Economic Policy and Developmental Regulation in South Korea

Abstract

This paper analyses the importance of a developmental regulation system in the economic policy path of Korea since the 1960s. This system has three dimensions: proscriptive (i.e. determining the type of activity or the price of a commodity and creating state-owned companies), prescriptive (i.e. policy recommendations) and liberalising (i.e. setting up some regulations to protect competition and prevent monopolies). The main emphasis was proscriptive and prescriptive during the first phase (1962–1993) and moved to liberalisation during the second phase (1993–2003). The third phase (2003–present) has been focused on a balanced combination of all three dimensions. This paper shows how the Korean state has implemented a system of developmental regulation to strengthen public and private enterprises, to promote direct and indirect management of these firms, and to move towards long-term economic policy effectiveness in order to serve national industrialisation and sustainable growth.