• International Area Studies Review
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• v.16 no.3
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• pp.27-51
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• 2012

Among the hypotheses regarding the internal process of industrialization, the debates about 'labor-surplus' model have been intensive. The basic idea of this neoclassical theory is that industrial development is brought about by the transfer of the unlimited cheap labor to the modern sector, and thus, under the labor-surplus situation labor-using technologies should be used for industrialization. Fei and Rannis attempted to confirm this theory by applying it to the Japanese economy. The purpose of this paper is to study whether the theory can be applied to Korean economic development. The neoclassical dualistic model which was designed by Kelly and Williamson was utilized. Simulating Korea's major economic variables for the period of 1965-1992 by using computable general equilibrium (CGE) model, we found that there are significant differentials between the simulation and the actual data. It suggests that Korea's economic development has not followed the neoclassical path -- creation of comparative advantage on the basis of market force.