3.2 Characteristics of government - led economic management
It is generally accepted that the Korean government has played decisive role in the nation 's successful economic development during the last thirty years . However , one should be aware that it is very difficult to define the concept of government - led economic management precisely . For the purposes of our analysis , we suggest that government- led economic management regime is an economic policy regime In which the government determines major endogenous economic variables within the realm of private economic agents by imposing its will on the market as an outsider . Under such a regime , the government predetermines the outcome that would otherwise be determined endogenously through market competition processes . A government - led economic management such as that defined above exhibits the following characteristics . The government macroeconomic management generally relies on direct regulation such a rationing over open - market operations for money. supply control and on wage - price controls over aggregate demand management for anti inflationary policy. In addition the government , microeconomic policy takes the form of picking the winners before the market process works itself out and provides the means ( i.e , financial support ) necessary for the chosen to win . In order for this interventionistic economic management to be successful without causing severe distortions in resource allocation , the government must have informational superiority over the private market participants , as well as complete set of solutions ready to be put into action to tackle difficult policy issues . Unfortunately , the requirements that must be fulfilled so that govern ment intervention can be of benefit are difficult to satisfy – particularly as the economy grows in size and complexity . Since a complete recipe for solutions to various economic problems cannot be readily available, the degree of government intervention should be reduced in order to benefit the economy , Korea seems to have entered this stage of economic development already and is in need of active initiatives on the part of the private sector in order to secure further sustained economic development.