TY - BOOK ID - 135960696 TI - The Plant-Level View of an Industrial Policy : The Korean Heavy Industry Drive of 1973 AU - Kim, Minho. AU - Lee, Munseob. AU - Shin, Yongseok. AU - National Bureau of Economic Research. PY - 2021 PB - Cambridge, Mass. National Bureau of Economic Research DB - UniCat UR - https://www.unicat.be/uniCat?func=search&query=sysid:135960696 AB - Does industrial policy work? This is a subject of long-standing debates among economists and policymakers. Using newly digitized microdata, we evaluate the Korean government's policy that promoted heavy and chemical industries between 1973 and 1979 by cutting taxes and building new industrial complexes for them. We show that output, input use, and labor productivity of the targeted industries and regions grew significantly faster than those of non-targeted ones. While the plant-level total factor productivity also grew faster in targeted industries and regions, the misallocation of resources within them got significantly worse, especially among the entrants, so that the total factor productivity at the industry-region level did not increase relative to the non-targeted industries and regions. In addition, we provide new evidence on how industrial policy reshapes the economy: (i) The establishment size distribution of targeted industries and regions shifted to the right with thicker tails due to the entry of large establishments and (ii) the targeted industries became more important in the economy's input-output structure in the sense that their output multipliers increased significantly more. ER -