Korea has achieved rapid economic development in the past quarter century. The foregoing chapters described and identified the contours of the rapid transformation in Korea. This chapter attempts to develop clues to plausible explanations by addressing questions as to why and how this process took place in the way it did and how the change was managed. Part of the answer to why the pace of progress has been so rapid in Korea lies in understanding government policy at the macro and industry levels which has shaped, to a great extent, the business environment. It also lies in understanding the behaviour of firms in response to the changing environment. This chapter, therefore, is concerned with the examination of the particular set of policies and the institutional machinery at the macro and industry levels which played a key role in the transformation (in contrast to the policies that influenced the development of technology embodying inputs in Chapter IV). This chapter is also concerned with analysis of why and how the processes of technological development took place at industry and firm levels.