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Development Overview

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Overview of Korea’s development experience

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Development Overview
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Public Administration

Budget 2

Promoting Economic Development (1961 to 1980)

The budget guidelines, administrative policy speeches on annual budgets, and written proposals for government budgets from 1961 to 1980 reveal the main objectives of budgets as promoting economic development, strengthening military power, promoting exports, stabilizing people’s livelihoods, and fostering science and education. In particular, the main concerns of budget decisions between the late 1960s and 1980 were expanding social overhead capital, promoting exports, revitalizing rural economies through New Village Projects, and fostering heavy and chemical industries (HCIs).

The military government that came to power in 1961 stressed economic development as the top-priority issue on the policy agenda, and launched a series of five-year plans to that end. The biggest obstacle to Korea’s economic development at the time was the chronic shortage of capital. Greater capital and investments were needed to speed up economic growth. In its decades-long drive to secure capital, the Korean government continuously reformed interest rates and taxes (as part of accelerating exports), and fostered social overhead capital and basic industries (until the early 1980s).

The export-oriented policy centered on light industries began to show its limits in the early 1970s amid the rise in wages and growing competition with other developing countries. The Korean government thus decided to enhance the industrial structure of the nation’s economy by turning to a protective industrial policy for fostering HCIs. Rapid industrialization, however, generated undesirable byproducts, including the growing income disparity between cities and rural towns. The government sought to mitigate this urban-rural gap by launching New Village Projects, beginning in the late 1960s, which were aimed at boosting rural economies.
 
<Table 3∙2> Central Objectives of Government Budgets (1961-1980)
 

1961 Maintaining sound finance and rationalizing background institutions, promoting the economic stability and growth of rural communities, fostering SMBs, promoting rural development projects, expanding the social welfare system, strengthening education, and reforming diplomacy and defense
1962 Implementing the First Five-Year Plan for Economic Development, reinforcing defense capacity, ensuring social order, and reforming public information and relations activities
1963 Implementing the five-year plan, reinforcing diplomatic and defense capacity, improving people’s livelihoods and strengthening social order, expanding the social security net, and promoting technical training and education
1964 Maintaining sound finance, implementing the five-year plan, maintaining diplomatic/defense capacity and internal security, introducing local administration, reforming education, fostering science and technology, establishing a population policy, improving social welfare and healthcare, and improving the administrative efficiency
1965 Maintaining sound finance, implementing the five-year plan, reinforcing national security preparedness, reforming education, improving social welfare and healthcare, introducing local finance, and rationalizing administration
1966 Implementing the five-year plan, reinforcing monetary/currency/price stability and the financial independence rate, building infrastructure for greater agricultural output and industrialization, improving the international balance of payments, promoting job creation through public investments and projects, improving the working and living conditions of government employees, maintaining sound finance, increasing capital for financial independence, improving agricultural output and the livelihood of farmers and fishermen, promoting exports and SMBs, establishing infrastructure for industrialization and increasing social overhead capital, reinforcing national security preparedness, introducing policies on unemployment and social security, and reforming education
1967 Implementing the second five-year plan, ensuring fiscal viability, increasing agricultural output and the income of farmers and fishermen, promoting exports and SMBs, developing national territories and increasing social overhead capital, fostering industrialization/science and technology, reinforcing national security preparedness, implementing policies on unemployment and social security, reforming education and culture, reforming administration

 
 

1968 Implementing the second five-year plan, preparing the basis for fast economic growth, modernizing agricultural/marine production and increasing food output, promoting exports and SMBs, promoting industrialization and increasing social overhead capital, reinforcing national security preparedness, fostering the sciences/technology/education, increasing employment and improving social welfare, reforming administration
1969 Sustaining economic growth for the long term, gathering greater capital for investment and increasing savings, stabilizing prices, promoting exports and improving the trade balance, increasing rural income, reinforcing defense capacity, and rebuilding the economy
1970 Making exports the focus of all economic and related policies, revitalizing the rural economy, encouraging active investments for growth, fostering key industries, stabilizing prices
1971 Increasing exports, reinforcing the security system, fostering education and culture, developing new sciences and technology, creating a healthier society, boosting investments in key industries, increasing food output, and raising rural income
1972 Focusing on developing the rural economy, increasing exports and improving the trade balance, expanding infrastructure for HCIs and fostering SMBs, reinforcing the security system, developing R&D infrastructure and fostering human resources, improving living conditions for people, increasing social overhead capital and modernizing the distribution structure
1973 Maintaining a sound fiscal policy, reinforcing firearms and security preparedness, promoting the New Village Movement and rural development, increasing exports and improving the trade balance, developing infrastructure for HCIs and fostering SMBs, ensuring a better balance in social overhead capital development and modernizing the distribution structure, promoting technical education and spreading a nationwide culture of learning, and improving living conditions for people
1974 Maintaining a sound fiscal policy, promoting the New Village Movement and rural development, fostering HCIs, increasing exports and promoting tourism, fostering technological and scientific innovations for living, ensuring a better balance in social overhead capital development, reinforcing security preparedness, improving social welfare, preserving traditional culture and strengthening the national spirit
1975 Promoting the New Village Movement and rural development, supporting HCIs and construction, developing energy resources, ensuring a better balance in social overhead capital development, promoting human resources/science and technology, improving social welfare
1976 Reinforcing security preparedness and international relations, reforming bureaucratic culture and improving the treatment of public officials, enhancing employment security and social welfare, minimizing the expansion of administrative organizations and reducing general costs, promoting rural development and the New Village Movement for greater food self-sufficiency, fostering HCIs and construction, developing and diversifying energy resources, ensuring a better balance in social overhead capital development, and increasing support for SMBs and exporting industries
1977 Reinforcing national security, promoting social and economic development, and rationalizing government spending
1978 Fortifying national defense capacity and international relations, consolidating economic development and self-sufficiency, promoting social development and preservation of traditional culture, and rationalizing government spending
1979 Ensuring a stable fiscal basis, ensuring balanced improvement in living conditions, eliminating obstacles to output and industrialization, and improving the efficiency of government spending
1980 Balancing the current account to contain rapid inflation growth rate, drafting a contractionary budget to inhibit the growth of government spending, increasing support for the stabilization of living conditions, augmenting support for industries struggling to increase output, eliminating obstacles to growth, supporting mechanical engineering, and making better use of the spending plan


 Source: Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.