Selective Intervention and Growth: The Case of Korea

For a "pick the winners" industrial policy to be successful, governments must be able to identify opportunities for welfare-enhancing intervention where the market does not behave optimally, formulate and implement appropriate policies, and prevent political market failures from leading the policies astray. South Korea's policies of the 1970s are often cited in this context. But in the South Korean case, Noland finds that, based on application of several models that posit criteria for making successful industrial policy, very few of the sectors South Korea picked for promotion satisfied the criteria.