Bureaucrats and the Korean export miracle

What makes an industrial policy successful? This thesis finds that the effect of an industrial policy changes tremendously with the implementing bureaucrat. I study South Korean bureaucrats who promote exports on appointments to 87 countries between 1965, when South Korea was one of the world’s poorest countries, and 2001. I exploit the three-yearly rotation of bureaucrats between countries to show that individual bureaucrats matter greatly in boosting exports. Increasing bureaucrat ability by one standard deviation is associated with a 37% increase in exports. This effect is comparable to that of opening an office, implying that this industrial policy has no effect when implemented by a bureaucrat one standard deviation below average. I exploit differential import demand growth to study a mechanism via which better bureaucrats increase exports: transmitting information about market conditions. Under better bureaucrats South Korean exports increase more with a product’s import demand. Finally, I investigate whether experience can bridge the gaps between bureaucrats. I isolate quasi-random variation in experience, exploiting a product’s import demand growth during the bureaucrat’s first appointment. In subsequent appointments of this bureaucrat exports increase in products with greater bureaucrat experience. This highlights that organizational capacity grows endogenously, implying a novel channel for path dependence in organizational capacity.