Trajectories of Economic Development and Policy

The Korean economy has demonstrated phenomenal economic growth rates over the past four decades with the exception of the financial crisis in the late 1990s. Average overall economic growth between 1963 and 1996 exceeded 8.5%, among the highest worldwide. GNP increased from less than US $100 in 1960 to more than US $14,000 in 2004.

Since the Korean War during 1950-53 destroyed the industrial base of the Korean economy, the Korean government had to build its economy from scratch. The Korean government has pushed for rapid economic development.

The Korean government which took sufficient power via military coup in 1961 launched its first five year economic development plan in 1962. In the 1960s, the government had pursued export-led industrialization strategy... Lacking capital and industrial infrastructure, Korea firms heavily depended on foreign debt; this was tightly controlled by the state...

During the 1970s, the government promoted the HIC sectors - steel, shipbuilding, machinery, electronics, non-steel metal, petroleum, and chemical industries - as the main industries...

One of the key features in industrial policy during the first two decades of economic development is the government’s almost complete control of financial resources and credit...

In the 1980s, the government seemed to realize the importance of strengthening the market mechanism and began to reduce excessive government intervention, although the government continuously controlled financial resources held by the banking industry...

In the early 1990s, Korea faced similar problems as most developing countries passed through them in the industrialization process...

When a financial crisis hit Korea in 1997, the Korean government asked the IMF(International Monetary Fund) to provide emergency loans to fix the liquidity problems and had to follow the IMF mandatory program in return...

ICT industries and display industries took off after the IMF crisis. The birth of new ventures was purposefully promoted as a means to correct the skewed industrial structure and boost the economy...