7.4 Evaluation of the Fifth Plan After the second oil crisis, the Korean econo- r my worst economic tion, and socio-political turmoil prevailed in the extreme. Therefore, the annual growth f rate slowed to -5.7% in 1980. The fifth plan, begun in 1980 and completed in 1981. e emphasized price stabilization as its top prior- However, as the Korean economy and the world economy began to have an upswing from the bottom, the conditions for economic planning were greatly enhanced. In the first 6 two years of the plan, price stabilization was achieved. In 1983, the economic growth rate recovered to more than 6% by reducing the current account deficits. Since the growth rate of the world economy was slowing down and oil prices were spiraling downward, the gov- ernment had to inevitably revise the contents of the plan due to the changing external envi ronment. Under this plan, the Korean economy enjoyed price stability for five consecutive years as result of a tight fiscal policy and sta- ble money supply, supporting the internation- al competitiveness of its industries. The gov- ernment's strong policies undermined specu- lation in real estate and blocked the channels of easy moneymaking. At the same time, the government tried to promote savings by sup- porting the increase of the real interest rate up to an appropriate level. These efforts became the basis of the balance of payments surplus as well as self-sustained growth. They provided the opportunity for the Korean economy achieve a trade surplus in the midst of the price stability of the late 1980s, However, even though these accomplish- ments improved the quality of daily life, thcre was criticism that the government had not enhanced the welfare-adjusting function of its fiscal policy. Furthermore, the government did not meet the rapidly growing demand for improved welfare and equity among the social classes. Moreover, the proportion of economic development expenditure was
reduced and social overhead capital was insufficient from the late 1980s on, creating bottleneck in social infrastructure in the 1990s. The assessment of the fifth plan is that it attempted to promote market function, to resolve the diverse issues of comprehensive socio-economic development and to meet the changing needs of the people. However, it was also recognized that the government did not successfully achieve the goal of liberaliza- tion, openness and socio-economic issues as planned. It may have been too ambitious a plan. The government adopted the policy to support market friendly targets while it adopt- ed a policy to strengthen government inter- vention rather than sypport market friendly targets. It was a good lesson that, under the changing circumstances, the goal, strategies and policy means of the plan had to T cally change in response to new environ- ments, if necessary