Having successfully weathered the structural problems of the 1979-81 period, Korea has begun far-sighted programs of reform which it hopes will facilitate the industrial transition needed to push it towards the ranks of the industrialized countries. The economy is thus in a period of rapid change, and the conduct of public policy towards key sectors is undergoing a similar transformation. This Economic Report therefore serves a number of purposes: first, it provides a review of recent economic developments and the principal issues influencing Korea's achievement of its Sixth Five-Year Plan goals. Second, it addresses in a broad fashion the conduct of industrial policy, and third, it provides a selective yet in-depth look at certain key topics related to macroeconomic and industrial policy. With respect to industrial policy, the Korean incentive regime is assessed in light of the interventionist posture of Government in the 1970s and the ensuing reform movement, the process of trade and financial liberalization is analyzed, and Korea's industrial structure is discussed in some detail. Finally, the formulation of future industrial policy is addressed and issues are identified with respect to declining industries, conglomerate policy, and emerging industries.