The government promoted exports but maintained restrictions on imports to contain current account deficits and protect domestic industries. Tariff rates began to decline slowly in the early 1970s, but their levels remained very high until the early 1980s (Table 2-4).
Table 2-4. Tariff rates (1957-1984)
On the other hand, quantitative restrictions were reduced significantly. The previous positive list system whereby the Ministry of Commerce and Industry designated freely imported, restricted and banned items was turned into a negative list system in July 1967.
In the new system, only restricted and banned items were identified, and all other items could be imported without restriction. In Figure 2-5, ‘liberalization of quantitative restrictions’ is defined as the number of freely-imported items divided by the number of total items. This ratio jumped from 9.3 percent in 1966 to 52.4 percent in 1967.
Figure 2-5. Trend in import liberalization
Between 1968 and 1977, however, quantitative restrictions were strengthened, and total import liberalization remained at around 55 percent. Compared to Japan and Taiwan, which had already raised the liberalization ratio above 90 percent in the mid-1960s and mid-1970s, respectively, liberalization proceeded very slowly in Korea (Young-Sun Lee, 1986, p.812). Quantitative restrictions were aimed mainly at protecting the domestic HCI and agricultural sectors (Jungho Yoo, 1991, p.70). It was almost impossible to import the items in these protected sectors.
Import liberalization made a fresh start in 1978 with the announcement of three separate liberalization schedules. It was put off again due to the second oil shock that occurred in 1979, but continued after 1980. It gained full momentum in 1984 as the external balance was restored.
Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.
References
· Lee, Young-Sun, “Promoting Heavy and Chemical Industries and Transforming the Industrial Structure (1975-1979),” in Forty-year History of the Korean Economic Policy, The Federation of Korean Industries, 1986, pp.807-815 (in Korean).
