The International Monetary Fund (IMF) has pointed to South Korea's rapid industrialization in the 1970s as a model for fostering future industries, recommending that other countries adopt similar "strategic support" policies to drive economic growth.
In its report titled “Industrialization and Big Push: Theory and Evidence from Korea,” released on Wednesday, the IMF analyzed the role of government-backed policies in the growth of South Korea's heavy industry. The report highlights how South Korea implemented targeted measures, including one-time subsidies to encourage the adoption of foreign technologies, as well as tax incentives and financial support for research and development (R&D) and production process improvements. According to the IMF, these policies helped South Korean firms rapidly adopt advanced technologies, leading to significant spillover effects on the local economy. “Korea's shift in industrial structure toward heavy industry has since become the foundation for the country's long-term growth,” the report noted.
The IMF also recommended that other nations draw inspiration from South Korea’s approach by developing policies aimed at fostering future growth industries. These could include enhanced tax incentives, increased R&D investment, and initiatives to support technology development. “The IMF’s advice can be applied to Korea’s current situation," Kim Sang-bong, an economics professor at Hansung University, commented on the report. "Tax and financial support should be actively provided for technology development and human resource training in new industries to secure future growth engines.”
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