This paper examines the transformation of the Korean development model since the 1960s. The statedirected
capitalism that characterized the close liaison between government and business successfully
transformed Korea into an industrial powerhouse in the 1970s. Under the strong leadership of Park
Chung Hee, the Korean government picked industrial winners and promoted them with cheap capital
and protection to boost industrial productions and exports. This guided capitalism was very successful,
but the Korean government began to abandon the ideology and moved toward liberalism gradually since
1980s. Under the Chun Doo Hwan’s administration, the active role of the state in the economy was
reduced, allowing more freedom in the market. Then the government began to emphasize liberalizing
the economy for foreign goods, capital, and free operation of the market by minimizing government
control. After the 1997 financial crisis, promoting foreign direct investment into the country and signing
FTAs became important growth strategies for the Korean economy. It is believed that the neoliberalism
will continue to override the nation’s economic direction for welfare of the country.