Before the 1997 crisis, Korean firms destroyed shareholder value and chronically produced nonperforming loans for financial institutions. In particular, chaebol‐affiliated and unionized firms did so, with lower profitability among the financially unsound firms. Chaebol and unions thus...

This paper first show that South Korea's industrial targeting in the name of heavy and chemical industry drive in the 1970s managed to produce industries with international competitiveness over time. It then performs ex post cost-benefit analysis to show that industrial targeting in Korea has...