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South Korea Economic Plans
Economic programs were based on a series of five-year plans
that began in 1962. The First Five-Year Economic Development Plan
(1962-66) consisted of initial steps toward the building of a
self-sufficient industrial structure that was neither consumption
oriented nor overdependent on oil. Such areas as electrification,
fertilizers, oil refining, synthetic fibers, and cement were
emphasized. The Second Five-Year Economic Development Plan (1967-
71) stressed modernizing the industrial structure and rapidly
building import-substitution industries, including steel,
machinery, and chemical industries. The Third Five-Year Economic
Development Plan (1972-76) achieved rapid progress in building an
export-oriented structure by promoting heavy and chemical
industries. Industries receiving particular attention included
iron and steel, transport machinery, household electronics,
shipbuilding, and petrochemicals. The developers of heavy and
chemical industries sought to supply new industries with raw
materials and capital goods and to reduce or even eliminate
dependence on foreign capital. New (and critical) industries were
to be constructed in the southern part of the peninsula, far from
the border with North Korea, thus encouraging economic
development and industrialization outside the Seoul area and
providing new employment opportunities for residents of the less
developed areas.
The Fourth Five-Year Economic Development Plan (1977-81)
fostered the development of industries designed to compete
effectively in the world's industrial export markets. These major
strategic industries consisted of technology-intensive and
skilled labor-intensive industries such as machinery,
electronics, and shipbuilding. The plan stressed large heavy and
chemical industries, such as iron and steel, petrochemicals, and
nonferrous metal. As a result, heavy and chemical industries grew
by an impressive 51.8 percent in 1981; their exports increased to
45.3 percent of total output. These developments can be ascribed
to a favorable turn in the export performance of iron, steel, and
shipbuilding, which occurred because high-quality, low-cost
products could be produced in South Korea. By contrast, the heavy
and chemical industries of advanced countries slumped during the
late 1970s. In the machinery industries, investments were doubled
in electric power generation, integrated machinery, diesel
engines, and heavy construction equipment; the increase clearly
showed that the industries benefited from the government's
generous financial assistance program.
The late 1970s, however, witnessed worldwide recession,
rising fuel costs, and growing inflation. South Korea's
industrial structure became somewhat imbalanced, and the economy
suffered from acute inflation because of an overemphasis on
investment in heavy industry at a time when many potential
customers were not in a position to buy heavy industrial goods.
The Fifth Five-Year Economic and Social Development Plan
(1982-86) sought to shift the emphasis away from heavy and
chemical industries, to technology-intensive industries, such as
precision machinery, electronics (televisions, videocassette
recorders, and semiconductor-related products), and information.
More attention was to be devoted to building high-technology
products in greater demand on the world market.
The Sixth Five-Year Economic and Social Development Plan
(1987-91) to a large extent continued to emphasize the goals of
the previous plan. The government intended to accelerate import
liberalization and to remove various types of restrictions and
nontariff barriers on imports. These moves were designed to
mitigate adverse effects, such as monetary expansion and delays
in industrial structural adjustment, which can arise because of a
large surplus of funds. Seoul pledged to continue phasing out
direct assistance to specific industries and instead to expand
manpower training and research and development in all industries,
especially the small and medium-sized firms that had not received
much government attention previously. Seoul hoped to accelerate
the development of science and technology by raising the ratio of
research and development investment from 2.4 percent of the GNP
to over 3 percent by 1991.
The goal of the Seventh Five-Year Economic and Social
Development Plan (1992-96), formulated in 1989, was to develop
high-technology fields, such as microelectronics, new materials,
fine chemicals, bioengineering, optics, and aerospace. Government
and industry would work together to build high-technology
facilities in seven provincial cities to better balance the
geographic distribution of industry throughout South Korea.
Data as of June 1990
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