tic companies that fixed prices and dominated their markets (Amsden, 1989). Complete 'import substitution' was achieved by 1957 through a government ban on textile imports. Efficiency was high, as was labor productivity, approximately doubling in the decade. Nevertheless, exports were minimal, as the aim of government policy was to satisfy domestic demand first, and then aim for overseas markets. Consequently, foreign trade in general was minimal for the decade, with attention paid mostly to domestic reconstruction and immediate consumer needs.
By the start of the 1960s, the textile industry, which still dominated the manufacturing sector in South Korea as it had since the days of Japanese colonialization, was overexpanded because of the subsidized loans and lack of exports (Amsden, 1989). The latter occurred because of a number of reasons. First, its plant and equipment were old, much of it of pre-World War II Japanese origin. In addition, marketing channels, particularly in the U.S., were n
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