The Five-Year Economic and Social Development Plans () were an economic development project of
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
.
Background
Both North and South Korea had survived the
Korean War
, date = {{Ubl, 25 June 1950 – 27 July 1953 (''de facto'')({{Age in years, months, weeks and days, month1=6, day1=25, year1=1950, month2=7, day2=27, year2=1953), 25 June 1950 – present (''de jure'')({{Age in years, months, weeks a ...
(1950–53). From the end of
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
, South Korea remained largely dependent on U.S. aid until a military coup occurred in 1961. American economic aid failed in its goal of creating an industrial base in South Korea largely thanks to corruption. While the South Koreans did not starve and were able to keep up with national defense, most of the aid was misappropriated for private use. This created a small class of wealthy Koreans at the expense of the majority of the country, generating resentment. Despite this widespread corruption however, the
Syngman Rhee
Syngman Rhee (, ; 26 March 1875 – 19 July 1965) was a South Korean politician who served as the first president of South Korea from 1948 to 1960.
Rhee was also the first and last president of the Provisional Government of the Republic of Ko ...
administration had managed to use some U.S. aid to develop the country's education system, transportation infrastructure, and communications infrastructure. This investment resulted in the South Korean population being well educated by the time the
Park Chung-hee
Park Chung-hee (, ; 14 November 1917 – 26 October 1979) was a South Korean politician and army general who served as the dictator of South Korea from 1961 until his assassination in 1979; ruling as an unelected military strongman from 1961 ...
regime took over, with the infrastructure in place for rapid economic growth. In 1961, General
Park Chung-hee
Park Chung-hee (, ; 14 November 1917 – 26 October 1979) was a South Korean politician and army general who served as the dictator of South Korea from 1961 until his assassination in 1979; ruling as an unelected military strongman from 1961 ...
seized political power and decided the country should become self-reliant by utilizing five-year plans.
Five-Year Plans
The plans were designed to increase wealth within South Korea and strengthen political stability. A change in policy from
import substitution industrialization
Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production.''A Comprehensive Dictionary of Economics'' p.88, ed. Nelson Brian 2009. It is based on the premise that ...
to
export-oriented growth occurred throughout these five-year plans. South Korea had three five-year plans under the auspices of the Economic Planning Board, a state bureaucracy pilot agency.
1962–1966
The first plan sought to expand electrical/coal energy industry, emphasizing importance on the infrastructure for establishing a solid foundation, agricultural productivity, export, neutralize balance of payments, and promote technological advancements. These policies were established, along with further investments in education and other social resources, to shift the Korean economy further towards an export oriented one. As part of these shifts, the share of workers in agriculture steadily declined in exchange for more workers in manufacturing.
The Korean economy observed a 7.8% growth, exceeding expectations, while GNP per capita grew from 83 to 125 US dollars.
1967–1971
The second five-year plan sought to shift the South Korean state into
heavy industry
Heavy industry is an industry that involves one or more characteristics such as large and heavy products; large and heavy equipment and facilities (such as heavy equipment, large machine tools, huge buildings and large-scale infrastructure); o ...
by making South Korea more competitive in the world market, which was incorporated into all future five-year plans. The industry was based on steel and petrochemical industry. The major highways were built for easier transportation.
U.S.-China's
opening up in 1972 led to a greater competitive marketplace for South Korean goods and services. Fears also prevailed that the U.S. would no longer provide military defense for South Korea. By the end of the second 5-year plan, South Korea was able to double its GNP per capita.
1972–1976
Park Chung-hee implemented the third five-year plan which was referred to as the
Heavy Chemical Industrialization Plan (HCI Plan) and, also, the "Big Push". The HCI Plan designated 5 separate fields as "strategic fields":
Electronics
The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronics uses active devices to control electron flow by amplification ...
,
Shipbuilding
Shipbuilding is the construction of ships and other floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to befor ...
,
Machinery
A machine is a physical system using power to apply forces and control movement to perform an action. The term is commonly applied to artificial devices, such as those employing engines or motors, but also to natural biological macromolecule ...
,
Petrochemicals
Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
, and
Non-ferrous metal
In metallurgy, non-ferrous metals are metals or alloys that do not contain iron (allotropes of iron, ferrite, and so on) in appreciable amounts.
Generally more costly than ferrous metals, non-ferrous metals are used because of desirable proper ...
s. Faced with escalating North Korean threats, a potentially
uncertain ally in the United States, and the changing security arrangements regarding
Okinawa
is a prefecture of Japan. Okinawa Prefecture is the southernmost and westernmost prefecture of Japan, has a population of 1,457,162 (as of 2 February 2020) and a geographic area of 2,281 km2 (880 sq mi).
Naha is the capital and largest city ...
, South Korean political leaders looked to use a heavy industry drive to lessen their military dependence on the United States and build up the
Republic of Korea Armed Forces
The Republic of Korea Armed Forces (), also known as the ROK Armed Forces, are the armed forces of South Korea. The ROK Armed Forces is one of the largest and most powerful standing armed forces in the world with a reported personnel strength of ...
.
To fund the HCIP, the government borrowed heavily from foreign countries (not foreign direct investment, so that it could direct its project).
1977–1981
By the time of the fourth plan, GNP per capita in 1977 was 1,000 US dollars. However, in 1978, because of price of goods, real estate speculation, lack of everyday necessities and various produce, etc., previously unaddressed problems began to arise. In 1979, the second oil shock pushed the Korean economy to harsher standards and in 1980, the
Gwangju Democratization Movement
The Gwangju Uprising was a popular uprising in the city of Gwangju, South Korea, from May 18 to May 27, 1980, which pitted local, armed citizens against soldiers and police of the South Korean government. The event is sometimes called 5·18 (Ma ...
, political turmoil, pessimistic foresight, and unmet goals all contributed towards a first minus in the Korean economy in years.
1982–1986
The Fifth Five-Year Economic and Social Development Plan (1982–86) sought to shift the emphasis away from heavy and chemical industries, to technology-intensive industries, such as precision machinery, electronics (televisions, videocassette recorders, and semiconductor-related products), and information. More attention was to be devoted to building high-technology products in greater demand on the world market.
1987–1991
The Sixth Five-Year Economic and Social Development Plan (1987–91) to a large extent continued to emphasize the goals of the previous plan. The government intended to accelerate import liberalization and to remove various types of restrictions and nontariff barriers on imports. These moves were designed to mitigate adverse effects, such as monetary expansion and delays in industrial structural adjustment, which can arise because of a large surplus of funds. Seoul pledged to continue phasing out direct assistance to specific industries and instead to expand manpower training and research and development in all industries, especially the small and medium-sized firms that had not received much government attention previously. Seoul hoped to accelerate the development of science and technology by raising the ratio of research and development investment from 2.4 percent of the GNP to over 3 percent by 1991.
1992–1996
The goal of the Seventh Five-Year Economic and Social Development Plan (1992–96), formulated in 1989, was to develop high-technology fields, such as microelectronics, new materials, fine chemicals, bioengineering, optics, and aerospace. Government and industry would work together to build high-technology facilities in seven provincial cities to better balance the geographic distribution of industry throughout South Korea.
See also
*
Economy of South Korea
The economy of South Korea is a highly developed mixed economy. By nominal GDP, it has the 5th largest economy in Asia and the 13th largest in the world. South Korea is notable for its rapid economic development from an underdeveloped nati ...
*
New Community Movement
The Saemaul Undong, also known as the New Community Movement, New Village Movement, Saemaul Movement or Saema'eul Movement, was a political initiative launched on April22, 1970 by South Korean president Park Chung-hee to modernize the rural So ...
*
Five-year plans of other countries
References
;Source
*Park, P.H.,2000 "A Reflection on the East Asian Development Model: Comparison of the South Korean and Taiwanese Experiences," Thailand, Japan, and the East Asian Development Model, edited by Frank-Jurgen Richter, pages 141-168
{{Economy of South Korea
Economic history of South Korea
Five-year plans