Growth of other sectors

In the 1960s and 1970s, the construction sector also grew rapidly. It played a main role in building physical infrastructure and industrial plants. The experience gained from building large-scale facilities greatly enhanced Korea’s competitiveness in the construction industry and enabled it to win many overseas construction projects staring from the 1970s.

Overseas construction orders rose from 170 million dollars in 1973 to 13 billion dollars in 1981, contributing greatly to Korea’s foreign currency revenues.

On the other hand, the primary sector, especially the agricultural sector, stagnated with annual output growth of 3 percent in the 1960s and 1970s. The slow growth of agricultural output is natural given the continued migration of workers from agriculture to manufacturing and from rural to urban areas. But the perceived imbalance in jobs and other opportunities between rural and urban areas created social tensions and political pressure increased for policy interventions to revitalize the agricultural sector and rural areas.

A more important question is whether agricultural productivity improved as hidden unemployment in rural areas decreased. In this respect, an important contribution was made by the development of a new local rice variant, known as Tong-il (unification) rice, in the early 1970s, which produced a far larger amount of grain per stalk than the traditional variant. In addition, machinery and new farming methods were introduced to improve agricultural productivity. Traditional farming communities were subject to the Saemaul (new village) Movement, which the government organized to modernize rural areas in all aspects from food production to living conditions. The goal of the program was to achieve self-sufficiency in grain production, supported by the Green Revolution in crops

All these changes led to a large improvement in agricultural productivity, accelerated the migration of workers from rural to urban areas, helped Korea achieve self-sufficiency in food production at least in the case of rice (Table 3-9), and contributed to increasing rice supplies at a lower price to industrial workers.

Table 3-9. Self-sufficiency ratio of grains (1956-2005)

As for fishing, a significant part (10 percent) of reparation payments was invested in this sector and supported its growth. The fishing sector got a further boost with the Korean-Japanese Fishing Agreement (1965), which gave protection to Korean fishing grounds and provided an opportunity for the revival of the fishing industry. In time, deep-sea commercial fishing emerged as a new business and became an important foreign currency earner. It also contributed to the improvement in the nutritional standards of Koreans by providing new sources of protein. The large fishing fleets venturing to the far corners of the world were an early source of Korean national pride, although their activities were curbed after 1977 when Korea lost access to important fishing grounds with the declaration of exclusive fishing zones by the U.S., the Soviet Union and other countries.

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