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Development Overview
Territorial Development General

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General

Development of industrial parks

The development of industrial parks in the country started in the early 1960s. In January 1962, the government announced the first of the Five-Year Economic Development Plans. Shortly after, it proclaimed the Urban Planning Act, which replaced the Urban District Plan Ordinance issued during the colonial period. Although the act was not aimed at the development of industrial parks, it included a series of programs for their formation within the scope of urban planning, and adopted land readjustment projects in support of urban planning. Therefore, most of the industrial parks in the 1960s were created under the procedures of the Urban Planning Act.

The government adopted a strategy of concentrating industries in regions with high growth potential, rather than dispersing investments nationwide, in consideration of the country’s limited financial resources. The regions selected for development included the Seoul-Incheon area due to the existing infrastructure and availability of urban services; Ulsan, with its advantageous location and port; and the Taebaek, Yeongsan River area for agriculture and resource development. The plan for the Seoul-Incheon area was implemented in the 1960s with the establishment of an export park. The Ulsan Industrial Park, designated in 1966, was the starting point for the Southeast Coastal Heavy-Chemical Industry Belt that would be established in the 1970s and 1980s. The Mt. Taebaek area was designated for the development of raw materials, such as coal and cement. Cement would play an important role in the Saemaul Movement later. Coal made possible the reforestation of mountains as it replaced wood as fuel for households.

In the early 1960s, cheap labor was nearly the country’s sole development resource. The government’s industrial policy was focused on the production of basic materials, such as fertilizer, cement and coal, and the development of labor-intensive export industries. Consequently, industrial parks were concentrated in Seoul, which had a sufficiently large labor force and other resources. Under the Export Industrial Park Formation Act of 1964, the first Korea Export Industrial Park was established in Guro-dong, Seoul. The site had several advantages, including a sufficient workforce and easy accessibility to transport, electricity and water. Work on the 114-acre site began in December 1964 and was completed in February 1966.

The park attracted much attention and the site could not accommodate all the businesses wishing to locate there. The government designated a second 98-acre and a third 294-acre park and planned for the development of additional sites in Incheon, near Seoul.

The success of the first Korea Export Industrial Park caused a boom in the creation of industrial parks by local governments. Nevertheless, the export industry parks located in the heart of the capital boasted considerable advantages that other industrial parks outside Seoul could not copy. The importance of Seoul to the nation’s manufacturing sector increased. The national share of secondary industries (manufacturing and mining) operating in Seoul rose from 23 percent in 1960 to 31 percent in 1970, with a corresponding fall for other cities and provinces.

The country’s industrial structure changed greatly under the Five-Year Plans. The primary industry’s share of GDP dropped to 29 percent by 1972 from 37 percent in 1962, while the share of secondary industry rose from 16 percent to 24 percent in the same period. This caused changes in the employment structure. The percentage of workers in the primary industries fell from 63 percent to 51 percent between 1962 and 1972, while those employed in secondary industries increased from 9 percent to 14 percent.

Industrialization promoted urbanization. The nation’s urbanization rate rose from 37 percent in 1960 to 51 percent a decade later. The population of Seoul increased from 1 million to 5.54 million between 1945 and 1970. This created a demand for large-scale urban development projects. The government enacted the Land Readjustment Project Act in August 1966. Land readjustment projects involved the building of large housing estates and urban infrastructure, including roads, and were prevalent in the 1970s and 1980s. Seoul’s modern district of Gangnam, south of Han River, was a prime example of these projects.

Railroads functioned as an engine for the country’s economy by transporting an increasing amount of everyday necessities and industrial supplies, such as fertilizer, cement and grains. The amount of goods to be transported rose sharply as aresult of the increase in industrial production from the mid-1960s.

Railroads accounted for 84 percent of the nation’s transportation capacity in 1962, compared with 10 percent for highways and 6 percent for air and maritime services. The railroads were placed under severe strain in transporting goods, when the economy achieved a growth rate of 19 percent in 1966.

By 1969, railroads still accounted for 72 percent of the nation’s transport, while the share for highways and maritime and air services were gradually increasing to 13 percent and 15 percent, respectively.

During the first Five-Year Plan (1962-1966), projects were undertaken to pave the roads in large cities and improve existing provincial roads, although the focus continued to be on constructing railroads. The building of the country’s first toll expressway was the brainchild of President Park Chung-hee. It became the backbone for the country’s network of highways. The Seoul-Incheon Expressway, opened in December 1968, was the country’s first and contributed greatly to the increased transportation of goods around the capital region. The 428 km-long Seoul-Busan Expressway was completed in July 1970 after only two years and five months of construction.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.

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