World Rank

Steel making (Posco):

Shipbuilding (Hyundai Heavy Industry):

Car manufacturing (Hyundai Motor):

Consumer Electronics (Samsung, LG):

Semiconductor (Samsung, Hynix):

6th

1st

5th

1st

1st

Industrial structure and employment structure in 1962

* based on GDP

Typical underdeveloped agricultural economy

43%

12%

45%

Industry Structure

Primary

Secondary

Tertiary 63%9%

28%

Employment Structure

Primary

Secondary

Tertiary

Agricultural development orIndustrial development ?

rapid absorption of unemployment(absolute poverty)

long-term sustainability

Industrialization

Disadvantages:

lack of domestic capitalnarrow domestic marketscarcity of resources

Advantages:

abundant supply of labor(massive unemployment)highly educated manpower(high rate of college enrollment)

Import substitution industrialization orExport-led industrialization ?

domestic market or global market ?

capital intensive or labor intensive ?

Export-led industrialization

Aspect of comparative advantage Low wage Abundant labor supply

Aspect of foreign market environment Trend of free trade under GATT Low competition in global market

Inevitable aspects due to structural issues Absorption of massive unemployment to ease absolute

poverty Secure foreign exchange for purchasing raw materials

needed for development

Providing incentives Tax benefits Funding at low interest rate Undervalued exchange rate

Securing technical labor force and technologyPromotion of vocational trainingInstitutionalization of science and technology development

Administrative supportPresidential Meeting for Export Promotion(monthly)Establishment of KOTRACreation of TRADE SPECIAL ACCOUNT FUND

Industrial structure

43%

12%

45%

1962

Primary

Secondary

Tertiary

27%

22%

51%

1972

Primary

Secondary

Tertiary

Wage increase loss of competitive edge

Economic recession due to the 1st Oil Shock

Limits for sustainable growth

Transformation of Industrialization Strategy

Labor intensive light industries Capital intensive heavy and chemical industries

The Presidents annual State of National Message in1973

Announcement of export target of $10 billion ($2 billion in 1973): advanced structure of trade

Achievement of income of $1,000($400 in 1973): realization of advanced industrial structure for sustainable growth

Improvement of independent national defense capability

Designation of strategic industries (petrochemical, steel, shipbuilding, machinery, electronics, nonferrous metals)

Creation of industrial estate(Ulsan, Pohang, Geoje, Changwon, Gumi, Onsan)

Construction of infrastructure(road, railroad, harbor, electricity, water)

Industrial structure

27%

22%

51%

1972

Primary

Secondary

Tertiary

3%

30%

67%

2011

Primary

Secondary

Tertiary

Trade structure

60%

40%

1972

LightIndustry

HeavyIndustry

3%

97%

2011

LightIndustry

HeavyIndustry

Securing labor forces needed for development

Improvement of education & technical training

Improvement of infrastructure

Active role of Government