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South Korea Industrial Policies
The major issue facing the Park regime in the early 1960s was
the grinding poverty of the nation and the need for economic
policies to overcome this poverty. A critical problem was raising
funds to foster needed industrial development. Domestic savings
were very low, and there was little available domestic capital.
This obstacle was overcome by introducing foreign loans and
inaugurating attractive domestic interest rates that enticed
local capital into production. Of South Korea, Taiwan, Hong Kong,
and Singapore, only South Korea financed its economic development
with a dramatic build-up of foreign debt, debt that totaled
US$46.8 billion in 1985, making it the fourth largest Third World
debtor. Foreign corporate investments were primarily of Japanese
origin.
As noted by consultant David I. Steinberg, Seoul administered
a series of economic development plans. The government mobilized
domestic capital by encouraging savings, determined what kinds of
plants could be constructed with these funds, and reviewed the
potential of the products for export. In this sense, the will of
the government to undertake economic development played a crucial
role; the role of the government, however, was not limited to
such measures as mobilizing capital and allocating investments.
Steinberg also pointed out that Park's government
restructured industries, such as defense and construction,
sometimes to stimulate competition and other times to reduce or
eliminate it. The Economic Planning Board established export
targets that, if met, yielded additional government-subsidized
credit and further access to the growing domestic market. Failure
to meet such targets led to Seoul's withdrawal of credit.
Data as of June 1990
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