In 1961, the government strengthened the Economic Planning Board (EPB) as a central agency for drafting and coordinating development plans and mobilizing financing. This helped concentrate budgeting, foreign borrowing, and investment decisions into a single planning system closely tied to the executive.
On May 16, 1961, military officers led by Park Chung-hee overthrew South Korea’s civilian government. The new military government claimed it would restore order and pursue national reconstruction, creating political space for more centralized economic direction.
The Korean Central Intelligence Agency (KCIA) was established in June 1961. Alongside security goals, it became a powerful tool in domestic politics, which affected labor, student activism, and the broader environment in which industrial planning was carried out.
The First Five-Year Economic Development Plan (1962–1966) launched a state-led push to build basic infrastructure and expand industry. Over time, policies increasingly favored exports (selling goods abroad) as a path to growth and foreign currency earnings.
On May 3, 1964, South Korea devalued (lowered) the won’s official exchange rate to make exports cheaper in foreign markets and imports more expensive at home. This was part of a broader policy mix that aimed to accelerate export-led industrialization.
The Second Five-Year Plan (1967–1971) sought faster growth by expanding industrial capacity and infrastructure. It also reinforced the state’s use of targeted finance and policy support to steer firms toward sectors linked to exports and productivity gains.
In April 1970, construction began on the Pohang integrated steelworks run by the state-backed firm POSCO. Building a domestic steel base mattered because it supported shipbuilding, machinery, autos, and other downstream industries central to state-led industrial upgrading.
On April 22, 1970, the government launched Saemaul Undong (New Community Movement) to improve rural infrastructure and living conditions. It was intended to narrow rural–urban gaps that could widen during rapid industrialization centered on cities and factories.
On July 7, 1970, the final segment of the Gyeongbu Expressway opened, completing a major north–south transport corridor. Better logistics reduced travel time and shipping costs, supporting national market integration and export-focused manufacturing.
The Third Five-Year Plan (1972–1976) marked a strong pivot toward heavy and chemical industries (such as steel, petrochemicals, shipbuilding, and machinery). The state used directed credit, import controls, and performance pressure to speed industrial upgrading and strengthen national capabilities.
In late 1972, the Yushin Constitution reorganized South Korea’s political system to strengthen presidential authority. This political shift reduced checks on the executive, which influenced how industrial plans and resource allocation could be enforced over opposition.
On July 3, 1973, POSCO’s initial Pohang steelworks was dedicated, signaling that the heavy-industry strategy was producing major new capacity. Domestic steel supply supported export-competitive manufacturing and reduced reliance on imported inputs.
By 1976, planners were preparing the Fourth Five-Year Plan (1977–1981), reflecting a more complex economy with larger industrial sectors and heavier capital needs. The planning system increasingly had to balance growth goals with inflation, energy shocks, and industrial inefficiencies that could emerge from rapid state-directed investment.
On October 26, 1979, President Park Chung-hee was assassinated by KCIA director Kim Jae-gyu. Park’s death ended the leadership that had tightly linked political authority with multi-year industrial planning, leaving a contested legacy of rapid growth alongside authoritarian governance.
South Korea: Development Plans under Park Chung-hee (1961–1979)