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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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Budget system 2

Promoting Economic Development (1961 to 1980)

Between 1960 and 1980, the basis of the budget system underwent a series of major changes. In 1962, a performance-oriented budgeting system (POBS) was officially adopted, first on a trial basis involving the 15 quantifiable projects of three ministries (the Ministry of Agriculture, the Ministry of Health and Society, and the Ministry of Construction). The system, however, was repealed in 1964 (Yu, 2003: 379). A business accounting system was introduced in 1962 to ensure that public corporations administered and spent their budgets in a wise and rational manner.

By 1963, the Five-Year Economic Development Plan as well as the Medium and Long-term National Development Plan began to shape and guide the budget-making process. The CBA also started to impose ceilings on the budgets of ministries and departments, and minimized the margins by which operating budgets and general office supply costs could increase.

From 1967 to 1970, each ministry or department intent on increasing its budget was required to limit the margin of increase in the budget request to 120 or 150 percent of its previous annual budget, depending on the organization. This was deemed a necessary measure to control and minimize the waste of government budgets. Beginning in 1975, the general expense standard began to be applied to general office supply costs. Ministries and departments also started to prioritize items in their operating budgets in 1979, adopting the principle of zero-based budgeting.

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