The purpose of this study is to provide a systematic analysis of the industrial support system in place in Korea, reviewing the nominal and real protection rates applying to different industries in Korea as of 1978, and comparing them to the estimates of 1968.
Between 1968 and 1978, the average legal tariff rate applying to all industries in Korea has dropped from 54.3 percent to 36.0 percent, while the level of import liberalization has risen from 57.6 percent to 61.3 percent. Despite this apparent progress of liberalization, the average nominal protection rate on all industries dropped minimally, from 14.0 percent to 12.7 percent, over the same period. The real protection rate even increased from nine percent to 20.4 percent.
When we begin to look into these industries one by one, greater variation begins to emerge. The real protection rate on the agriculture, fishery, and forestry rose from 17.9 percent in 1968 to 63.7 percent in 1978, due to the grain self-sufficiency policy. The real protection rate on mining and energy, on the other hand, declined from 3.5 percent to -36.5 percent due to the low coal price policy. Within the manufacturing sector, nominal and real protection rates have continued to decline with respect to building materials and intermediary goods, while they rose in relation to non-durable consumer goods. Overall, the protection rate gap between industries has grown significantly over the years, worsening inefficiency in resource allocation in general.
In the meantime, the nominal and real protection rates on machine and transportation equipment industries have decreased because the productivity and efficiency of these industries have improved profoundly over the last decade, thanks to the introduction of new technologies and the growing economies of scale.
This study divided Korea’s manufacturing sector into four categories according to trade type and found that, while the exporting industries and industries that have no import competition are given little protection, industries with import competition and industries with both export and import competition are given significant amounts of protection.
한국의 산업유인정책과 산업별 보호구조분석(Analysis of Korea’s industrial incentive policy and industrial protection structure)
|Series Title; No||연구보고서 / 제81-10권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < General|
|Holding||KDI; KDI School|