South Korea is arguably the premier development success story of the last half century. Rapid growth coincided with extensive state interventions in the economy, and considerable controversy exists as to how much this performance should be credited to the country's state-led development strategy and to what extent the lessons from that experience might be portable or applied elsewhere. The salience of this issue has grown as South Korea has become a more important provider of development assistance and advice. Now the country faces challenges in maintaining its superior economic performance, notably interrelated problems revolving around the country's demographics, long-term fiscal position, and lagging productivity in the services sector domestically, and a taxing environment externally. Finally, the country confronts scenarios involving potential instability, collapse, and/or absorption of its neighbor, North Korea.