Sectoral targeting: Auto manufacture in Korea and Taiwan

Policies to establish auto assembly were premature in both Taiwan and Korea: domestic demand in neither country was of an adequate size to support viable local production before the 1980s. Skill acquisition also lagged behind. Korea overcame the domestic market scale constraint in the mid‐1980s by exploiting a fortuitous export opportunity before boosting domestic demand while simultaneously liberalizing auto imports. Taiwan shadowed Korean development with less consistency, less determination and less success. But the long‐term benefits of entry are unclear: maturation rates have been too long while the diffusion of lean technology has shrunk the scope for exporting on a scale similar to Japan at a similar stage in its product cycle.