Summary of South Korea's Five-Year Economic Development Plan
There were many economic issues that led to the current Republic of Korea. Among them, the Five-Year Economic Development Plan that began in the early 1960s became an important cornerstone for economic development of the Republic of Korea.
• Background of the Five-Year Economic Development Plan
To be exact, the Five-Year Economic Development Plan, which began in 1962, was initiated to revive the economy of the Republic of Korea. With the inauguration of the Park Chung-hee government through the May 16 military revolution in 1961, the demand for and awareness of economic development increased. The military regime intended to establish the legitimacy of the revolutionary government and the foundation for national development through economic growth.
From 1950 to 1953, the Republic of Korea fell into serious economic difficulties due to the great Korean War called the Korean War. The country's industrial base had collapsed, its economic functions had been lost, and its economic structure was centered around agriculture, so there were great limitations in developing independently. In the late 1950s, the United States expanded economic aid to South Korea, which greatly contributed to economic recovery and development. Socially, the government began to establish economic development plans, expecting economic growth and improved living standards.
Korea, which had an economy centered on agriculture, needed to change its economic structure through industrialization. This was impossible without a systematic approach under government leadership, and the Park Chung-hee government established a five-year economic development plan for national development in order to rebuild the economy that had collapsed after the war. The five-year economic development plan set the main goals of the economic structure centered on agriculture as a self-reliant economy, increased exports, and job creation. The main goals and achievements were different for each stage, and negative issues arose, but since the government's goals were clear, all government agencies, centered on the president, implemented them without wavering.
• The First Five-Year Economic Development Plan 1962-1966
The main goal was to “transform the economy from an agricultural economy to a manufacturing economy” and it became the foundation for Korea’s industrialization. It recorded an average annual economic growth rate of 8.6%, and GNP increased from $1 billion to $4 billion. Although it did not change completely, the industrial structure that was centered on light industry began to change to heavy and chemical industry. This was the opportunity for the textile, clothing, and food processing industries to grow significantly.
However, during this period, too much focus on industrialization led to the neglect of the agricultural sector, which led to a decrease in farmers' income and rural stagnation. In addition, due to a lack of resources for industrialization, economic instability occurred as a result of relying on external resources.
• Second Five-Year Economic Development Plan 1967-1971
It was a time when the “promotion of heavy chemical industry” was the goal and the steel, machinery, and chemical industries were developed. It recorded an average annual growth rate of 8.9% and GNP increased from 4 billion dollars to 8 billion dollars. It was a time when exports increased significantly and achieved results exceeding 10 billion dollars in 1971.
However, excessive investment in fostering the heavy chemical industry led to the emergence of inefficient companies and waste of resources. As export dependency increased, the economy became more susceptible to external factors. The oil crisis in 1973 was a representative example of an event that put the Korean economy in danger.
• Third Five-Year Economic Development Plan 1972-1976
As a “plan aimed at upgrading the economic structure,” an industrial structure centered on large corporations was established. The economic growth rate recorded an average of 9.5% per year, and GNP increased from 8 billion dollars to 15 billion dollars. During this period, social overhead capital such as roads, ports, and airports were greatly expanded, which became a turning point in industrial development.
However, the industrial structure centered on large corporations marginalized small and medium-sized enterprises, resulting in economic imbalances. In addition, the focus on industrialization led to environmental problems, which then led to serious environmental pollution and become a threat to the health of the people.
• The Fourth Five-Year Economic Development Plan 1977-1981
During this period, the goal was to maintain “high growth,” and GNP increased from $15 billion to $30 billion, recording an average annual GNP growth rate of 8.6%. Diversification of export items led to the growth of new industries such as electronics, automobiles, and shipbuilding.
Despite high growth, job creation declined, leading to an increase in unemployment, particularly among youth, and economic imbalances between regions and the gap between metropolitan and non-metropolitan areas widened significantly.
• The 5th Five-Year Economic Development Plan 1982-1986
During this time, the goal was to “stabilize the economy,” and the focus was on suppressing inflation and creating jobs. With an average annual economic growth rate of 6.5%, GNP increased from $30 billion to $50 billion. Social welfare was also greatly expanded at that time, and the overall standard of living of the people improved as investment in education and health expanded.
The goal was to stabilize the economy, but due to rapid economic development and automated industrial structures, solving the high unemployment rate became a major challenge. In addition, as areas such as social welfare, education, and health are areas in which people have difficulty paying attention, there was a lack of investment, making it difficult to improve the level of people's well-being.
The Five-Year Economic Development Plan was a huge and successful national reform task that achieved economic growth called the “Miracle of the Han River” and industrialization and growth through heavy chemical and light industries. There were many side effects such as social imbalance and environmental problems, but after the war, the country's industrial base was completely destroyed and there was no hope, but thanks to the government's strong will and unwavering drive, the Republic of Korea has become the economic powerhouse it is today. In the 21st century, the world can see how important the firm goals and will of the government are in the economic structure connected to the global chain.
• Conclusion
What the government must do for national development is to set clear goals, appoint strong responsible organizations and people in charge to achieve those goals, and consistently implement them. In addition, active cooperation and support from each government agency is the most important factor in achieving national development.
The goal of national development is to create national infrastructure for industrial modernization. The essential requirements for industrial modernization are:
1. Building an industrial road network. The construction of a road network is like a blood vessel connecting each region and city, and it is a network for industrial sites, rural areas, and exports and imports.
2. Building a power grid: Electricity is an essential element for all industrial development. This is an essential element closely related to the lives of the people and is also an essential element that forms the economic foundation. This is because electricity is the energy used to operate all industrial infrastructure.
3. Establishment of water and sewage systems: Water is an essential element for operating industrial sites and a basic element connected to survival. How to manage used and discarded water is a hot issue worldwide and a social network that must be established at the national level. In addition, the supply of drinking water and industrial water to industries, and the treatment, recycling, purification, and management of contaminated water generated from each home and industrial site are directly related to the environment and health.
The most basic and necessary social infrastructure projects such as the above require a huge investment of national capital, so they are projects that cannot be carried out independently except by countries with strong finances. That is why underdeveloped countries and developing countries procure capital through advanced countries and the World Bank and invest in national development projects, but if they do not have systematic and clear national goals and thorough management, they are bound to fail, and the government will fall into a swamp of huge debt.
The government must establish macroscopic and clear goals and methods for the people.
What to do?
How to do it?
Who to do it with?
This is a fundamental and clear purpose that will completely change the national industrial structure and improve the national economy and people's lives and achieve national development. This will not only improve national development and people's lives, but will also be recorded as a great achievement in history and create a greater future for the country.
