Abstract

This paper aims to examine the policy and institutional implications of “policy-augmented human capital” on Korea’s industrial revolution and rapid economic development. The important factor that drives economic development is a function of the spirit of development and the capacity of “policy-augmented human capital.” Policy-augmented human capital refers to the ability of competent leaders and bureaucrats to craft economic development plans and concrete measures. The multiplied combination of this human capital with effective policies leads to rapid economic development by both awakening dormant development capabilities and creating an environment that enables the unleashing of a country’s economic potential. In the process of Korea’s rapid economic development, the policy-augmented human capital played a key role in determining the specialization of output, the nature and direction of trade, and the pace of economic growth. In addition, this unique human capital contributed to the size and composition of the ‘industrial portfolio’ which helps to identify and promote industries that can achieve future comparative advantages and economies of scale.

Key Words: Korean Industrial Revolution, Hoffmann’s ratio, Policy-augmented human capital, Developmental spirit, Pyramid-type catch-up model, Industrial portfolio