ABSTRACT
During the late 1960s and the early 1970s, a slowdown of Korean economic growth occurred as a result of the limits of exportoriented light industrialization. The relative economic crisis became one of the causes leading to the rise of the bureaucratic authoritarian regime (the Yushin [Revitalizing] System) of 1972. It coincided with the socio-political crisis that had resulted from labour disputes and a rigged election.1 In March 1973, shortly after the emergence of the authoritarian regime, President Park declared an ambitious industrial transition programme that shifted emphasis from export-oriented light industries to export-oriented heavy and chemical industries.2 The industrial policy was a sectoral development strategy focusing on heavy and chemical industries (HCIs): iron and steel, non-ferrous metals, shipbuilding, machinery, automobiles, electronics, and petrochemicals. During the 1970s, the HCI sectors had been promoted by a broad range of policy instruments including privileged policy loans, subsidies, and tax reduction and exemption. Without such strong government supports, few big business firms would have been willing to bear the risks. The HCI sectors required massive investments and a long gestation period of profits. The industries had an uncertain comparative advantage in international competition and in the small domestic market.
