Working Toward Fiscal Viability (1948 to 1960)
As indicated in budget guidelines, administrative policy speeches on budget drafts, and in written proposals for government budgets, the main objectives of budgets from 1948 to 1960 were strengthening military power, achieving national reunification, promoting postwar reconstruction, securing international grants and aid, reinforcing diplomatic skills and capacity, and stabilizing prices.
Korea suffered extreme inflation in the mid-1940s, with the average wholesale price in Seoul multiplying by sevenfold between 1944 and 1946. Inflation worsened upon the outbreak of the Korean War in 1950, placing the Korean economy on the brink of irreparable collapse (Yoon, 2005). Although the Korean economy managed to grow at a rate of 4.5 percent a year on average between the ceasefire of the Korean War in 1953 and 1961, such economic growth was made possible entirely by foreign grants and aid (Yoon, 2005).
<Table 3∙1> Central Objectives of Government Budgets, 1948-1960
| 1948 | Completing the recovery of national energy and securing international recognition as a newly independent nation, improving people’s livelihoods by tackling major policy issues—including the reconstruction of industries and economic revival (through the Economic Cooperation Administration (ECA), etc.), reforming administration and strengthening society |
| 1949 | Pursuing national reunification and building industries |
| 1950 | Achieving a trade balance to secure greater foreign aid for the ECA |
| 1951 | Winning the war, ensuring internal security, providing social aid and relief, and establishing foreign/farming/fiscal policies |
| 1952 | Providing aid for war refugees, promoting economic reconstruction, reinforcing military strengths, waging public propaganda, assisting the UN Korea Reconstruction Group’s projects, ensuring internal security |
| 1953 | Achieving national reunification by taking over the North and gathering national competence to that end, strengthening military power and internal security, promoting stable livelihoods for people and reviving the economy (through the ECA), increasing support for aid-based projects, and drawing up a new budget for the new year |
| 1954 | Achieving territorial reunification and gathering all national strengths to that end, strengthening military power and internal security, establishing a foreign policy, enhancing administration and enforcing official discipline, establishing an economic policy and making budget preparations, ensuring industrial revival and the stabilization of people’s livelihoods, strengthening the government’s public relations and propaganda efforts, and establishing a social health policy |
| 1955 | Promoting economic reconstruction, improving the efficiency of administration, and strengthening military power |
| 1957 | Promoting national reunification and revival |
| 1958 | Stabilizing and improving people’s livelihoods, strengthening military power, improving administrative efficiency, controlling inflationary pressures, and drafting a balanced budget |
| 1959 | Maintaining the military strengths necessary for national reunification, stabilizing pricing and monetary policies with a fiscal stabilization plan, and providing active support for basic industries |
| 1960 | Achieving sound finance and tax reforms, fostering economic growth of farming and fishing towns, fostering SMBs, promoting exports and improving the international balance of payments, expanding industrial infrastructure, promoting the progress of education/culture/science and technology, improving social welfare, strengthening efforts for diplomacy and propaganda, guiding Koreans overseas, strengthening military power, reinforcing the nation’s readiness posture against communism, establishing a pension for government employees, and reforming administration |
Source: Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.
