The long economic cycle and the industrial upgrading of South Korea

The world economic boom and trade expansion during the postwar Great Boom helped the industrialization of South Korea through exports of manufactured goods. During the following Great Slowdown, South Korea benefited from the industrial dislocation caused by the rising wages and the falling rate of profits in the advanced capitalist countries.;South Korea took advantage of foreign direct investment and trade within the Asia-Pacific economic integration reinforced by the Japanese multilayered subcontracting system. The main force in making foreign direct investment helpful for South Korea's industrial upgrading has been its export-oriented development strategy. However, the South Korean government's excessive controlling and limiting of incoming foreign direct investment delayed industrial upgrading.;South Korea's sudden upgrading from light to heavy industries that did not conform to its comparative advantage led to huge balance-of-payment deficits. The creation of higher value added in many industries requires a strengthened role of small- and medium-sized enterprises.