The objective of this study is to identify and analyze the issues and problems currently plaguing South Korea’s steel industry so as to provide means of facing and overcoming them towards greater future prospects for the industry.
Korea’s steel industry has been growing steadily, and is likely to continue its growth in the future as well. Nevertheless, the country’s industrial structure lags far behind those of advanced economies in terms of efficiency and productivity, with much of the existing facilities still small-scale and pre-modern. The Korean steel industry also relies heavily on imports for the majority of its required raw materials. These difficulties complicate the future prospects of the industry and require in-depth analysis.
Scholars of economic development mostly accept the theory that developing countries with little capital and much labor should invest in labor-intensive industries rather than capital-intensive ones, likewise prioritizing the use of labor-intensive production techniques over capital-intensive ones.
Korea lacks not only capital, but also natural resources, and is consequently forced to rely on imports for the vast majority of the resources it needs. This, in turn, increases Korea’s need for foreign currencies, with which it can purchase imported raw materials and capital goods.
Korea should therefore follow an industrial strategy that prioritizes the production of heavy and chemical goods, which can both substitute for imports and satisfy Korea’s need to export. The strategy for the Korean steel industry, under the Fourth and Fifth Economic Plans, should aim at maintaining the balance between Korea’s import substitution policy and export-encouraging policy.
In order to determine how a nation’s steel industry should evolve, one should first divide the steel industry between steel material manufacturing and steel goods manufacturing, and consider each. The former is an equipment industry that requires much capital and highly advanced technology. It is also a heavy fuel-consuming industry. The latter, on the other hand, requires much skilled labor and knowledge. In other words, steel material manufacturing and steel goods manufacturing differ sharply in terms of the principal production factors they require.
This study is divided into three chapters. Chapter 1 provides an overview of the growth and evolution of the steel industry in Korea. Chapter 2 analyzes the demand for steel manufacturing, and forecasts likely changes in Korea’s steel market. Chapter 3 predicts shifts in steel industries worldwide, discusses future growth strategies for Korea’s steel industry, and sums up findings and conclusions.
From this study we may conclude that the unbalanced growth strategy that Korea’s steel industry pursued under the Third Economic Plan actually lived up to its ideal. Given the Korean government’s ambition to consolidate the steel industry as a key national industry in Korea and expand the production bases for heavy and chemical manufacturing industries in general, the domestic demand for steel materials will grow significantly, both in terms of quantity and quality, under the Fourth and Fifth Economic Plans. The basic Korean steel industry policy therefore should aim at mobilizing both background and forward linkage effects, while also striking and maintaining a balance between its import-substitution and export-encouraging policies.
한국철강공업의 성장(Issues and prospects of Korea’s steel industry)
|Series Title; No||연구총서|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Manufacturing|
|Holding||KDI; KDI School|