This paper provides a critique of Korea’s industrial policy in the context of a new development economics paradigm. Korea’s industrial policy, broadly speaking, is categorized into two distinct phases roughly on both sides of the mid-1980s: periods classified as the “conglomeration” and “de-concentration” periods, respectively. Our discussions on industrial policy lead us to address the fundamental question of development economics, through which we argue that the development process is characterized by “discrimination” and “verticalism”. Furthermore, growth, we argue, naturally leads to some degree of conglomeration, which we acknowledge has been a source of some concern. However, Korea’s anti-concentration and egalitarian policies of the past 15 years or so, by placing too much emphasis on equitable balanced growth, has not only been ineffective in handling issues of conglomeration, but has also striped the country of its industrial competitiveness and growth potential. The competitive challenge to Korea is, to put it succinctly, to get out of the “egalitarian trap”. This paper provides the reasons why Korea has fallen into this “egalitarian trap”, and why we must get out of this trap if we are to restore the country’s industrial competitiveness.