Korea's Five-Year Economic Development Plans: Targets, Performance and Overall Assessment
Dal Hyun Kim
Abstract
The well-designed formulation and effective implementation of the Korean five-year development plans beginning 1962 made it possible to achieve the successful economic development and modernization of Korea. In the discussion that follows in the paper, the major targets and policies in each plan are introduced and the performance of each plan is also evaluated.
Shortly after successful military coup in May 1961, the military government announced the motto: "Modernizing the fatherland." It meant that economic development could be achieved through industrialization. The first five-year Economic Development Plan (1962-1966) was relatively hastily prepared upon mutual consultation with the concerned ministries. The major targets of the first five-year plan (1962-1966) were (i) to remove the vicious socio-economic circle and (ii) to establish a basis for self-sufficiency during the planned period.
The major targets of the second five-year development plan (1967-1971) were (i) to modernize industrial structure, and (ii) to pro-more a self-sufficient economy during the planned period. The major targets of the third five-year development plan (1972-1976) were to (i) harmonize growth, stabilization and equity; (ii) achieve a self-sufficient economic structure by upgrading industrial structure, improving the BOP and achieving self-sufficiency in food grain; and, (iii) promote integrated land development and balanced regional development.
The major targets of the fourth five-year development plan (1977-1981) were to (i) is achieve a self-sustaining growth structure, (ii) promote equity through social development and (iii) promote technological innovation and efficiency improvement under the goal of "growth, equity and efficiency." The major targets of the fifth five-year development plan (1982-1986) were to (i) improve stability, international competitiveness and the balance of payments; (ii) increase employment opportunities and income; and, (iii) enhance national welfare by promoting balanced development between social classes and different regions.
The major targets of the sixth five-year development plan (1987-1991) were to achieve economic advancement and to mote the welfare of the people. Under these objectives, their targets were to (i) enhance equity and fairness, (ii) balanced development and the improvement of the standard of living of the people, and (iii) promotion of openness in the economy and globalization. The objectives of the five-year New Economy plan (1993-1997) were for (i) the Korean economy to become an advanced economy as soon as possible although in order to achieve this, the active participation of the people and innovative initiatives of the private sector were required; and (ii) the enhancement of the economic capability to accommodate the unification in the future.
Korea's successful economic development through the five-year economic development plans was mainly attributable to (i) the strong development willingness of the Korean leaders including president, (ii) the efficient administrative capacity of the government officials, and (iii) the economic potential including the large size of the population possessing a relatively higher educational level. its success has been attributed to the assessment that the Korean people had a strong development willingness and national consensus for promoting economic development. However, there are positive and negative aspects of the Korean development plan.
In conclusion, Korea's development plan ning performed the following functions: (i) it established the direction of the various policies; (ii) it stimulated private sector activities; (iii) it greatly expanded economic activities in the private sector, (iv) it promoted participation and cooperation in the implementation of the plans; (v) it played a coordinating role between different groups; (vi) it improved the compilation of data and analytical methodology which are relevant to planning; and, (vii) it produced planning expertise. These successful functions obtained from the five-year economic development plans may give useful lessons for developing countries.