Korea's extremely rapid economic growth, averaging almost 9% a year since 1980, has also spurred growth in the transportation sector with freight and passenger traffic increasing rapidly. To respond, Korea has developed a multi-modal transport network within the confines imposed by the country's mountainous terrain. Until recently, the major challenge in transport was building infrastructure to facilitate development while controlling it either through direct ownership and operation by Government agencies or by regulatory controls on private operators. The experience of the last few years reveals a need for reassessment. Pressure still exists to expand infrastructure, but increasingly Korea will need to balance supply and demand, as well as to facilitate the flow of capital for social overhead investments. The transport problem is not one of underutilization or one of poor performance in terms of service quality. Korea's challenge is to increase reliance on market mechanisms to address the need for additional resource mobilization and improved management of demands across modes. The growth of Korean markets has brought a proliferation of products, services, freight movements and travel, which means that centralized controls needed to be scaled back and concentrated on fewer strategic choices. As a result, authorities moved to decentralize many Government decisions as well as allow transport users to play a greater role in influencing what facilities and services are provided and who is to pay for them. Korea is already taking steps in these directions by corporatizing former Government departments and agencies and expanding private participation. The report builds on this momentum, offers suggestions about policy directions and discusses how added transportation challenges can be met. In sum, Korea must find ways to finance needed infrastructure investments and to identify measures that can improve performance and use of existing transport capacity. The study's objectives are: 1) to review the state of transport in Korea and its future direction in terms of performance, priorities and balancing of modal investments and institutional policies, 2) to assess the near-term financial resource requirements and constraints, 3) to examine options for pricing and regulatory reform in the various transport markets to improve performance, and 4) to identify innovative public and private financing options.