeded 9 per cent, and radical changes in the economic structure saw a move away from previous import substitution policies. The state implemented major economic reforms-such as the adoption of more realistic exchange rates, centralisation of import controls, and the introduction of export incentives-that encouraged industries to look to global markets and to develop the country’s comparative advantage such as low production costs and, until the early 1980s, a relatively compliant workforce. Consequently, agriculture’s contribution to the gross domestic product (GDP) dropped from 36 per cent to 13.8 per cent and the share of manufacturing increased from 25 per cent to 50 per cent between 1962 and 1985.2 These elements have converted the image of Korea from that of an underdeveloped country in the 1960s to that of a newly industrialising country (NIC) by the late 1970s.