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The recent financial crisis has raised significant questions about liberal free-markets as a mechanism for generating economic growth compared to those economies where there is greater state intervention. This article develops a theoretical framework for economic development that can explain historical changes in both industrial policy and economic growth where the state actively intervenes to direct economic development. The article then applies this framework to the case of South Korea where there is a strong interventionist government. The results show that economic development can be explained within a sequential framework of policy intervention and that rather than being a static decision, successful state intervention is a dynamic and evolutionary process.
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