The Five-Year Economic and Social Development Plans () were a series of economic development projects in

South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...

Background

Both North and South Korea had survived the

Korean War The Korean War (25 June 1950 – 27 July 1953) was an armed conflict on the Korean Peninsula fought between North Korea (Democratic People's Republic of Korea; DPRK) and South Korea (Republic of Korea; ROK) and their allies. North Korea was s ...

(1950–53). From the end of

World War II World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...

, 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), also known by his art name Unam (), 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 Provisiona ...

administration had managed to use some U.S. aid to develop the country's education system, transportation infrastructure, and communications infrastructure. The Syngman Rhee government submitted a draft of a long-term economic development plan to the United States in 1956 and expressed its will to develop, and the planning and conception of the state-led industrialization policy and economic development plan were realized as the five-year economic development plan promoted by the Park Chung-hee regime. The investment of the First Republic resulted in the South Korean population being well-educated by the time the

Park Chung Hee Park Chung Hee (; ; November14, 1917October26, 1979) was a South Korean politician and army officer who served as the third president of South Korea from 1962 after he seized power in the May 16 coup of 1961 until Assassination of Park Chung ...

regime took over, with the infrastructure in place for rapid economic growth. In 1961, General

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 protectionist trade and economics, economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign ...

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.

1960–1961

The government formulated a five-year economic plan based around agriculture and light industry to decrease unemployment, but was ultimately overthrown before having the chance to carry it up. The five-year plan would have advocated for “

populism Populism is a essentially contested concept, contested concept used to refer to a variety of political stances that emphasize the idea of the "common people" and often position this group in opposition to a perceived elite. It is frequently a ...

first, then

industrialization Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...

” and set the direction for

1962–1966

The first plan sought to expand the electrical/coal energy industry, emphasizing the importance of the infrastructure for establishing a solid foundation, agricultural productivity, export, neutralizing balance of payments, and promoting 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 the 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 Electronics is a scientific and engineering discipline that studies and applies the principles of physics to design, create, and operate devices that manipulate electrons and other Electric charge, electrically charged particles. It is a subfield ...

Shipbuilding Shipbuilding is the construction of ships and other Watercraft, floating vessels. In modern times, it normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation th ...

Machinery A machine is a physical system that uses 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 macromolec ...

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 so ...

, 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 pro ...

s. Faced with escalating North Korean threats, a potentially uncertain ally in the United States, and the changing security arrangements regarding

Okinawa most commonly refers to: * Okinawa Prefecture, Japan's southernmost prefecture * Okinawa Island, the largest island of Okinawa Prefecture * Okinawa Islands, an island group including Okinawa itself * Okinawa (city), the second largest city in th ...

, 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 o ...

. 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 the 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, 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 remove various types of restrictions and non-tariff barriers on imports. These moves were designed to mitigate putative adverse effects, such as monetary expansion and delays in industrial 'structural adjustment', which could arise because of a large surplus of funds (the idea being less funds would 'discipline' industry into greater 'efficiency'; a policy program indicating, more so than the previous one, shifts towards

neoliberalism Neoliberalism is a political and economic ideology that advocates for free-market capitalism, which became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pe ...

as an ideology). 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.

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