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This chapter examines how South Korea’s steel industry caught up with the Japanese steel industry technologically by focusing on the relationship between the phases of innovation, the speed of technological catch-up, and institutions. Two large waves of innovation occurred in the industry after World War II. Korean steel companies succeeded in accelerating the catching-up process by concentrating their investment at specific phases of each innovation cycle. In the first wave of innovation, South Korea concentrated its investment on the construction of integrated steelworks by establishing the state-owned monopoly firm, POSCO. In the second wave, the market entry of Hyundai Motor Group through vertical integration and POSCO’s countermeasure allowed for developing high-quality steel sheets, which further pushed forward the catching-up.
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- The Catch-Up Process in the Korean Steel Industry
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