경제개발5개년계획의 회고(The five-year economic development plans revisited)

This study aims to summarize the four “Five-Year Economic Development Plans” by briefly reviewing each of the plans. The Five-Year Economic Development Plans started almost 20 years ago. The series of four plans, which were strongly backed by the Korean government, laid the foundation for Korea’s rapid economic growth. The first economic plan established in Korea was the “Economic Program for Korean Reconstruction” drawn up by the Nathan Associates under contract with the United Nations Korean Reconstruction Agency (UNKRA). It was a five-year economic development project from 1953 to 1957, based on an analysis of the Korean economy by non-Koreans. However, the plan was not put into practice due to negative assessments and political circumstances. Afterwards, a three-year economic development plan was formulated by Koreans, but was not implemented either. The first economic development plan that was put into operation was the first Five-Year Economic Development Plan (1962-1966) after the May 16 Coup in 1961. The plan aimed to upset the existing socio-economic cycles and lay the foundation for independent economic development through industrialization. As a result, the secondary industries grew 15 percent on average annually, while the primary and tertiary industries increased 5.3 percent and 8.1 percent, respectively, resulting in overall growth. The first Five-Year Economic Development Plan contributed to the rapid growth of the national economy as the national production ratio per capita in 1966 (the target year) reached USD 122.50, an increase of 31 percent in five years. The first Five-Year Economic Development Plan was successful, but fell short of the target. The earned value of the investment rate of the first Five-Year Economic Development Plan was 15.1 percent, 7.5 percent below the target of 22.6 percent, of which the overseas saving rate accounted for 8.5 percent. At first, the Korean government planned to cover 13.4 percent of the target with foreign assistance, but both the overseas saving rate and the domestic saving rate failed to fulfill the goal. The second Five-Year Economic Development Plan (1967-1971) was finalized by mid-1966. The new plan set its yearly goals by reviewing past practices. Clearly, the second plan was successful as it saw continued rapid economic growth, advancement of industrial infrastructure, consistent increase in trade, increase in domestic saving, and expansion of social investment capital. However, it did not achieve the goals of economic independence and the improvement of the international balance of payments. Also the depression in the growth of agriculture (2 percent growth between 1967 and 1971) worsened imbalance between industries. Nevertheless, the second plan achieved 12.4 percent annual average growth. The third Five-Year Economic Development Plan (1972-1976) focused on growth, stability, and balance, the establishment of the independent economic structure, and balanced regional development. To achieve balance between growth and stability, the plan lowered the goal of annual growth to 8.6 percent annually, compared to the 11.4 percent target of the previous plan. Despite the new target rate, the third plan further accelerated Korea’s economic growth, exceeding its target and generating a 11.2 percent average annual growth rate. The Korean government sought to achieve heavy chemical industrialization as a means of stability during this plan, but the oil crisis caused a significant increase in prices, which had an adverse effect on the national economy. The wholesale price increased from 15.1 percent in 1973 to 44.6 percent in 1974, although it fell to 20.2 percent in 1975. The wholesale price stabilized in 1976, the final year of the third plan, with an increase of 8.9 percent. The fourth Five-Year Economic Development Plan (1977-1981) emphasized growth, balance, and efficiency. Here “growth” meant the establishment of an independent development structure. The government planned to secure as much as 72 percent of total investment with domestic saving. One of the principal achievements of the fourth plan was the remarkable growth of the Pohang Iron and Steel Company. The Korean government planned to develop the Pohang Iron and Steel Company into a world-class large iron and steel producer, hoping to boost exports to the U.S. and Japan, as well as increase domestic demand. However, the rapid economic growth during the period of the fourth plan was accompanied by serious problems. The expanded growth policy led to the failure of currency stabilization, price hikes, and the aggravation of income distribution. The fifth Five-Year Economic Development Plan is slated to start in the 1980s with the aim of achieving efficiency and stability. The annual average growth rate during the fifth plan is expected to hit 8 percent, with a 9 percent annual price appreciation and USD 54.6 billion in exports.