1. The Process of Growth of Korean Industry The Japanese invasion of Korea took place in the late nineteenth century, and from 1920 onwards the industry of Korea began to show rapid growth. In the 1930`s there was further acceleration in the development of Korean industry. Table 1 shows that the average annual growth rate was 10.4 percent for the 1920`s and 13.5 percent for the 1930`s. It should be noted at this point, however, that (1) Japanese capital was the main driving force behind the rapid growth, and that (2) such growth was the natural outcome of the contributions which Korean industry had made towards the maturing of Japanese capitalism in the first plase, every advantage being taken of it subsequently by matured Japanese capitalism in order to carry the war. When the Liberation from Japanese rule came in 1945, the decline of Korean industry was inevitable because of such factors as the deformed industrial structure left behind by the Japanese, the decline of wartime prosperity, and the division of the country into two parts. To make matters even worse, the three-year Korean War which broke out in 1950 destroyed 42 percent of the meager industrial facilities. Thereforce, after the War, Korean industry had to start again and establish a new foundation for its development. Thanks to foreign aid and the Governments` active rehanilitation policy, however, the industrial growth of Korea was relatively rapid after the truce of 1953. As shows in Table 5, the average annual growth rate of Korean industry in the period 1953-1966 was 13.4 percent, and the growth index reached 505.4 in 1966 as compared with 100 in 1960. The consumer goods industry grew 10.2 percent and the capital goods industry 17.9 percent on the yeqrly average. In the first period following the truce, the necessity of meeting the urgent demand for consumer goods was so great that the consumer goods industry grew remarkable; however, from about 1960, there was an sudden increase in the demand for capital goods; this was due to the putting into operation of the first five-year econimic development plan, and it naturally resulted in the notable growth of the capital goods industry. In connection with the rapid growth of Korean industry, we should pay attention to the following facts: (1) the industry has had to depend to a great extent on imports as well as on foreign aid; (2) the rapid industrial growth is not something unique to Korea but is rather a general phenomenon that can be observed either in the rehanilitation process of any country which has been devastated by war, or in the initial stages of the industrial characterized by violent fluctuations. 2. The Change and Weakness of the Industrial Structure To find out the reasons why the industrial structure of Korea has shouwn traces of deformity, it is necessary to look back to the period before the Liberation from Japanese rule in 1945. Until the 1920`s, industry in Korea had been developed with the emphasis on light industry with the backing of Japanese capital. In and after the 1930`s, during which Japanese capitalism reached maturity, heavy cheminal industry as part of the numitions industry was given priority, thus marking a new structural change in the industrial picture. As there is no statistical data for the period immediately after the Liberation and during the Korean War, we have to look at the years following the armistice of 1953. As mentioned previously, owing to the serious shortage of consumer goods after the war, the rehabilitation and development of the consumer goods industry was the first steps taken. As a result, however, the industry grew to excess shown in Table 9 and through the 1950`s, the consumer goods industry was about 80 and the capital goods industry about 20 in weight. With the execution of the first five-year plan, the development of the capital goods industry went ahead so well from the beginning of the 1960`s to the extent that, in 1964, the industrial structure