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Overview of Korea’s development experience

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Development Overview
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Public Administration

Budget 3

Pursuing Fiscal Contraction (1981 to 1987)

The main objectives of the government budgets from 1981 to the late 1980s, as revealed in budget overviews, were expanding infrastructure (including housing, schools, roads, etc.), stabilizing prices and ensuring balanced growth, improving the natural environment, increasing the reliability of energy supplies, and reinforcing security and diplomatic capacity.
More specifically, policies were adopted to address and mitigate the negative side effects of heavy-handed government interference in certain sectors and markets in the 1970s (Yun, 2005). The government shifted its focus to the economic stabilization drive and improving living and environmental conditions for people, while promoting economic liberalization in the market so as to minimize interference with private-sector activities.

[Table 3.3] Central Objectives of Government Budgets (1981 to 1987)
 

1981 Housing for lower-middle classes, increasing primary and secondary education facilities, expanding urban transportation networks, improving the structure of daily essentials distribution, developing scientific and technological human resources, improving the reliability of and rationalizing the use of energy supplies, countering environmental degradation, reforming the treatment of government workers, consolidating the national security system, supporting SMBs, modernizing rural communities, increasing social overhead capital, supporting the livelihood of the poor
1982 Enhancing self-defense capacity and diplomatic support for national security, improving the livelihood of the poor and meeting basic living needs, promoting technological development, ensuring reliable supplies of energy, increasing social overhead capital, continuing support for rural economies and SMBs, innovating education and culture, and rearranging the purposes of central and local revenues
1983 Promoting economic recovery, stabilizing prices, ensuring balanced economic growth, improving social welfare, minimizing government spending, and enhancing the efficiency of government investments
1984 Designing government spending to support the creativity and advancement of the economy, using a budgetary basis for stabilizing prices, supporting balanced economic growth and the improvement of social welfare, reinforcing diplomatic and security capacities, innovating education, and fostering culture and sports
1985 Ensuring efficient allocation of the budget, consolidating the price stabilization system and inhibiting the growth of foreign debts, reinforcing diplomatic and security capacities, enhancing growth potential and promoting balanced economic growth, ensuring better redistribution of income and improving social welfare through social development projects, innovating culture and fostering sports
1986 Continuing the economic stability drive and inhibiting the growth of foreign debt, improving the mode of budget administration to enhance distribution efficiency, reinforcing diplomatic and defense capacities, promoting the advancement of the economic structure for more balanced growth, improving social welfare through social development projects, innovating culture and fostering sports
1987 Ensuring balanced economic growth and raising growth potential, improving quality of life in a balanced manner by increasing support for the poor and those residing in remote regions, reinforcing the national security capacity and maintaining law and order, innovating education and culture and fostering sports, enhancing income efficiency and simplifying administration

 
Realizing Greater Democratization (1988 to 1997)

Budget overviews from 1988 to the late 1990s show that the main objectives of government budgets during this period were reinforcing national competitiveness, enhancing the productivity of the public sector, ensuring balanced economic growth, improving the learning environment and revitalizing arts and culture, and reinforcing capacities for security, defense, diplomacy and national unification.

The onset of democratization in 1987 brought with it abrupt wage hikes and an increase in labor-management disputes, both of which seriously weakened the competitiveness of the Korean economy and spurred questions as to how Korea could compete in the global economy (Yun, 2005). The government began to focus increasingly on fostering technological innovation, research and development, and human resources. The hosting of the Olympics in Seoul in 1988 also elevated societal interests in culture and the arts, while the demand for more balanced economic growth continued to rise in various sectors of society.
 
<Table 3∙4> Central Objectives of Government Budgets (1988-1997)
 

1988 Increasing support for low-income households and less developed areas/sectors, improving quality of life, strengthening industrial structure and growth potential, enhancing financial support for the age of decentralization, preparing for the upcoming Olympics, reinforcing diplomatic and defense capacity, maintaining sound finance, and improving fiscal policy efficiency
1989 Increasing support for welfare and balanced development, improving growth potential and industrial structure, reinforcing diplomatic and defense capacity, improving educational environments and culture, maintaining sound finance, and improving the fiscal policy efficiency
1990 Increasing support for balanced development and for less developed areas/sectors, increasing welfare allowances, reinforcing capacity for diplomacy/defense/national reunification/ internal security, consolidating potential for sustainable growth, improving educational conditions, fostering culture and the arts, and improving fiscal policy efficiency
1991 Enhancing growth potential through industrial restructuring and technology development, promoting balanced growth (reducing regional/class divide), reinforcing the capacity for internal security/national security/diplomacy/defense, improving educational conditions, actively fostering culture and the arts, and improving fiscal policy efficiency
1992 Enhancing growth potential and industrial competitiveness, upholding the fairness principle regarding the class/sector divide and supporting the stability of people’s livelihoods, improving educational conditions, supporting culture and the arts, reinforcing the capacity for security diplomacy and national reunification, and improving fiscal policy efficiency
1993 Enhancing industrial competitiveness and growth potential, ensuring the sustainability of welfare and people’s livelihoods, improving educational conditions, expanding infrastructure for culture and the arts, and increasing efforts to form the basis for national reunification (including diplomacy and security)
1994 Prioritizing the distribution of financial resources according to the mid-term fiscal plan, minimizing fixed expenditures, increasing the tax basis, ensuring productive and outcome-oriented budget preparations, and implementing fiscal policy that promotes market autonomy
1995 Reforming the budget preparation structure to realize specific goals, introducing the concept of cost per unit of administration, reviewing subsidies for local government organizations and the private sector from the zero base, coordinating and reforming government subsidies for industries in light of the Uruguay Round Agreement Act, improving the operational efficiency of government-supported institutions and corporations, maintaining appropriate defense capacity, improving the working and living conditions of government employees, improving construction-related issues to enhance competitiveness, and introducing the Comprehensive Planning System for Regional Development
1996 Enhancing national competitiveness and growth potential, improving quality of life to reflect increasing incomes, enhancing the productivity of the public sector, improving the fiscal operations of local administrations, and employing the fiscal policy as an instrument for adjusting macroeconomic conditions
1997 Setting the example of frugality for economic stability, enhancing national competitiveness and growth potential, actively supporting the improvement of quality of life, enhancing the productivity of the public sector, and supporting balanced regional growth

 
People’s interest in culture and the arts peaked in the 1980s in anticipation of the upcoming Olympics, while the demand for fairer, more balanced development soared in all sectors of society amid the march of democratization.

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