Trade and Development: Lessons from Korea

Korea has achieved remarkable economic development since the 1960s, rising within a single generation from one of the poorest countries in the world to one with an affluent economy supported by world-class industries and large production capacities. This successful development of Korea has been facilitated by a rapid expansion of trade, and exports have been an engine for economic development. The Korean government adopted extensive export promotion policies to promote exports and facilitate export-led economic development for decades. Many of these policies, which led to the unprecedented economic success in Korea, would be inconsistent with the current rules of international trade law under the auspices of the World Trade Organization (WTO) that bind 163 member states around the world. This article examines the export promotion policies adopted successfully by Korea from the 1960s to the 1980s and determines whether they are consistent with current trade rules. Based on this examination, this article assesses the adequacy of the policy space granted by the WTO regime and calls for regulatory reform of the WTO rules, particularly subsidy rules, reflecting on lessons from the successful development case of Korea.