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South Korea Revenues and Expenditures
The central government budget has generally expanded, both in
real terms and as a proportion of real GNP, since the end of the
Korean War, stabilizing at between 20 and 21 percent of GNP
during most of the 1980s. Government spending in South Korea has
been less than that for most countries in the world (excepting
the other rapidly growing Asian economies of Japan, Taiwan, and
Singapore). The share of government spending devoted to
investment and other capital formation activities increased
steadily through the periods of the first and second five-year
plans (1962-1971), peaking at more than 41 percent of the budget
in 1969. Since 1971 investment expenditures have remained at less
than 30 percent of the budget, while the share of the budget
occupied by direct government consumption and transfer payments
has continued to increase, averaging more than 70 percent during
the 1980s.
During the 1980s, the largest areas of government expenditure
were economic services (including infrastructural projects and
research and development), national defense, and education.
Economic expenditures averaged several percentage points higher
than defense expenditures, which remained stable at about 22 to
23 percent of the budget (about 6 percent of GNP) during the
decade. In 1990 the government was studying plans to lower
defense expenditures to 5 percent of GNP. Some observers noted a
trend toward a slight increase in the portion of the budget
devoted to social spending during the 1980s. In 1987 expenditures
for social services--including health, housing, and welfare--were
16.4 percent of the budget, up from 13.9 percent in 1980, and
slightly higher than 1987 government outlays for education (see
table 3, Appendix).
The government revenue structure was virtually totally
dependent on taxes (see
table 4, Appendix). By the early 1980s,
nearly two-thirds of tax money was collected in the form of
indirect taxes. Revenues collected by the central government in
1987 rose to 19,270.3 billion won (for value of the
won--see Glossary),
up from 13.197.5 billion won in 1984.
Data as of June 1990
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