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1 Background
Once the first Five-Year Economic Development Plan was securely on track and the first features of industrialization were created in Korea in the late 1960s, the amounts of industrial goods in transit multiplied explosively, raising the urgent need for expansion of transportation infrastructure.
Up until as late as the second Five-Year Economic Development Plan, policymakers had not considered construction of a national highway connecting Seoul to Busan. However, a survey performed by the Nedeko Investigation Group, commissioned as part of the human resources agreement that the Korean government signed with the International Bank of Reconstruction and Development (IBRD), revealed the pressing need for building and expanding the road network in Korea. The Nedeko group thus advised the Korean government to shift its focus from railways to vehicle roads, but without going into the specifics of building highways. The group merely addressed the need to build highways between Seoul and Incheon, and between Seoul and Suwon, before the implementation of the third five-year plan.[1]
The Korean government then began to consider the possibility of extending the nation’s highway network. The Ministry of Construction surveyed the possibility of constructing highways that would extend 1,138 kilometers in total and link Seoul and Busan, Seoul and Incheon, Seoul and Gangneung, and Daejeon, Gwangju and Yeosu, in hopes of securing the international loans necessary for the construction of the Seoul-Busan highway.[2] The idea of highways, however, was quite unpopular among policymakers and the general public alike at the time. This negative sentiment, coupled with the massive, almost prohibitive amount of funds required for such an undertaking, prevented the Ministry’s plan from developing further.
Nevertheless, the construction of the Gyeongbu National Expressway, linking Seoul and Busan, appeared as part of the campaign promises of President Park Chunghee in 1967, spurring serious debate. Proponents argued that highways were crucial for expediting the processes of modernization and industrialization, and also for the development of rural, farming communities by narrowing the distances between those communities and cities. In other words, it was charismatic political leadership that transformed the image of national highways in popular opinion overnight.
Source: Korea International Cooperation Agency. 2004. Study on Development Aid and Cooperation for South Korea: Size, Scope and Exemplary Effects. Seoul.
2 Process
In April 1967, as part of his campaign platform, President Park announced his plan for building highways that would link Seoul and other major urban centers in Korea, such as Incheon, Gangneung, Busan, and Mokpo. The government began to prepare for the construction of these highways immediately following the presidential election.
In December 1967, the Driving Committee on the Construction of National Expressways, chaired by the President and membered by leading figures of various sectors of Korean society, launched the National Expressway Construction Planning and Investigation Group to handle all investigative and planning tasks pertaining to highways.
In the meantime, policymakers had made the decision to build the highways based solely on domestic capital and technology, since decision-makers in the IBRD, Washington, and other development organizations and donor countries believed it too early for Korea to initiate a highway project. Korean policymakers therefore concluded that they likely could not proceed with their highway projects reliant on international development aid alone. This conclusion culminated in a policy decision when the International Development Association (IDA), believed the likeliest source of funding, rejected the Korean government’s application for financial support.
The Korean government funded the import of certain construction equipment and materials from overseas through the Japanese Reparation Fund for Korea. It also quickly commissioned a group of domestic technical experts to conduct a feasibility study and devise a plan for the building of the highway. Construction on the Seoul-Suwon part of the Gyeongbu National Expressway Project finally began in February 1968.
The project, which claimed more than one-tenth of the total government budget (KRW 300 billion at the time), was a major national commitment on an unprecedented scale. The Driving Committee, which was installed under presidential decree, included as its members not only Cabinet ministers, but also leaders of the Korean economy and society, while its Planning and Investigation Group enlisted the participation of hundreds of civil servants, local government officials, scholars, and businesspeople.
Although the project was, in principle, to be completed reliant on domestic resources only, it inevitably required the import of certain construction materials and equipment from overseas, and some investment of foreign capital. Concluding that construction alone would require KRW 36 billion, the government drew up a budget matching that amount, seeking partial funding in the international grain fund provided as PL480, as well as in the Japanese Reparation Fund.[1] In essence, the Korean government utilized the foreign capital it had already been given to fill in the project’s financial and technical shortcomings.
In the end the project cost KRW 42.9 billion for construction alone, mainly due to unexpected increases in land compensation costs and inflation.
< Construction Costs for the Gyeongbu National Expressway Project>
(Unit: KRW 1,000,000)
Item | Budget (1968) | Actual (1970) | Margin of Difference |
Land compensation | 1,224 | 1,963 | 719 |
Construction | 28,294 | 37,390 | 9,096 |
Testing equipment | 55 | 44 | -11 |
Imported equipment | - | 492 | 492 |
Imported materials | 2,194 | 1,892 | -302 |
Foreign services | 110 | 86 | -24 |
Ancillary costs | 1,123 | 1,106 | -17 |
Total | 33,000 | 42,973 | 9,973 |
Source: Seoul-Busan National Expressway Construction Logs, Ministry of Construction and Korea Expressway Corporation, July 1947.
While much of the project proceeded based on domestic capital and technology, Korea was nonetheless forced to draw upon foreign capital for part of the project, particularly with respect to importing materials and equipment not able to be manufactured in Korea given its industrial capacity at that time. Even basic building materials like cement had to be imported in part from overseas. A number of devices and equipment were also brought into the country in order to ensure project efficiency. Foreign grants and aid mainly went to securing these items.
Because the Korean government was already negotiating a loan with the ADB regarding the construction of another highway, between Seoul and Incheon, the government necessarily turned to the Japanese Reparation Fund for the Gyeongbu project, even changing and converting some of the items already on the fund application for this new purpose. A total of USD 8.45 million originated from foreign sources for the Gyeongbu project, or approximately 10 percent of the total construction cost.
< Foreign Capital Used for the Gyeongbu National Expressway Project>
(Unit: USD 1,000)
Source | Amount | Purpose | |
Japanese Reparation Fund (conditional grants) | Project Year 3 | 326.9 | For the purchase of maintenance equipment and radio devices |
Project Year 3 | 2,671.6 | For the purchase of guardrails and other construction materials | |
Subtotal | 2,998.5 | ||
Project Year 4 | 748.8 | For the purchase of paving equipment | |
Project Year 4 | 3,148.6 | For the purchase of reinforcing steel and other construction materials | |
Subtotal | 3,897.4 | ||
Total | 6,859.91 | ||
ADB loan2 | 872.7 | For the purchase of paving equipment | |
KFX fund | 681.5 | For the purchase of construction equipment | |
Total | 8,450.1 |
Notes:
1. Korea apparently drew KRW 8 million in total (KRW 3 million and KRW 5 million in 1968 and 1969, respectively) from the Japanese Reparation Fund, but left no details more specific than those indicated here.
2. While there is a record showing that the loan from the ADB was spent on purchasing paving equipment, there was no ADB loan for the Gyeongbu project. One can infer, then, that the ADB loan provided for the Gyeongin (Seoul-Incheon) project was spent, in part, on the Gyeongbu project.
Source: Ministry of Construction and Korea Expressway Corporation, 1947.
In addition to Korean technical experts’ participation in the project, the Korean government also enlisted the services of well-established, US-based technical service agency De Leau Cather International during the early part of the construction phase (1968), to advise on, and assess, the technical status of the project overall. More specifically, Korean experts handled the feasibility study, routing, executive designs, and other components of investigation and planning, while the foreign agency provided technical support for the rest of the construction process.
Thanks to these efforts, the national expressway projects officially concluded in July 1970, significantly ahead of the original deadline of June 1971.