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close this bookTechnological Independence The Asian experience (UNU, 1994, 372 pages)
close this folder3. The Republic of Korea
View the documentPreamble
View the documentHistory
View the documentDevelopment policies and strategies from the 1960s to the 1980s
View the documentThe plans
View the documentImpact on the agricultural and industrial sectors
View the documentScience and technology in korea before the 1960s
View the documentThe role of science and technology in recent development
View the documentScience and technology and the exogenous environment
View the documentEducation and training
View the documentResearch and development
View the documentReassessment of the policy and strategy
View the documentAchievements in industrial development
View the documentThe electronics industry as a case-study
View the documentSelf-reliance targets at each stage
View the documentProblems and issues
View the documentFuture plan for self-reliance of science and technology
View the documentThe long-term goals and strategy of national development
View the documentRole of science and technology for future development
View the documentLong-term goal of S&T development
View the documentSumming-up and regional cooperation
View the documentRegional cooperation
View the documentBibliography

Development policies and strategies from the 1960s to the 1980s

Under Japanese domination, Korea was mainly an agricultural economy, exporting rice and importing manufactured goods. Since its liberation from Japanese occupation, the Korean economy developed in three phases: periods of economic instability and destruction from 1953 to 1954; reconstruction and expansion of the economy from 1954 to 1961; and accelerated economic growth after 1962.

During the reconstruction period, import substitution of consumer durables was attempted by guaranteeing a secure, though limited, market. Production was also expanded continuously throughout this period.

The foreign exchange required for industrialization during this period was limited. This was obtained through the export of agricultural goods and other raw materials, and partly through limited transfers from abroad. Because of this foreign exchange shortage, the Republic of Korea shifted, from the 1960s on, to an export-oriented growth strategy, exporting labour-intensive manufactured products.

Significant development and increases in real per capita GNP were seen only after the first Five-Year Economic Development Plan in 1962. From 1962 to 1984, real GNP grew at an annual rate of 8.2 per cent- the result of the adoption of the export-oriented industrialization strategy - and was much higher than the figure of 4.3 for the period 1954-1961. As the Korean economy became productive, foreign capital entered the country voluntarily, in the form of both loans and direct investment. This not only contributed to high growth rates, but also resulted in a high external debt.

Soon, the export of labour-intensive products reached its limits, as labour costs rose and the labour surplus disappeared. The economy now had to shift to other types of manufacturing with different comparative advantages. One was the import substitution of capital goods, which until then were imported.

This shift was not easy, as the technologies in capital goods manufacturing were much more sophisticated, and, in contrast to labour intensive manufacturing, it was hard to attain scale production. A compromise was the choice of a limited range of capital goods that were relatively labour-intensive, as in the machinery industry, construction equipment, and shipbuilding. However, even here, the labour required was of a more skilled character. In pursuing this strategy of skilled-labour intensive manufacturing, the Republic of Korea faced shortcomings in both technologies and skilled labour.

To overcome these difficulties, the country now began to import and then adapt foreign technology whilst simultaneously enhancing its indigenous technological capability. In this difficult task it was broadly successful, although there were partial failures, as in the fields of precision machine tools and heavy electrical equipment.