Figure 6) $ ^{18} $ . In Korea, the government intended to rapidly self-develop heavy industries, with a minimum of help from foreign capital. However, since Korean organized financial markets were so underdeveloped that it could not raise enough investable funds through the domestic organized financial markets, the government was forced to allocate financial resources to the strategically selected target industries using various forms of policy based credit lines. Such control over the financial system by the government created a serious financial depression and a capital flight to the unorganized financial market. This resulting financial depression further deteriorated the domestic financial mobilization through the official financial markets, which in turn lead to the strengthening of financial control by the government.

In Taiwan, the government adopted a development strategy which depended less on heavy industries with large scale economy. In the development of the Taiwanese economy in the 1970's and 1980's, light and less capital intensive industries, which mainly consisted of small and medium sized firms, played the major role rather than heavy industries, which consisted of large sized companies relied heavily on finance through the unorganized market, where funds were allocated, based on the comparative advantage of investment projects, through market mechanisms. Financial development in Taiwan was deep enough to finance the funds demanded by these light industries. Thus, in Taiwan, policy based lending by the government was less important for its economic development than in Korea.

In the 1970's, ASEAN countries achieved their first importsubstituting industrialization which centered on the development of textile industries $ ^{19} $ . While the risk of investing funds in light industries with matured technology, like the textile industry, is recognized to be relatively small, financial development in ASEAN countries was so low that the funds demanded for the first import substitution industrialization was not raised through the domestic financial market at the commercial base. Further, while various forms of policy based lending schemes were introduced to supplement the resource mobilization for industrialization in these countries, those policy schemes played only a marginal role in the industrial policies. Foreign capital which was imported in the form of official funds was used mainly for financing public infrastructures. On the other hand, a significant fraction of foreign funds for industrialization in the private sector, was financed in the form of long-term borrowing with public guarantees or direct investment.

Recently, ASEAN countries have been pursuing financial liberalization policies, which aim at promoting financial resource mobilization and improving allocative efficiency of financial system through market mechanism $ ^{20} $ . Liberalization of financial market, however, may slow down the speed of industrialization in developing countries, because developing countries' financial markets tend to avoid high risk accompanied by fixed investment in the newly introduced industries. In order to promote further industrialization, therefore, it becomes essentially important to increase the import of foreign capital to cover the shortage of investable funds in those newly introduced industries. Relaxation of control over financial markets as well as direct foreign investment is intended to help introduce more capital from abroad under a policy of liberalization of financial markets. While these policies help promote industrialization, under these new circumstances, the governments' control over foreign capital is inevitably lowered. Thus, the change in financial policy reflects the change in the industrialization strategy.