DISCUSSION / JONGSOOPARIC Government Intervention and Industrial Restructuring: The Case of South Korea In his book. Public Intervention and Industrial Restructuring in China, India and Republic of Korea, especially in Chapter 3, A.K. Bagchi reviews government intervention and industrial reconstruction in South Korea. Although Bagchi may be right, I am not satisfied with his view on two counts. First, I find his approach to the study of the historical background to government intervention flawed because he fails to examine the real aspects of Japanese colonialism and foreign aid from the US. In Bagchi's words: Under the Japanese colonialism, .... most of the employees in (such) industries were Koreans. Furthermore, many Koreans were more or less forcibly conscripted by the Japanese to work in Japan. Thus Koreans in Japanese-controlled factories in Korea and Japan learned many necessary industrial skills.. . •1 But almost all the Korean labourers employed by the Japanese were from the rural areas and were used for hard physical labour. They were alienated from the production process in a way that limited the acquisition of advanced technology. The Japanese intention was just to extract surplus value from the physical potentiality of Korean labourers. In other words, Japanese employer's segregated the heads from the hands of Korean labourers. Bagchi also beautifies the role of military aid and the military connection between Korea and the US. He seems to have overlooked the unproductive aspects of US foreign aid to Korea. Some questions can be raised here; why did the U.S. continue to increase military aid? Why did the nature of US aid change over the period from the Korean War to the 1960s? Why did the Park regime turn to Japlan in the 1960s? Secondly, Bagchi seems unaware of the fact that the industrialization process in Korea was at the expense of agricultural sector. In the beginning of 1960s, there were two policy objectives for important industrialization in Korea, viz., low wages and low prices of rice, the main food of Korea. And the US programme of PL 480 aid contributed to imperative government policy. At that time, over 60 percent of farmers, * £)ept. of Economics, Gyeongsang National University, Kyung Nam, South Korea. Social Scientist, Vol. 18, No. 5, May 1990