South Korea-Economic Performance

The new regime inherited an economy suffering from all the side effects of Park's export-oriented development program and policy of expanding heavy and chemical industries (see Economic Development , this ch.; Industrial Policies , ch. 3). The international economic environment of the early 1980s was extremely unfavorable, a situation that further restricted South Korea's exports. It was necessary, therefore, for the Chun regime to concentrate on stabilization and it devoted its first two years to controlling inflation while attempting to bring about economic recovery. Investment was redirected from the capitalintensive heavy and chemical industries towards labor-intensive light industries that produced consumer goods. Import restrictions were lifted.

The economy began to improve in 1983 because of stringent anti-inflationary measures and the upturn in the world economy. While South Korea had suffered a negative growth rate in 1980, it attained an 8.1 percent growth rate in 1983. Exports began increasing in mid-1983 and the economy began to gain strength. A good harvest in 1983 also helped. South Korea attained its 1983 export target of US$23.5 billion, a 7.6 percent increase from 1982.

In December 1983, Seoul unveiled its revised Fifth Five-Year Economic and Social Development Plan. The plan called for steady growth for the next three years, low inflation, and sharply reduced foreign borrowing. Exports were to rise by 15 percent a year, inflation was projected to be held at 1.8 percent, and per capita GNP was to rise to US$2,325 by 1986. The annual growth rate was planned to average 7.5 percent though the actual performance was higher. The real GNP growth rate was 7 percent in 1985, but for the next three years 12.9 percent, 12.8 percent, and 12.2 percent, respectively.

Data as of June 1990