Economic development and rural industry in South Korea and Taiwan

This paper attempts to provide insights into the dynamics of rural industry by examining its historical performance in South Korea and Taiwan. The evidence suggests that with economic development, (i) industrial activity has shifted from the rural to the urban areas, but the shift has been much more dramatic in Korea than in Taiwan, and (ii) rural industry in the forms of secondary activity and non-factory production has declined while medium- and large-sized rural factories have become more important. The paper then explores the reasons for these changes and for the differences in rural industrial growth in the two countries.