Heavy-and-chemical(HCI) industrialization in developing economy aims to build up industrial basis and acquire HCI competence through learning by emulation. Market imposes heavy loss to discourage such attempts, and firms follow market signal, acknowledging HCI is too early for them to try. Park Cung-Hee took full control of financial resources, local and foreign, and launched HCI implementing foreign debt guarantee, policy loans at favored interest rates, and tax favors on HCI projects, and let state-owned firms invest in steel and petrochemicals to initiate HCI. Firms, however, had been
borrowing operating capital from curb markets at monthly rate 3.84% to ruin their financial structures so that they may not to afford any investment, and soaring popularity of minority leader who were against Park’s HCI policy raised uncertainty on consistency of policy for firms to postpone investment. Stalling investments means localized steel and petrochemicals may not find market to
drift toward bankruptcy only to verify the “too-early” view was right. Park executed three consecutive drastic measures “8․3 emergency decree-October revitalization-Declaration for HCI” by two month lag each. Anti-market 8․3 decree nullified all contracts and forced to lower interest rates to monthly 1.35% and extend maturity, anti-democratic Revitalization made Park a permanent president to guarantee policy consistency, and declaration presented a set of unprecedented favorable subsidies. These measures succeeded in inducing massive HCI investments to build up HCI basis, and Koreans firms tried their best to acquire competence while state subsidies were still on, since not only the projects but also their entire business would go bankrupt otherwise. State subsidies were not market conforming but only temporary until Korean firms became capable of working in HCI.