Industrial Policies and Outcomes: A Comparison of Pre-liberalized Korean and Turkish Economies

Abstract

Since the 1960s Korea and Turkey have been among the fastest growing economies globally with a transformation of their economic structures from an agrarian into an industrial one. However, design and implementation of their industrial polices have been different, leading to different industrialization paths and end points. This paper reviews and contrasts the industrial policies in the two countries on a comparative basis during their periods of rapid industrialization that precede economic and financial liberalization (1960–80 for Turkey and 1962–97 for Korea). Korean industrial policies were more focused; targeting specific industries and complementing this with manpower and technology policies. While import substitution has been prevalent in both countries, Korea has simultaneously emphasized export orientation and Turkey has not. Macroeconomic management was more prudent in Korea than in Turkey. Repressive financial policy together with directed credits were common in both, as were tax incentives favouring industrial investments.