Selective Intervention and Growth: The Case of Korea

This paper attempts to determine whether conditions amenable to successful selective interventions to capture cross-industry externalities are likely to be fulfilled in practice. Three criteria are proposed for good candidates for industrial promotion: that they have strong inter-industry links to the rest of the economy, that they lead the rest of the economy in a causal sense, and that they be characterized by a high share of industry-specific innovations in output growth. According to these criteria, likely candidates for successful intervention are identified in the Korean data. It is found that, with one exception, none of the sectors promoted by the heavy and chemical industry (HCI) policy fulfills all three criteria.

  • Authors: Marcus Noland & Howard Pack
  • Year: 2004
  • Organisation: Institute of International Economics
  • Publisher: Institute for International Economics
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