NATIONAL INTELLIGENCE SURVEY 41B; SOUTH KOREA; THE ECONOMY

• Document Type: CREST
• Collection: NIS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP01-00707R000200080006-1
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 29
• Document Creation Date: October 25, 2016
• Sequence Number: 6
• Content Type: REPORTS

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The NIS is National Intelligence and may not be re-
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For NIS containing unclassified material, however, the
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Subsections and graphics are individually classified
according to content. Classification /control designa-
tions are:
(U /OU) Unclassified /For Official Use Only
(C) Confidential
(S) Secret
Mw..- r �xx+r.rn.+ns,:.we.aua�.a.+a: w:cva..,�._:..:.,..
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Cultivated
land area: 5.6
million acres
Total Land Area
100%
24.4 million acres
(38,000 square miles)
Other 14.4
Fruit and
Vegetables 9.4.
Pulses 10.2.
Barley and
Wheat 29.9
Forest Arabia
671% 23196
I
Urban
and
other
9,8%
Rice 36.1
The percentage distribution shown is
based on total multicropped area, which
amounted to 7,956,000 acres.
a. Agriculture
Agriculture output rose an average of 4.15%, per year
in 1963 -72, substantially higher than the population
growth rate of i Because of the more rapid growth
in other sectors of the economy, however, agriculture,
forestry, and fisheries declined in relative importance;
their share of GNP declined from 40% in 1961 to 29%
in 1971, and their share of total employment declined
from 60% in 1961 to 49% in 1971. In spite of the
growth in agriculture, South Korea is still a net
importer of foods. In 1971, foodgrain imports
amounted to 2.7 million tons, including more than a
million tons of rice and 1.7 million tons of wheat
Under its 'Third Five Year Development Plan, the
country plans to become self sufficient in rice by 1976.
About 23% of the total land area is arable, and
virtually all the arable area is cultivated (Figure 3);
cultivable land is located mainly on the coastal plains
and along the inland valleys, and an increasing
amount of hilly land has been cultivated by terracing.
Paddies constitute 36% of the cultivated area, and the
remainder consists of dry fields along the valleys and
upland slopes. The Koreans practice intensive
farming; double cropping occupies about half of the
total cultivated area. On the paddies, the summer crop
is rice, and in the winter the soil is drained and planted
FIGURE 3. Land use, 1971 (U /OU)
to barley, vheat, or vegetables. On the dry fields,
potatoes, beans, and industrial crops are grown in the
summer, and wheat, barley, and rye in the winter.
Other food clops include millet, sorghum, buckwheat,
corn, soybeans, green beans kidney beans, and
peanuts.
The soils of South Korea are generally shallow and
poor and require heavy fertili::ation. Greater
knowledge of the benefits of proper fertilization and
.increased supplies of fertilizers in recent years have Ieci
to the use of a more balanced ratio of nitrogen,
prosphorus, potash, and lime by many Korean
farmers. On the other hand, a large number of farmers
continue to Ilse less efficient and less expensive natural
fertilizers. Consumption of chemical fertilizers reached
1.3 million tons (product basis) in 1972.
The country is nearly self- sufficient in fertilizer
production, except for potassic fertilizers. It has eight
producing plants. Fertilizers are distributed by the
National Agricultural Cooperatives Federation
(NACF), the sole agency authorized by the
government to procure fertilizers and pesticides and
supply them to farmers. Most villages throughout the
country have NACF- operated cooperatives that also
3
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r. s
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as.ist lhr larlal�rs in alalki�tilig I heir KIKId% iind cntettd
th0nl CFMIIL (it addition to lllr matmi NA C F
urgantwallon. Ihere arc niur brillcllvs, 1.10 cs:rrutly
coolm�ntiics. Dull f ,7E -E villagrcexllxlrtiis'es. 1114-tvarc
:Ilse six ci;d fur nultkellog products well
as li�rrtln�k. eggs. fruit. Vegetables, aad silk eIK'Ikas.
'file NACF is Ilte oily unxlens agricullisr:t[ cn�dil
holitlitiun ::ti th hipgcst aioglt, utarct of cloidd for
South Kon�an furtucn. It Las the ;usthodly to
mliscoont and Istirrou' from Ilse I1mik of Kwea and In
issttc delcnlnn�s. Korraa farmers rl�guirc cudil, atul
IxItanW ittslilaliollal Cklill hoshct�u 1.1111suilill4e. theg
have iKsrr41crtxl from pris'ulc nhau�ylt'ml schro
rhlsrgi? intrust rtlts maglog flout W; lit 10% 114�r
nuulth, Al prrsrat, the NA (,I- pniviclt,s less than truc-
half of Loki] ittrd emlil, :tilt[ farmers still most ixlrmu�
heavily fo41ii pdvatc nuolt1VIr11drrs.
Move 191.5, %Alen the 5siulli Korean Govrnimen:
Was tslablidled, W 11111111Mr of [caul Wfarru pnli
!lave Ik+Ott stadcrlakcll, Ten;itsry Inn It�cn offirl:111y
alool6livil. and farmers have lKvrt forllldd[�11 tit
murtgLige their land IW :m yooe hnt lice go %entmertt,
limaor _If the shnrlage of lim-intewsl c�redil.
ho.ccrc fi0rillerti ullaclilnts ITMA tuorlgRge.. user ]l ;df
their crops In priVale nlulleyleaders, l.:oul reform
ttcittcd it prOlifrr.0tio11 of spoilt. Irrrgolor, Will
IIIItt illligamis 1lols. hat W rcviiion of the Faun lAtI
Itoprovelncul. Act in 1967 prtvided for the
cimmilidaitrm amt rearrangculcIA of holding' t41
tnq/rove cfficicnry .111d mist, pr /0luctioa, Dltring the
Srcoiid Fine fear Plan (IW7-71 alm lit 370,t11111:rcFes
of Lund were a+ns' Ili tltttccl. Fanners rrsIptin Ims betel
g(KA, bill 1001tlentl'k.1 chlveloptKl ill tllV 1111n�allertllC
1 >nxnss he�eause of a slWUtaytc of trliat,ll lx�n41altcl, Ill
,pile of himLieftlnn vfforts, the. avenge size of a L�erat
in S1IIIIt Kort:t Fell mias v0rysnh111- 111 WIN' 12 Wen's.
In the 'Third Five Year Platt 0 the
government has einlshasiYed the derth,psnenl of the
agriculti:al st (loderthc flan, agrictilime'ssluire
Of talal investmcsil "ill rise! to 11.8% from the 13.3%
c;dltd for :u the Second Fim Year flan, 'Tbr major
untphWSis trill he placed on distribulinn of improved
sends, fstrm aleCINW0�l.Wlloll, consolidnliWU of
frlgmcaml holdings. and improved Irrigation,
drain amt� rust[ systculs. Furthrrmare, it long
range plan co�eritig the 1971 -31 period was
fornlabrtctl twilevrinii the four istajor river basin wva%
(Kntto-gnng, 1'ongsjll -g4ng, Nakloitg� gang, and lian-
gang'), which act for over half the farmland
under !idtiv: Liun.
'Furrdk;tcdthY oh 19ALV et,utN WV Iltr lbl ,4 Maur[ in eIx npnx,
[d thr ."5tu1111WF \tali III the CAMIAry PKAIV chaptrr arn1 the trail
lixlf,
I (:rails �iticr is Snutll Kurca', mint iuslxrrl:n,t
1`0041 cro11: it iau ;I high ealorie contt�nl +Intl a Iligh
yield h,Ae, liit'e is phanit'd Oil 116111t out, -11nff of the
lotul :aca snwo to grtin iinclading donhle- catplxst
arras) (Fil;are I). YnKloclioa of nlillrd Fitt� V;rrir0l
bet%teca :31 mihiioW ton% and �l.l trillion lolls,
ase agutg 3.73 million lam in I9i++ "0-71 (1.1911 S).
WO10114C11 druu9)1t 0(mclilio11s caltx'd it dc�ciine in rice
ptotluction in 196 ;[till 196%, and ogaiu ill ih72. when
oat pul was. sliglllh lx�loa� (ht, prcyitrus year Icy[] 41f
�1.0 million lolls. Alont `ilS'i of tilt irrigaLle paddy
arr:t 2.4i Wlilllon :Ices i% full.- o patliallr irrlgaled,
:md the remainder is minird. 111ve yields averaged
abort [A tons per acm is L962 -7).
Itarles. lllc SM-110rnl nu �t ingnxt:lat fexXI cnlp, is
planlett us a settiultl crop oa al0ul aae -liulf of Lite riir
paddits. !icmlh Korea's bailey output rc�Wrlsrlel a )sigh
of 2.0 Was in M's. but tirclilud Ance 111011,
141111 alltpnl lal:slilig 1, ltii,t11111 I011s ou ]1112, Wheat
vtollipetes 5[ barley to soon. extent a% a x�ceatel crap
fill ria�fielcls, huh the Ionger gnsving hen ion required
for wheat plA s the harvest tinge lulu tilt- rainy
scaseai -111(' iillut udVW11lagamsli11tr furtnmsplal ling
flue. As :i recall. tilt! :ttca mAva to cheat is ally almoli
one sislh of the urea soak lit barley. Sonilt Koreas
cheat consumption has increusc�11 �al) i %iucc 1%7.
,Md ill 19(2 it lotoled ailtatt l,li ndiliun tans, the ladk
of which ccus imllorled under F.L. �ISW Ill 1972, wheat
pnxliletiall ;I-, only 2 11. 0l1ll 14111%, it ,igoifie,tnS
deviine from 19711 awl lflFt-
The wo luctimi Of mvmt 1xrinittes varied sliglilly In
196(.5.71, althouXli the phtelt"11 lit" hits doulined Alive
the tol(l- li)li0's. Is land b;ts lk�c11 sltifted In barley t
rice pnxlaclion. Most of Lite oolpal of ssceet Imlalaes
is eti�tsollied dlredly, ullh(ugh some is prcicewd into
starch, nli`ohol. anal gilmov. The gomilllteat
etivoll :Igts llir protilletion of stn�el lxltiticxs h: -itme
of the high y)rld WILL high calorie content The
production 41f Gillis ntid vegetables Istereased
it >nsidertb :vav0rlite past sew -rot )-cars, almig with the
gns+�ill of fllIKI pmcCssing industries in ge11er11. The
oulpnt of viviabits Fits iacn ;iuYl a wei,my f;lst,
growing by 16 In LOT 1. %%�hell it anum11led to 2.9
milhom tuns, 011ier ftOKl crops mired is sigi ificanl
quantities itItAwle rye, millet, corn, and white
polWtocs.
IWdustrial crolr% um of less inllxlrtarlitc ill Solids.
Korea's agricullund sector. '!'Ile governnh however.
is prfilWoting the jW011cltrol of rah cord% sal l as
malb", le ;eves (for wrict !lute), lobammi, r- utilal.
xraartic. hemp, rllle,eed, runic, and black m+h.
l "obacuo production Wnd exports ore aeaively
promoted lty tilt goverroueal, which has a rnonolkily
s
i
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o t
0
'o
CULTIVATED AREAS
Paddy crops
Dry crops
UNCULTIVATED AREAS
L J Forest
Scrub, brush and
barren land
R
la
r'
0
D
p 0
OQ O
O o 0 0
0
o
IJ O e p
O
C3 o
FIGURE 4. Vegetation and land utilization (U /OU)
on the manufacture and distribution of tobacco
products. Exports of tobacco and tobacco products
rose in value from US$7.8 million in 1968 to 12.6
million in 1972. Cotton acreage and production have
remained at a relatively low level due to the
availability of U.S. cotton under the P.L. 480
program. In 1961, there were 120,000 acres planted to
cotton, producing 123,000 bales; by 1971, the cotton
area had declined to 34,000 acres, with a total output
of 53,000 bales.
Sericulture has grown rapidly, and South Korea now
is the world's leading exporter of raw silk. Raw silk
production almost tripled between 1966 and 1971,
when it surpassed 2,300 tons.
(2) Livestock �Farm animals have been valued
primarily as a source of draft power and manure;
however, their use as a source of food is rapidly
increasing. 'rhe government continues to stress
livestock development to increase the supply of animal
protein. In 1969, a 4 -year livestock development plan
was announced proposing the establishment of a
cooperative Korean cattle development complex,
livestock demonstration farms, and the distribution of
improved breeding animals to farmers. The number of
draft cattle rose from 1,190,156 in 1968 to 1,244,135 in
1971, still well below the count of nearly 1.4 million in
1964 (Figure 6). The beef cattle population, on the
other hand, rose from 907 head in 1964 to a high of
:3,948 head in 1969, then fell to 2,865 head in 1971.
The number of milk cows has followed a long -term
upward trend, rising from 14,000 head in 1968 to
30,000 head in 1971. The increase in number of dairy
cattle, beef cattle, and chickens during the past
decade was a response to the growing urban demand
for milk, eggs, and meat �a result of rising incomes.
Expansion of the domestic feed industry has
facilitated the raising of beef cattle and poultry. The
number of hogs averaged nearly 1,323,000 in 1964 -71.
Other farm animals raised in South Korea include
sheep, goats, rabbits, ducks, geese, and turkeys.
Livestock exports are small, averaging less than US$4
million per year in 1969 -71; exports of meat and meat
5
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FIGURE 5. Production of selected crops (U /OU)
(Thousands of metric tons)
*Polished v eight of grains
`y
preparations averaged about $1,533.000 annually ill
those %ra rs.
b. Fisheries
At least half of the animal protein in the So nth
Korean diet is supplied by fish. Because of tie�
convergence of cold and swarm sea currents, the waters
off the coast of South Korea arc ideal for many
varieties of marine life. In addition to coastal fishing,
deep -sca fishing is being developed on a large scale.
Some of tl .c more important species caught are oysters,
Tanis, liana, saury, hairtail. Alaska pollack, mackerel,
anchovies, squid, and scaNveed. The overall fish catch
(including seaweed) reached 1,343,569 tons in 1972,
compared to 600,000 tons in 1964. Exports of fish and
fishery products increased from Ines than US$24
million in value: in 1961 to $153 million in 1972,
accounting for about 9% of total exports in tile. latter
year. The government fisheries program calls for an
expansion of the catch to 1,157,000 tons and exports
of $183 million by 1976.
A large segment of the South Korean catch cones
from coastal fishing, although the cultured and (feel)-
sea fishing catch is expanding. The output of cultured
fish increased from 97,000 tons in 1967 to 160,400 tons
in 1972, and the deep -sea catch rose from less than
1.000 tons in 1960 to 50,000 tons in 1968 and 221,000
tens in 1971. The deep -sea fishing; fleet has expanded
from 63 ships in 1963 to 155 in 1972 as a result of
government encouragement. '1'hc fleet fishes for tuna
in the Atlantic, Pacific, and Indian oceans and
operates out of 1.1 bases scattered throughout the
world. At present, over 50% of the deep -sea operations
consists of trawl fishing, whereas a few years ago
operations were chiefly longline fishing.
Efforts are being made to overcome the problems of
low income and lack of modern facilities and
techniques in South Korea's fisheries. In 1972, South
Korea began a number of joint ventures, including
those with the New England hisheries Company for
shrimp and tuna fishing, with the Del Monte
Company for skipjack tuna fishing, with El Salvador
for tuna fishing anal processing, with U.S. and
Japanese interests for Alaska poliack fishing, and with
Uruguay for trawl fishing. The industry also benefits
from substantial foreign aid. Under terms of the
Fishery Agreement with Japan, that country will
pro ,;de US$130 million to the industry.
c. Forestry
About 67% of the land area of South Korea is
classified as forest area, but this includes 13% that is
FIGURE 6. Number of livestock (U /OU)
(Thousands of head)
1965 1966 1967
1968 1969 1970 1971
'Draft cattle.......
1965
1966
1967
1968
1969
1970
1971
Milled rice
3,501.1
3,919.3
3,603.1
3,195.3
4,090.4
3,939.3
3,997.6
Barley
1,807.0
2,018.1
1,916.0
2,083.6
2,066.5
1,973.9
1,857.5
I1'heat
299.9
315.3
309.8
345.0
365.6
356.8
322.0
Rye
29.2
4.2
27.5
24.8
27.3
21.6
17.3
Millet
62.6
58.8
42.4
78.8
61.4
44.7
35.1
Corn
39.9
33.7
59.6
33.1
62.6
67.8
64.1
White potatoes.....
435.6
688.3
566.1
617.0
599.3
605.2
589.1
Sweet potatoes.....
1,678.5
2,690.2
1,670.7
2,049.3
2,122.7
2,136.1
1,901.4
Cotton............
11.8
13.7
11.9
12.7
13.5
13.3
12.1
Vegetables.........
1,576.0
1,717.2
1,869.4
2,150.2
2,427.5
2,520.3
2,917.9
Fruit
310.0
331.1
358.9
392.4
416.8
423.3
404.3
Tobacco...........
56.1
72.1
66.0
69.7
59.2
56 3
63.4
*Polished v eight of grains
`y
preparations averaged about $1,533.000 annually ill
those %ra rs.
b. Fisheries
At least half of the animal protein in the So nth
Korean diet is supplied by fish. Because of tie�
convergence of cold and swarm sea currents, the waters
off the coast of South Korea arc ideal for many
varieties of marine life. In addition to coastal fishing,
deep -sca fishing is being developed on a large scale.
Some of tl .c more important species caught are oysters,
Tanis, liana, saury, hairtail. Alaska pollack, mackerel,
anchovies, squid, and scaNveed. The overall fish catch
(including seaweed) reached 1,343,569 tons in 1972,
compared to 600,000 tons in 1964. Exports of fish and
fishery products increased from Ines than US$24
million in value: in 1961 to $153 million in 1972,
accounting for about 9% of total exports in tile. latter
year. The government fisheries program calls for an
expansion of the catch to 1,157,000 tons and exports
of $183 million by 1976.
A large segment of the South Korean catch cones
from coastal fishing, although the cultured and (feel)-
sea fishing catch is expanding. The output of cultured
fish increased from 97,000 tons in 1967 to 160,400 tons
in 1972, and the deep -sea catch rose from less than
1.000 tons in 1960 to 50,000 tons in 1968 and 221,000
tens in 1971. The deep -sea fishing; fleet has expanded
from 63 ships in 1963 to 155 in 1972 as a result of
government encouragement. '1'hc fleet fishes for tuna
in the Atlantic, Pacific, and Indian oceans and
operates out of 1.1 bases scattered throughout the
world. At present, over 50% of the deep -sea operations
consists of trawl fishing, whereas a few years ago
operations were chiefly longline fishing.
Efforts are being made to overcome the problems of
low income and lack of modern facilities and
techniques in South Korea's fisheries. In 1972, South
Korea began a number of joint ventures, including
those with the New England hisheries Company for
shrimp and tuna fishing, with the Del Monte
Company for skipjack tuna fishing, with El Salvador
for tuna fishing anal processing, with U.S. and
Japanese interests for Alaska poliack fishing, and with
Uruguay for trawl fishing. The industry also benefits
from substantial foreign aid. Under terms of the
Fishery Agreement with Japan, that country will
pro ,;de US$130 million to the industry.
c. Forestry
About 67% of the land area of South Korea is
classified as forest area, but this includes 13% that is
FIGURE 6. Number of livestock (U /OU)
(Thousands of head)
1965 1966 1967
1968 1969 1970 1971
'Draft cattle.......
1,312.7
1,288.6
1,240.5
1,190.2
1,198.4
1,267.8
1,244.1
Milk cows........
6.6
8.5
10.4
13.8
18.8
22.8
30.0
Beef cattle........
0.8
1.1
2.1
3.3
3.9
3.0
2.9
Chickens.........
11,892.6
14,007.7
17,079.2
25,967.8
22,651.4
22,476.9
25, ?22.0
Hogs
1,381.9
1,457.3
1,296.1
1,395.7
1,338.5
1,121.4
1,332.5
6
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Jh�uudrd: 41111th elf tilt' rl�In:li LIVI is lxulrl slocketi.
liter If }la. fun'sssuffered frlmlexIea.ivrux�rrcplting
Iletaltsl' of it 9r11e au elf fuel. '1'lli. rcwllited is
aiclr.prtsd cnln;au and 11:1411 Ih1lKlhly; that r l:ullagt�d
auras 1141114.3 c�ullis�:dian. IiI ovrrcrnne Ibis anitliliuu,
Iln gosrtnr11l'nl i. 1 >unllin} a Lureylr' 3311 ;d0ilitatiOn
llrogrull, both 1 .1 13rer5c�rve rsisl�a}S Iir:Iller ncounYx
Mill lip blrrr:lse hltllll'shwk drill}; 1111� perilKi 1965-
E 1. alnl(esl :3.1 million aeries uen' u'foncsled and about
3 -7 till 41111 irve scl�ellings s s' planted. The
411vl'n11ruat's soil amsen Pnlgrllll cvlvlsea alxJnl
1$11.tleill acmy xlupll}t J967 -711 in addiihon In 1.2
nlffliun :WW!, 1,411'ert -d t1111ing 1 While tirnlx�r
Pt(x111clioll has inenuse'd Rivet I!:v Past fro' yv ;lr.
d"Juali };real!}' eacrl'els, donu'stic suPlllr, [u 15
Ir:urbl'r output reached &33,1101} collie (l orIer.,
1'nngl :Jred iu dnnustir cYnruluplilln of d,G :>fi3Os
till 1111ilt d SI ;lIes 41141 11:11 ail agrvelllelll For
the expiorrtion Of Kona'% nffslsnre 111114'11. I'hillips
Illy K-ra11-:Inll'rican Oil Col.. u:ts ect it 1) 13y
four U -S. oil crlrtlPaniCs slK�cific.Ill for lx lnllennl
1'.x PIOnstion. Driliirlg 4olmi ltioll. werrr tint stl't'1 t(1
slut More lily candusion of bilateral negtiluttioa.
between Jalrsu and Soulll K11r4a coviverning the joiol
cxplorilina and vxl3!O�tati(1rk of Pelroir11nl rels1111rers In
dbillited bras_
(')411 is still a slgPlific :toll so11n1 410 cnrrl;r forclevitie
(11lx.er l ctivniti011 lllld nlil lrlll.rxlrl. It kills also
Ik -sine imixulald for Ilrating hl rura::trca sitter.
fanners have been envourtged Ill Preserve tilnhl'r
11-4111rccs, ,1111 �calcite coal productiuu eleclilled is
19119.6:1 as :1 rl�sl elf Ihl' 9 silift
to 1)el111eunl. l lou'rver, I1egi1111iit4 ill 1 517(1, steps uerc
takell 111 stilunlxtl� coal prod11cli11n, and output
ineteused to )2A l 111111irn tolls ill 11172, conil amd toan
clvcnllle of 10:2 /1111114111 [(Ill% in 196S-M. The goIvrn11ue11t- oa'it'll Koreall dining I'rotnnlitrn
Cor11e0n tiou (K,\l1 estaLlfshud 141 June 191337 to
ac.lst the wal indusiry irk rn(xlerrliMig its facilitie�s;ltld
curuolidaliag solar of the srkladler and less ecelnl11niral
Private 00a) ca IIINlnk-,, As it rrsldl. pracluction
reatchrd a reconl high in 194 (Figure 7),
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nnuu.r'a c
FIGURE 7. Mineral production (U /OU)
(Tons, unless noted otherwise)
1966 1967 1968 1969 1970 1971
Anthracite (thousand tons) 11,613 12,436 10,242 10,273 1.2,394 12,785
Iron ore (thousand tons) (50 Fe.).. 807 694 842 734 636 442
Tungsten (70% Was) 3,322 3,639 3,898 3,487 3,657 3,644
Manganese ore (40% mn.)......... na no 3,437 2,315 2,397 2,134
Gold, refined (kilograms) 1,882 1,968 1,708 1,465 1,366 947
Silver, refined (kilograms) 15,554 18,285 19,016 19,584 52,700 46,841
Copper ore (6% cw.) 21,073 15,561 18,616 19,285 18,772 14,638
T ore (400' pb.) 13,890 17,607 23,812 24,020 26,379 26,453
Zinc ore (50 Zn.) 23,386 27,299 36,353 40,278 46,809 60,169
Bismuth (99% Bi.) 97 110 105 111 106 97
Molybdenum ore (90% Mo.) 552 516 250 401 279 237
Crystalline graphite (80 2,164 2,426 643 593 795 1,172
Amorphous graphite (75 128,780 364,323 358,538 309,753 337,152 374,164
Kao lin 112,234 102,679 60,513 52,983 84,608 124,445
Talc........... 53,649 56,370 65,161 130,915 135,338 104,374
Fluorite (90% Ca F 31,208 56,968 32,562 24,177 29,978 50,815
Pyrophyllite 54,690 66,592 91,147 69,923 93,995 91,014
Limestone (thousand tons) na no 7,021 7,530 9,936 11,213
no Data not available.
Approximately one -third of the output comes from the
government -owned mines operated b the Daihan
Coal Corporation. South Korea's coal reserves were
estimated at about 1.3 billion tons in 1969, of which
510 million tons were considered to be recoverable
with present technology.
Electric power output expanded rapidly in recent
years to meet the growing demand for electricity. By
the end of 1972, the national installed capacity was
about 3,871,000 kilowatts (kw.), about 35% of which
was surplus. Production of electricity during 1972
amounted to 11.8 hilli�n kilowatt -hours (kw. -hr.), a
141% increase over 1967. Per capita output was 370
kw. -hr., which compares favorably with that of most
other Asian countries. The bulk of production was
generated by the government controlled Korea
Electric Company, which owns and operates most of
the country's generating base and all of the
transmission and distribution facilities. Private
ownership is restricted to industrial power plants and
three public utilities. The government approved
private participation in 1967 -68, when demand for
electricity substantially exceeded the supply.
Thermal plants account for about 90% of the
electric power output. The bulk of thermal power
production is derived from plants fueled by petroleum.
Hydroelectric power potential is restricted by the short
rainy season (during the summer) and a small annual
river flow, which reduce the economic feasibility of
water power development. In addition, few sites are
suitable for building reservoirs to provide adequate
water storage.
Both capacity and production are concentrated in
the two principal industrial, commercial, and urban
centers of Seoul- Inch'on in the northwest and Pusan
Ulsan in the southeast. The Seoul- Inell'on area
includes two large thermal plants, a 387,000 -kw.
facility at Seoul and a 250,000 -kw. plant at Inchon,
the latter of which is being expanded by an additional
550,000 kw. The country's largest hydroelectric
installation, the 108,000 -kw. Hwach'on plant (Figure
8) at the P'aro -ho Reservoir, also provides power to the
Inch'on area. The principal thermal plans in the
Pusan -Ulsan area are a 342,000 -kw. plant at Pusan; a
200,000 -kw. plant at Yongnam (north of Ulsan), the
capacity of which is being doubled; and two plants
with a combined capacity of 150,000 kw. at Ulsan.
Other fairly large thermal plants include the A and B
stations at Yongwol in the northeast -each with a
capacity of 100,000 kw. -and the 200,000 -kw.
Donghae plant, near P'ohang.
Electricity is consumed primarily in the vicinity of
the two generating centers of Seoul- Inch'on and
Pusan- Ulsan. Nearly four fifths of all available
electricity is consumed by industrial users, principally
chemical, textile, ceramics, food, and metal and
machinery producing installations. Most of the
residential power is consumed in urban areas, but rural
electrification is increasing steadily, and about one
third of the rural communities had electricity in 1971.
According to the 10 -year electric power develop-
ment plan, the national capacity is expected to reach
7,720,000 kw, by 1976, about three times the 1971
capacity. Major projects already under construction
W
r

FIGURE 8. Hwachon hydroelectric powerplant. This 108,000 -kw, plant is the largest
hydroelectric plant in the country and is a major source of power for Seoul. (U /OU)
by the Korea Electric Company could provide an
I dditional 2 million kilowatts of capacity by 1976.
One of the plants under construction, the 600,000 -kvv.
Kori station near Pusan, will be the country's first
nuclear power facility and will be powered by a
pressurized light -water reactor of U.S. manufacture.
Other important government -owned facilities
currently under construction include a 500,000 -k%v.
plant at Yosu and the 125,000 -kw. Yongdong plant
north of Samch'ok. In addition, the Inchon plant is
being expanded by 550,000 kw. and Yongnam is being
increased by 200,000 kw. Work is also underwav on
three important privately -owned public utility
thermal projects, which include the expansion of the
Donghae plant by 440,000 kw. all(] construction of the
600,000 -kw. plant at Yost' and the 316,000 -kw.
Kyongin plant at Inchon.
3. Metals and minerals (U /OU)
South Korea has only modest mineral resources.
Anthracite coal accounts for roughly one -half of the
value of ruining output, and iron ore, graphite,
copper, limestone, tungsten, and lead account for
most of the remainder. Other metals and minerals
produced in small amounts include gold, silver,
kaolin, talc, fluorite, pyrophyllite, bismuth, and
manganese, molyhdenum, and zinc ores. Salt is
obtained by evaporation from salt pans. Mineral
deposits are generally located in the mountains and
foothills. Tungsten and associated minerals, such as
bismuth, and lode gold are found in all parts of the
mountain ranges, which extend the entire length of
the cast coast and branch to the west and southwest.
Placer gold and mineral sands arc found in the
foothills. Anthracite coal, graphite, iron ore,
manganese ore, talc, in(] fluorite are located mainly in
the northern mountains, while nonferrous ores and
pyrites arc concentrated in southern mountain areas.
Some nonmetallic minerals such as salt, pyrophyllite,
and kaolin are found in lowland areas.
In 1971, South Korea's mining industry (including
quarrying) accounted for slightly less than 1 C'r of the
employed labor for -e and 1.15U' of the GNP. In 1968-
72, mining production rose at an average annual rate
of 2.1%, compared to an annual average of 10%
during 1962 -67. The slower rate of growth in 1968 -72
was largely clue to lower coal production in 1968 -69
and the reduced level of production of metallic and
nonmetallic minerals (other than coal) in 1970 -71.
Although the bulk of the mineral output is consumed
domestically, South Korea exports a major portion of
its iron ore, kaolin, pyrophyllite, lead, zinc, and
tungsten; total mineral exports (inc�!uding coal)
reached US$38 million in 1971. Tungsten ore, sold
mainly to Japan and West Germany, was the leading
mineral export, amounting to about $11 million in
1971. Practically all of the remaining important
mineral exports are sold to Japan. Mineral imports
include sulfur and asbestos (primarily from Canada),
coke and smal! amounts of bituminous coal (from
Japan), and copper (from the Philippines).
9
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The government owns nane of the larger mining
corporations but encourages the growth of private,
concpallies by providing financial and technical
assistance.
South Korea's iron ore reserves were estimated in
19';2 at 112 million tons, of which only 15.71 was
high gr Iron ore output declined OSr ill 1971 to
1 12,000 tons, most of which was exported to Japan.
South Korea is the second largest producer of tungsten
among the non Communist countries, behind the
United States. Output declined slightly in 1971,
however, totaling 3,(i -14 tons: output has been
declining in recent years because of declining
accessibility and duality of deposits. The Sangdong
nine (37 �09'\., 128 �50'E.) of the governnumt -owned
Korea Tungsten dining Co. and the '1 mine
(35 �47'\., 128-40'E. uc(uunt for over 901 of the total
tungsten production. South Koreas tungsten ore
reserves were estinuuted at 300,000 tons in 1972. 'I'll(
scheelite benefic�iation plant at Sangdong is capable of
cuing low -grade ore that could not otherwise be milled
s profitable.
South Korea has large reserves and is a major
producer of low -grade amorphous graphite, account-
ing for 16% of world output in 1970. It also has much
smaller reserves of higher duality crystalline graphite.
In 1971, the country produced 374,164 ons of
Y.. cmorphous graphite, .which included considerable
amounts of metaanthracitc. Exports of amorphous
graphite totaled 30,145 tons in 1971, mainly to Japan.
South Korea is richly endowed with kaolin, with an
estimated reserve of 30 million tons. Exports of
kaolin� mainly to Japan totaled 77,522 tons (out of
a total outpat of 124,445 tons) it, 1971. Limestone
production has increased rapidly with the expansion of
the cement industry, reaching 11,213,000 tons in 1971,
an increase of 13% over 1970.
The base metals production index rose 264 points
between 1965 and 1971 (1965 =100). Hankuk
Aluminum Co. erected the first aluminum smelter
near Ulsan in 1969, producing aluminum from
imported alumina. Aluminum ingot production rose
from 6,309 tons in 1969 to 16,600 tons in 1970, therebv
significantly reducing the country's dependence on
imported aluminum. At present, South Korea
produces a full line of aluminum products, taking
advantage of low labor costs. Production of
w' electrolytic copper rose 60% between 1968 and 1971.
The government has promoted the development of
a domestic steel industry to reduce its dependence on
imports; in 1971, imports of iron, steel, and ferrous
scrap were valued at US$196 million. Although South
Korea's steel production capacity in 1970 was 853,000
10
tons, output of steel ingots in 1971 was only 471,000
tons, slightly lower that tlue 181,000 tons produced in
1970. The producing units include a mill at Masan
with a capacity of 160,000 toils of steel ingots and
slabs in(] 120,000 tons of steel plate; two cold- rolling
mills built at Seoul and Pusan in 1967, with a
c�ornbined annual output of 180,000 tons of cold rolled
steel and galvanized iron sheets; and the privately
o\\,rccd Inchon Ileavy Industries (Steel) Co. steel
plant ;It Inch'on with a capacity of 140,000 tons of
(-rude steel. The rolling capacity of the Yunhap Steel
Mill Co. was doubled in 1970. The 'Third Dive Year
Plan (1972 76) calls for the building of a foundry pig
iron plant with it c�apacit' of 200,000 tons per y ear and
a special steel plant with a capacity of more than
60,000 tons of round bars annually.
South Korea has placed a high priority on
est ablishing its first integrated irou't and steel mill, and
in July 1973 all ten plants involved in the first stage of
Hie integrated mill bec�aune operational. The mill is
located at Pohang; it has an initial annual capacit of
over 1 million tons of ingots and 850,000 tons of
finished steel products. In July 1972a small steel plate
factor\ was opened as the first part of the project; it
has an annual capacity of :336,000 tons, using
imported slab. Initially, the Korea International Steel
Association (KISA) �a consortium consisting of U.S.,
British, German, French, and Italian firms �was
formed to finance the construction of the mill.
However, in early 1969 the U.S. Export Import Bank
refused it KISA request for financial support because
of reservations about the project's economic
feasibility. South Korea terminated its contract with
KISA and in turn received financing from Japan. I'hc
entire project was constructed under a supply and
technical service contract with Voest of Austria, and
the total cost amounted to an estimated US$210
million, of which Vocst provided $24.3 million, and
Japan supplied about $164 million. The Pohang mill
will not meet domestic steel requirements which
amounted to 1.5 million tons in 1970 and are expected
to grow to 4 million tons by 1976. In December 1973,
the second stage of the project will begin, designed to
raise the capacity to 2.6 million tons by 1967 -68. The
country hopes to receive it US$60 million World Bank
loan to help finance the $300 million, 3 -year second
stage development project. Preliminary studies are
now under way on a second integrated mill.
South Korea's nonferrous smelting facilities are to
be enlarged in the Third Five Year Plan with the
expansion or construction of facilities for copper, lead,
and zinc. The Changhang complex, built in 1964,
includes a lead smelter and refinery, a copper smelter
Kxy_ M': hl:: ii: ti.: a5.$ iF ."'iiwa.:4:.ti::
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and electrolytic refinery, a flotation mill, and a plant
for extracting silver and gold using the cyanide.
process. Production of refined gold declined fr
nearly two tons per year in 1967 -69 to just under one
ton in 1971. However, it is probable that South
Korea's actual gold output is higher than officially
reported, since not all mining companies are required
to report gold production to the government.
i
4. Manufacturing and construction (U /OU)
a. Manufacturing
Manufacturing is the most dynamic sector of the
South Korean economy, accounting for over 25% of
the real GNP in 1972, compared to only 15% in 1966.
The share of the employed labor force engaged in
manufacturing rose from 10% in 1966 to over 13% in
1971. The rate of growth of manufacturing ,output
increased from an average annual rate of 15.8% in
1962 -66 to 23.2% in 1.967 -72. This growth was based
!argely on the development of export oriented
industries such as textiles, plywood, and electrical
machinery. As a result, manufactured goods
comprised 88% of total exports in 1972 in contrast to
only 22% in 1961.
The trend in South Korea is toward larger plants
and more capital intensive methods of production,
but labor- intensive industries producing such items as
straw products and textiles are still important. In 1960
about one -third of manufacturing output was
produced in large enterprises (200 or more employees),
whereas in 1970 the share was about two thirds. Large
modern plants are most conspicuous in the fast
growing producer goods industries such as chemicals
and petrochemicals, base metals, cement, and
electrical machinery, as well as in the important
export oriented plywood industry. Small firms (less
than 50 employees) dominate the furniture and
fixtures, clothing, footwear, leather goods, metal
products, and nonelectrical machinery industries.
The textile industry (including footwear and
clothing) is the oldest and largest manufacturing
industry in South Korea, accounting for about 25% of
the manufacturing labor force and roughly 20% of the
gross value added in manufacturing in 1970. Most of
the industry's production is consumed domestically,
although exports of textiles and clothing have
increased dramatically, reaching US$619 million in
1972, compared to only $3 million in 1962. Textiles
and clothing accounted for 38% of total exports in
1972, compared with 6% in 1962, and South Korea
now ranks third behind Hong Kong and Taiwan
among less- developed countries as an exporter of
textiles. Clothing exports alone in 1972 totaled $442
million, a 45 increase over 1971. Textile production
increased 36% and clothing and footwear, 46% in
1972.
With the rapid growth of the manmade fiber textile
industry, output of most natural fiber textiles has been
declining in recent years; however, natural fibers
(cotton, wool, and silk) still account for a large portion
of textile output. The number of spindles available for
cotton textile production has been steadily increasing,
totaling about 1 million in 1971. Production of cotton
fabrics in 1971 was about 24% above that of 1970, but
it was still 8% below the 1967 level. The lower
production levels since 1968 reflect strong competition
from svnthctics. Only about 58% of the total fabric
output in 1971 consisted of pure cotton fabrics,
compared to 74% in 1965. South Korea depends on
imports for most of its raw cotton requirements
currently over 125,000 tons annually. Raw cotton
imports in 1972, valued at US$86 million, were
supplied mostly by the United States under the P.L.
480 program. In contrast to the production of other
natural fiber fabrics, silk fabric production has
boomed. The output of silk fabric increased 130%
between 1966 and 1971, and reached 8.2 million
square meters in 1971.
Manmade fiber fabric production includes products
of nylon, acrylic, polyvim,l acetate, viscose and
acetate rayon, polyester, and polypropylene fibers.
South Korea imports intermediate manmade textile
products, and concentrates on the production of
clothing. Imports of synthetic fibers, yarns, and fabrics
totaled about US$95 million in 1971. When the Ulsan
petrochemical complex is completed, however, the
need for imports of intermediate synthetic textile
goods will be substantially reduced. 'There are plans to
boost production of synthetic fibers fourfold by 1976.
Knitwear has shown the fastest growth of all the
rapidly- rising synthetic textile exports increasing
from less than $6 million in 1965 to $133 million in
1971. Sweaters made of synthetic fiber comprise a
large portion of knitwear exports; sweater output in
1971 was almost six times the level of 1966.
Food processing (including beverages and tobacco)
is the second largest industry within the manufactur-
ing sector, but its relative importance :s declining. Its
share of gross value added in manufacturing fell from
42% in 1961 to 29% in 1970. Food processing,
beverage production, and tobacco processing grew at
average annual rates of about 26 21%, and 15%,
respectively, during 1967 71. The principal activities
of these industries are rice cleaning, sugar refining,
wheat milling, beer brewing, canning of agricultural
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and fishery products, and production of distilled spirits
and cigarettes. With the exception of canned and
frozen scafoods and dried seaweed, processed food
output is primarily for domestic consumption.
Plywood production is one of South Korea's fastest
growing and most modern industries; several
producers are among the largest in the non
Communist world. Plywood output increased almost
fivefold between 1966 and 1972, and exports during
this period rose from US$30 million to $163 million.
The output of paper and paper products rose 62
between 1968 and 1972, and further sharp increases
are expected. An $11 million paper mill near Seoul is
expected to begin production in 1973. This 37,000 ton
per -year mill is un integrated pulp de- inking and
processing mill that will utilize waste paper to produce
newsprint, writing paper, and printing paper. Under
the Third Five Ye, Plan, construction of it $40 million
pulp mill vlith an annual capacity of 130,000 tons is
contemplated.
1
12
r
N
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The chemical industry has received a high priority
under both the Second and Third Five Year Plans. The
industry's output of consumer oriented products such
as soap, paint, cosmetics, and pharmaceuticals
increased considerably, but the major growth occurred
in fertilizers and petrochemicals. South Korea has
become largely self sufficient in fertilizers other than
potassic fertilizer, with eight fertilizer plants having
been completed in recent years. Imports of chemical
fertilizer declined since 1970, when three large -scale
plants �two at Ulsan and one at Chinhae �were
brought on stream. In 1971 fertilizer imports fell to 8%
of the value of 1966 fertilizer imports; in 1969 South
Korea began to export small amounts of fertilizer. In
1971 the country produced about 891,000 tons, a
slight decline from the 910,000 tons produced in 1970;
output consisted mainly of urea. The Korean Fertilizer
Co. plant at Ulsan, with an annual capacity of
330,000 tons of urea (Figure 9) and 195,000 tons of
ammonia, is one of the largest fertilizer plants in the
rl%jL'Kt Y. Plant of the Korean Fertilizer Company, Ulsan, the largest such plant in
South Korea (U /OU)

world. This plant was financed with a US$46.9 million
commercial loan from Japan. To meet the expected
increase in fertilizer demand, construction of an
ammonia center was begun in 1971 at Ulsan by the
state -run Chongju Fertilizer Co.; it will be capable of
producing 300,000 tons of ammonia and 230,000 tons
of urea annually.
The Ulsan petrochemical complex, requiring
investments estimated at US$233 million, will be
completed during the Third Five Year Plan. The
project is designed to meet the needs of the growing
synthetic textiles and plastics industries. The first
major plant in the complex was the petroleum
refinery, opened in 1964 by the Korea Oil Corp., a
joint venture of the Korean Government and the Gulf
Oil Co. The Ulsan complex is adding a naphtha
cracking unit that will produce 100,000 tons of
etlrvleruc annually, as well as propylene, butadiene,
benzene, and cyclohexane, all for use in the
production of intermediate petrochemicals by eight
plants to be built at Ulsan.
Although the growth of machinery production
generally has been sluggish, the output of electrical
machinery has grown rapidly with the establishment
of export- oriented firms and the increasing domestic
demand. The principal electrical equipment produced
includes household appliances, dry -cell and storage
batteries, transformers, motors, and electronic
equipment, such as radios, telephones, and computer
components. Low labor costs have attracted foreign
capital and technology into the electrical equipment
industry, mainly from the United States and Japan;
production of the industry is aimed largely at markets
in developed countries. Output of electrical
equipment rose in value by a modest 15% in 1972,
compared with an average of 27% annually during
1962 -71. Exports jumped from US$19 million in 1968
to $125 million in 1972.
The production of transport equipment has grown
as a result of the steady expansion of shipbuilding,
rolling stock assembly, automobile assembly, and a
developing automotive parts industry. Output grew by
about 19% annually during 1967 -71, and in 1972
output was 11% above that of 1971. Several foreign
automobile companies. ssemble vehicles in Korea,
including Honda and Toyo Kogyo of japan, the Fiat
Co. of Italy, and the Ford Motor Co. of the United
States. General Motors (United States) and Shinjin
Motor Co. of South Korea signed an agreement in
1972 to establish a US$48 million plant that will have
a capacity of 35,000 automobiles and 50,000 engines
annually by 1974.
b. Construction
Construction activity in South Korea has been
expanding rapidly in response to rising industrial and
housing needs. In 1972, construction accounted for 5%
of GNP. During the period 1966 -71, the number of
building permits issued increased at an average rate of
about 19% annually, and the floorspace authorized by
these permits increased by about 16% annually. The
number of permits issued in 1971, however, was 1.1
and in 1972, 19% below the 1970 level because of the
slowdown in the overall economy. Although housing
construction has been rising (in 1971 there was a 5%
increase in new units built), the demand for housing
apparently is outrunning the supply. The housing
shortage in 1971 was estimated at almost 1.3 million
units. The continuing migration from the farms to
urban areas has increased the need for both housing
and schools, especially in major cities such as Seoul
and Pusan. Consequently, construction of housing and
schools, as well as highways, railroads, airports, sewage
and water systems, clams, and electric power facilities
is receiving high priority. The growth of construction
has stimulated the production of construction
materials such as bricks, glass, tiles, and cement.
Cement is the most widely used construction
material, and the building boom has encouraged a
rapid expansion of the cement industry. Prior to 1964,
the output of cement was less than 800,000 tons
annually. During 1964 -72, output grew at an average
annual rate of about 28 and production reached
nearly 6,500,000 tons in 1971. In 1967 the Tongyang
Cement Co. expanded the annual capacity of its
Samch'ok plant to 900,000 tons, and in late 1968 the
Ssangyong Cement Industrial Co. completed a plant
north of Samch'ok with a capacity of 1,700,000 tons
annually. In 1969, the Hand Cement Co. doubled its
capacity, from 500,000 tons to 1,000,000 tons.
Ssangyong completed an additional cement plant in
Yongwol in 1972, which raised South Korea's domestic
cement production capacity by 1,000,000 tons
annually. By the end of 1972, South Korea's cement
capacity stood at 8.3 million tons per year. Cement
production now is not only sufficient for domestic
demand, but also provides a surplus for export, much
of which has been going to Vietnam.
5. Domestic trade (U /OU)
South Korea's wholesale and retail trade in 1972
accounted for over 18% of the GNP. A substantial
amount of retail trade is conducted by small family
units with a minimum of capital and inventory.
Market -like ennCenf,_,H nc nF ch.�..,ho. .i,-
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a
a
i.
a
T
1%
5 1
LAJ
world. This plant was financed with a US$46.9 million
commercial loan from Japan. To meet the expected
increase in fertilizer demand, construction of an
ammonia center was begun in 1971 at Ulsan by the
state -run Chongju Fertilizer Co.; it will be capable of
producing 300,000 tons of ammonia and 230,000 tons
of urea annually.
The Ulsan petrochemical complex, requiring
investments estimated at US$233 million, will be
completed during the Third Five Year Plan. The
project is designed to meet the needs of the growing
synthetic textiles and plastics industries. The first
major plant in the complex was the petroleum
refinery, opened in 1964 by the Korea Oil Corp., a
joint venture of the Korean Government and the Gulf
Oil Co. The Ulsan complex is adding a naphtha
cracking unit that will produce 100,000 tons of
etlrvleruc annually, as well as propylene, butadiene,
benzene, and cyclohexane, all for use in the
production of intermediate petrochemicals by eight
plants to be built at Ulsan.
Although the growth of machinery production
generally has been sluggish, the output of electrical
machinery has grown rapidly with the establishment
of export- oriented firms and the increasing domestic
demand. The principal electrical equipment produced
includes household appliances, dry -cell and storage
batteries, transformers, motors, and electronic
equipment, such as radios, telephones, and computer
components. Low labor costs have attracted foreign
capital and technology into the electrical equipment
industry, mainly from the United States and Japan;
production of the industry is aimed largely at markets
in developed countries. Output of electrical
equipment rose in value by a modest 15% in 1972,
compared with an average of 27% annually during
1962 -71. Exports jumped from US$19 million in 1968
to $125 million in 1972.
The production of transport equipment has grown
as a result of the steady expansion of shipbuilding,
rolling stock assembly, automobile assembly, and a
developing automotive parts industry. Output grew by
about 19% annually during 1967 -71, and in 1972
output was 11% above that of 1971. Several foreign
automobile companies. ssemble vehicles in Korea,
including Honda and Toyo Kogyo of japan, the Fiat
Co. of Italy, and the Ford Motor Co. of the United
States. General Motors (United States) and Shinjin
Motor Co. of South Korea signed an agreement in
1972 to establish a US$48 million plant that will have
a capacity of 35,000 automobiles and 50,000 engines
annually by 1974.
b. Construction
Construction activity in South Korea has been
expanding rapidly in response to rising industrial and
housing needs. In 1972, construction accounted for 5%
of GNP. During the period 1966 -71, the number of
building permits issued increased at an average rate of
about 19% annually, and the floorspace authorized by
these permits increased by about 16% annually. The
number of permits issued in 1971, however, was 1.1
and in 1972, 19% below the 1970 level because of the
slowdown in the overall economy. Although housing
construction has been rising (in 1971 there was a 5%
increase in new units built), the demand for housing
apparently is outrunning the supply. The housing
shortage in 1971 was estimated at almost 1.3 million
units. The continuing migration from the farms to
urban areas has increased the need for both housing
and schools, especially in major cities such as Seoul
and Pusan. Consequently, construction of housing and
schools, as well as highways, railroads, airports, sewage
and water systems, clams, and electric power facilities
is receiving high priority. The growth of construction
has stimulated the production of construction
materials such as bricks, glass, tiles, and cement.
Cement is the most widely used construction
material, and the building boom has encouraged a
rapid expansion of the cement industry. Prior to 1964,
the output of cement was less than 800,000 tons
annually. During 1964 -72, output grew at an average
annual rate of about 28 and production reached
nearly 6,500,000 tons in 1971. In 1967 the Tongyang
Cement Co. expanded the annual capacity of its
Samch'ok plant to 900,000 tons, and in late 1968 the
Ssangyong Cement Industrial Co. completed a plant
north of Samch'ok with a capacity of 1,700,000 tons
annually. In 1969, the Hand Cement Co. doubled its
capacity, from 500,000 tons to 1,000,000 tons.
Ssangyong completed an additional cement plant in
Yongwol in 1972, which raised South Korea's domestic
cement production capacity by 1,000,000 tons
annually. By the end of 1972, South Korea's cement
capacity stood at 8.3 million tons per year. Cement
production now is not only sufficient for domestic
demand, but also provides a surplus for export, much
of which has been going to Vietnam.
5. Domestic trade (U /OU)
South Korea's wholesale and retail trade in 1972
accounted for over 18% of the GNP. A substantial
amount of retail trade is conducted by small family
units with a minimum of capital and inventory.
Market -like ennCenf,_,H nc nF ch.�..,ho. .i,-
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APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080006 -1
4:
r. I
r
e
r
original pnulutrrs- 11rrllcrs, cnlflsinrn, and othrra�
ll these IMANIels ellrccNy [It the I)ul)lic, tire: ettmuunt.
111151 ;�stirs have 11 lg;e r0ail sloncs� 6111 tludr s11:ur of
tolal domestic ]rule is TvIalk Theyge11crllly
01Wr,tte with vill:dl itlycnlorirs:eul It msirtir11nr11 of sides
prom0ll11n and udyerthingt. �1 CNIVIWI)o of credit by
m1Rr11411vtoriing plants to whole+lllets amd d151rih11Ulrs is
limited, and high hiterest Ales ;ire charged, most
lruisactions arc oil a cash hauls. 5011111 Korrum
wlloly ,aims have devclola�d ti lilniti�tt
eli}Irihulsnu systent Ihaiug;h agents in the v :lriuuti
provinces who dispow- of gueuls through 1M7.1.1 tr, ;dcrs,
but the lack of reach� credit hampers the flow and
reduces the volume (4 g(KKIS lh :et cJ11, Ix, handled.
Ialensive governllielit curttml over domestic tr 1.h
began in 1918. whett tllr Scxllll Koft-ml Colverlimelit
obtulntd owmriship of pro1wrlic-, that the japallesv
had uc^cluired or created during their albnosl 50-year
rule aver Korea. Although llle goaenlimW 11:cs
arlaturaged t1iv grnw1h of the private welim t�atensive
government control of onlcrpriscs and marLeting AM
exists. The bulk of aprictslturcl tmde is Iumo.161
through the Loyentnte�fit -owned \alional Agricul.
limn Ux)Ix�nttivcs 1-edvnllion (NACF). The local
ce+upcnilives assist f:trmm in nrukeling; crops.
(16:611ulc e�1lsimilier g umis, tied supply a0vullurtd
iupats such as Gulilirer. The govemm ew trultrols il
lxiciag and (Isstriliuticlri of tlid- f(n;ulMl iniglorts,
Chiefly ftro`t+ tuffs 111111 rlsv malerials, Ind such imports
lire rather small.
11intestie tnule II:Ix bvelt iulkibited xir11ewbut by
imidroptate lrtrogwrt facilities, oblillugh this is 1wilig
a >rrrylecl, ;ti':rlsunal IligII)V;t)x V0111Wd the major
intht;ld:d and tr dlnp cenlem, large urbatt tircas, and
nl;tjtlr I>.1rls, Other highways it n.Mtiv fee�tlerseTOvvs lit
the irlilr+> nls, CroviiLtial and lexal road Itrosdtie fans�
ln- jimiko trt)ts(Notullun info remote am:1s slut Scl!Wtl
by llsc rill %)3tcltt1 The governttteut, with foreig;ll
JMi5lilleel�, is smexder11iting till- highway system) :Ind i%
exploding Auld inipmviltg; the rlilnmd aystr)st. I)1 ):de
1412, &)ulh Korea.nxrived a US$40 million him from
I142 world mull; for it frouth radmad project that is In
ci)%1 $265 million. Now cxprastw0)1 IluW kern built
(such as the S;tru1 to l'nseul
superhighway) urare under c011slntetiMl. (Ihl- l lmntm,
1�erlgdtimg, uud !ioollt Coast cxprmwa)s are due For
cc+rnlileliun durs))g; the ritird Five Vrar 1'lurt C:olhlal
shipping; has increased considerably since M7, dne
partly t0Ihediversinr of fuel and ccnlrut cargtxs from
till osl-rinsrt47llttl rtilroati syslern. I -Mork have lwen
ma /de la expand the ship ping fleet, k". ,-idly by
building and ireporliug jm-trolcurn lankem; &lit[ctiastA
huik carriers. The flyua;lai Shipyard. a $7$ million
itt+lallalimt, is ovaring completion near Ulsan. T11ic
supk�sl:utker Ali lop rcl, %vI&II is Irviag Ir Ili II +lith British
tech11ita1 amisiallm to Imlittle sltigls of ill) lit 7 400,00
dV ;Idurlgllt lolh, is exlx�Cted (n Ii -axmc Otte elf the
wodil's major shiphuildiiig fadlilics.
Air t ra 1is lit) rtttIiao Ila% hreonse ircreasiltg,ly
imlx)rt;mt. The privately -owm�d Korean air f.ine�s
(KAI.) is tku! oil aim iii rline ;nut Ihl- principal schcdu let I
air carrier, adtlnug ll us�anll ssZ11111 r airlines also SMV
malnr tmlrlillg eemiLers. Kivilin airlxtl ill Scott) is sen a el
J six ollicr felon :164mal ;drlinrs. The volutne of air
cargo lmscxlu11eded substanthilly ill revemt }cars, 11111 it
remains mlatively 5111all,
C. Economic policy amt development
(U /flit)
Policy
The soudt Korvatl (:OlvvFwavmt is dirxtly involved
in the nalitin's ecrmonly, hill 11 aelively c1lcilorlgtcs 111e�
g;(lwth of Ili ptivulc wcio,i15. 14+ tidditiotl to its usual
p uticiluttion through 1ltorll�tilry I,od flsc -ll lwlicy, the
g ote�nt11101l IIw115 314:1n.v Lcge )lirrpriks. '111e'gnatest
degree of g ilvi -tntne nt e+lmlri3l is Yn 1110 hailkiug w�elor.
Lire gavcr11nu11l msoi ustd olx�nitcs till o) ;:jor financial
irsslituainns eatrrpl the Kitrean Develupmeul liutiuce
Coq)oralin11 (KDFG), and it holds It majority o: shan-1
Ill Lill but mne Of the nalion ;d tti1tn111ercial b:uiks. The
sixcial hulks ;Ire g;ommilrnl�owned. Thro11gh the
Korvoo Development Bank (i WU� fare-. --rly (1e
Kure ;Ltt 1110MIlArtlCGgn Iklrtk �Ihe gosrn11nenl 1113s
inveslutl in munctons. industrial and (1uuuu +rcid flrots
crated in confonititp �ssilll motior11ic de veloplovill
p11ltts. Alxwl 2$ large -scale industrial firms-ire diwd)y
owned tilt;] 0gieralecl by the yovennratl, including;
enlrq)ri cs ellg IlgvA in miuirlg. fertiliser lmductiotl,
u11d pkFulctim refining;. ]n addition, the government
owns lx) %Vcr and Imoslulrtati ill f lcidiliez :Ind hus a
monopoly in lha manufacuire 1.:f todkltxn products.
'Fite governmscnl's stated Ilalicy Ilan I't'ch I11 rthm-�
its EtIWCt clmirll over 11onfsnauiial 3alisitit -5, ltauyof
the hu'gvst fomier JA �.a- dumi11tilcsll rnlell)ria:
aa ill red by the government tiller World 1Y;1r U score
t11sn;x1 over to private ow�uership during [INC (�1111}�
rstr11u1neta1ntl mod development period. ilnwcyrr, tit:
gtovenmtcat hats invested in Ian e -%cafe t;�11tures Ill
Inume indllslrir: where it felt tl)c private sector could
not 1ru11tilirc ullfieil�nt c:lllstal. T1142 11101'011 Heavy
Industry (Steel) Cai., the IUnAok Ilravy Nlachillcry
Co., Will the integ;retVd ster1111sk1 alt 1''(1113119 ere
gotemment-ou'md� In the Mast, ancc a vgllt11re wits
fintily cstai)lishtd, it leas tither lensed over to pdvult-

rins�uscaee
S
k
x
.r
n
ownership and operation, or its future expansion was
left to private interests. For example, the country's first
oil refinery was government -owned and operated, but
additional refineries have been established by private
interests. The policy is still to dispose of government
holdings in industrial firms to private interests
whenever feasible.
The government has enacted a variety of measures,
many of them under the Foreign Capital Inducement
Law (FCIL), to attract foreign investment. The
government has pledged to protect foreign investors
from expropriation of their property and guarantees
unlimited repatriation of profits and repayment of
approved foreign loans. There is no legal limitation on
the percentage of stock a non Korean may hold in a
Korean firm. Generous tax exemptions and reductions
of various forms are granted and, as of 1970, foreign
nationals employed by foreign companies based in
Korea under the FCIL were exempted from income
taxes. In the Masan Free Export Zone, which was
established in 1970, foreign firms can manufacture,
assemble, or process products for exports, using tax
free raw materials and semifinished goods, most or all
of which may be imported. Foreign investment also
has been stimulated by educational policies that have
produced a high literacy rate, by political stability,
and by an improved monetary situation. Total private
foreign equity investment approved under the FCIL
during the first half of 1972 reached a record level of
US$80.2 million compared to $30.6 million during the
same period of 1971. Total public and private foreign
equity and loan funds authorized under the FCIL
between 1959 and June 1972 amounted to $4,321.6
million. The United States and Japan are the leading
sources of investment. Of the total equity investments
approved under the FCIL from 1962 through June
19 the United States' share was 52.2 and Japan's
share was 37.5
a. Government budget
South Korea's fiscal position has improved
dramatically since 1964 because of monetary and
fiscal reforms enacted in that year and because of
subsequent rapid economic growth. In 1961 domestic
revenues covered only about half of the central
government outlays; in 1972 they covered nearly 77
In 1966, domestic revenues exceeded current
government expenditures for the first time; since then,
a current account surplus has been available for
investment. The balance on current account shifted
from a deficit of about 5 billion won in 1965 to a
record surplus of about 109 billion won in 1971
(Figure 10). This resulted from a nearly 40% annual
increase in revenues during that period, while current
outlays rose by only about 31 annually. In 1972 the
current account surplus declined to 39 billion won.
The current account surpluses have helped finance the
rapidly growing capital expenditures. The overall
deficit combined current aid capital budgets
increased from an annual average of 32 billion won
during the 1966 -68 period to 71 billion won in 1971
and to a record level of 153 billion won in 1972. The
deficit was financed mainly by the sale of
commodities made available through foreign aid
programs, primarily U.S. assistance, and through net
borrowing; borrowing has been gradually displacing
aid as a means of finance. The 1973 budget forecasts a
13% increase in domestic revenues over the revised
1972 level, while total expenditures are to be
unchanged from 1972.
FIGURE 10. Central government budgets (U /OU)
(Billions of won)
1966 1967 1968 1969 1970 1971 1972* 1973
Current budget:
Domestic revenues......... 106 152
Expenditures, current...... 10o 135
Current balance...,.....
6
17
Capital expenditures.......
41
46
Overall balance.........
�35
�29
Financing of deficit:
467
484
Foreign aid
31
27
Net borrowing............
12
16
Net change in cash balance...
8
14
229
307
387
484
506
572
182
239
293
375
467
484
47
68
94
109
39
88
80
132
149
180
192
175
�33
�64
�55
�71
�153
�87
33
23
20
21
est 9
�3
50
30
36
est 85
�3
9
�5
�14
est -59
*Final budget.
*As passed by cabinet.
15
53Cd` Llmuxra. ww. uR. sunwrnur. r� s ...cvzu�c,:.yo.ue,rrnuueaea raxrmaw< i sly, or ehtuost Wi of thew, employed,
ue:rl;ed less than IS hours a walc in 1971. In soy
vvrul. lul ;tt Clllpluy'Ille`Ili 470(vak'd at all llv'eragt�
wimull rule of tihoot 2.2 in Illii7 -7l lend lolaled
9.7013,111X0 ;x -turns ill 1971. This iticmaw primarily
rellvels lice growth of eniployinvilt in manufutlliring.
ctimstruetiuu, transr,irrlalion, rind t. urnllllicaliall.
Thecv is no official eslintute of Lite ]xslentp:d pal �u
Deserve. During tire Korean war (19st1 &3). allelil
rnillitm evonumitally ite:lclive pers,lus. lueludirig
liottsewive5 and slildullt cse drown into Ihr labor
Force from a ;sopalaliuls of aIm)ttt 21 Inilliuit. SiIwe the
normal enurement ugc far cutployces in medium tind
large firms is Z%) years. a uondwr of Mile send
experienced men amld uadottlowdly wroker lhr labor
forrie in case of lultional cstlergcllcy. However, the
;;realest nerve is within .!he existing; labrn furor and
includes the unemployed. till(I +nilsloy0l, uod
lierxions working plft lines lit 1airlicular. tlmir are
Dewy wel1.1r:lined women.whuitPC not ftilly lit illud ill
llce a otilh Korean monulny. Callege- edumlvd women
in pnifcasional Firlds filed it difficult to secure jobs.
allheogh feetlalc irmployrneal has risen fader thous
hale erritplayrnenl since 11167.1111CM AN still relatively
Fein Tamale diKlnn, luwyem w scientists, Wourell
cvlmprise 3656 of [lie (abl foyer, ccluspamll to about
40% in the Vniled States and in )arum.
lei lire 1, Alllml 41K; of ilic employeil tikor foree ryas
enkaged iu;IgHcielUlre, forestry, hunting, and fishing.
I
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080006 -1

FIGURE 12. Employment, by industry (U /OU)
1967
(Thousands)
Percent
Percent
1965
1971
of
Percent
Number
Percent
Number
Num-
of
Num-
of
411
her
total
her
total
Agriculture and forestry..
4,785
56.2
4,597
47.3
Fishing and hunting.....
215
2.5
112
1.2
Mining
79
0.9
88
0.9
Manufacturing..........
800
9.4
1,287
13.3
Construction............
264
3.1
333
3.4
Public utilities..........
19
0.2
24
0.3
Transportation, storage,
100.0
and communication....
204
2.4
354
3.6
Commerce and other serv-
ices
2,156
25.3
2,913
30.0
Total
8,522
100.0
9,708
100.0
i
i
.i
a i
i
i
14% in mining and manufacturing, and 37% in
government, construction, commerce, and other
services (Figure 12). This represents a significant shift
from 1965, when almost 59% of the employed labor
force was in agriculture, forestry, hunting, and fishing,
and only 31% was in the service sector. In 1971,
manufacturing accounted for over 13% of the
employed labor force, compared to about 9% in 1965;
the civil service employed about 437,000 people, or
about 4.5% of the employed labor force.
The labor force is largely unskilled, and workers
trained in modern techniques still comprise only a
small proportion of the total (Figure 13). The
government is placing considerable emphasis on
upgrading manual, technical, and higher -level
managerial and professional skills. Since the
promulgation of the Vocational Training Law of 1967,
vocational training has been expanded and improved.
In 1970, 30,558 people were trained, compared to only
10,738 in 1967.
There are 14 legal holidays in South Korea, and
employees receive 8 days of annual leave a year or 18
clays after ten years of service. In addition, leave is
granted for sickness until recovery, and maternity
leave amounting to 60 days with pay is guaranteed by
law. Strikes, although outlawed since December 1971,
do occur, but they are relatively uncommon and
unpublicized. During the 1 -year period ending 31
August 1971, there were 236 labor disputes, of which
only 23 developed into strikes, which involved less
than 2,500 people. The chief labor organization is the
Federation of Korean Trade Unions (FKTU), which,
in 1972, embraced 17 unions with a membership of
504,624. Among the largest affiliates are the textile,
mire, and transportation workers' unions. The FKTU
has been more or less openly under government
control or influence since its inception in 1946.
D. International economic relations
(U /OU)
1. Trade
South Korea's exports (f.o.b.) increased from
US$32.8 million in 1960 to $1,067.5 million in 1971
and to $1,624 million in 1972 (Figure 14). Imports
(c.i.f.) also increased rapidly from $343.5 million in
1960 to $2,394.3 million in 1971. In 1972, however,
imports rose only to $2,522 million, as domestic
demand became sluggish and import substitution
continued to increase.
The composition of South Korea's exports changed
considerably between 1967 and 1971, although all
FIGURE 13. Employed labor force, by occupation (U /OU)
(Thousands)
19
APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080006 -1
1967
1971
Percent
Percent
of
of
Number
total
Number
total
Professional, technical, and related workers.........
247
2.8
411
4.2
Administrative and managerial workers............
76
0.8
64
0.7
Clerical and related workers
412
4.6
661
6.8
Salesworkers
1,124
12.6
1,240
12.8
Farmers, forestry, and related workers
4,686
52.6
4,557
46.9
Fishermen and hunters
222
2.5
133
1.4
Production workers and other laborers
2,147
24.1
2,642
27.2
Total
8,914
100.0
9,708
100.0
19
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APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200080006 -1
I tRC6ern d V s. Ptltrf 1
xxo
sxo
4 t
soon
t s`
soo
0
IMO 41 rQ 63 u c.s w 6: ca 0 10 71 n
FIGURE 14. Balance of trade (UJOU)
major gimps of c,%Ivorts use! III collie. Slanufarinrell
gtxxls. [If u'll)cll ablliit 11.11f musisted rtf lcxj +.K ,1111
chi IIshig, row! from fi7!'i of lottiI rslxlrlS in 1967 W82%
of local exixtris [a 1377[, while exp oats of foexhiuffs.
bes�erlgt Iohacco, oncl crude Inalesiuls fell ftoom33Sr
to Me (Fi1Gum 151.
The col IliNbilinll of II DIM IIN:lhlsc III IIgI' 11a11icrahlq
l>Itarc of total imlxrrls.
'I'll( Uuitcd Sladrs cold Japan lire Sonlh Korea's
iimlor I coding p;lriners. lu 1972, rxlxnls to Ibe Uniud
Slates and Jallut ;w ousted for invr 71`.1 of [(still
eyxtrts, uad in111euts from thoweill lilt fil-% lioloulftil to
67'r of. lolul imixlrts (Figme 17). Thc� U.S, shu c! of
Kuwait cxlxtrls rust- from 311!1 iu W61 to i2S in IMN,
but it IIriiPjwil to �17 �r. In 194 2 as It n�.ull of att dais�
policy of South Korea tit dis'crsif its eximm rnurl:rts.
The u1:13or exports to the Uuiled Slutes were clo[hlnK,
texfi1m. tcuc,r aml'pl}'tscmN1. wiis, will elrctriral
rriaddriely, hollllris from Isis Unitt -d Slalv.%1IvuoInttcd
for 265 of Sclollt Koreas imIKW.S i0 1972. down ::'�m
5055 in 1964. wheal, slur, cotlun. aad tnucbiner-
madr up over G if; of the iuclmis from the U1+ ;eYl
Stales lit 1971. South Kumar tecoMM its first so:plms in
snide milt (be U:iitcrl Staffs i0 1972.
Jalwi lets long 1x ii a major Soulh Korn im trudissg
lxariaer. Afier Jalimi s domination of Ki'1ca c11d1�d ill
3945, ilia Soli[: Korc:cll G0s'erltrovill atltt�ntptl�cl to
xMfict !rode with J:114111. 11111 Iy Ilte Ifh.S)'s trnla: hard
rrachecl it sohs[anlial Ievel. Smilh Komi s imporls
[.runt J :Ipurr incna.cxl fntrtt US$[ 10.] Inillioc: in 19(i 1
[to 49543.8 million in tt c 1. In 1973 Jo1x1n acrwnlitil for
FIGURE 15. Co+npo :Ilion of ex pool; (U101J)
NOW in rr ilffom of U.S. "fors)
r
C:':
i.
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M4 Ra not avallahlc.
29
i
i
N
r
(0117
1071
1072
I +cresol
t'erccnl
['scoot
ur
Of
of
Valut�
told
value
total
Value
Iola)
FYsh anti fish preltnrailons
:0.9
8.6
42,2
4.0
70.4
4.7
rsullw anti rrytrsablrs............
9.0
P.6
24.7
1.s
as
na
Mitre food, lw.vrrrxt�.. and (oharm.
9.11
:.S
7:.0
2.1
no
no
Silk I
ld 0
S.f
4�!.7
4,0
53,9
3.4
AlIhtmts, Inrludilist coal..........
29.1
9.1
17.S
d.S
w
Ma
0thrr crude materials............
14.2
4.4
25,7
as
10
Trouser and clot0ox
M._
&.R
117,1
41.4
dsoji:
M.r
Pl ywood
30,
r1.;
I %.8
11.4
163.4
to,f
Mill and cycltrorret
22
7.1
04.0
0.$
73.5
.$.S
Floclrieal equIlemens..
7.4
P.3
64.5
614
1:5.2
7.:
lion and Orel
1.0
o.d
24.4
:.J
as
o
Foot wear
A.1
f11.
37.4
J.5
35.4
1.4
Othrr m anufa eiu :M
34 .7
0.6
1t1
10.1
a s
ha
Totsl exports
320.2
100.0
1,067.3
100.0
1; ,d-
100.0
M4 Ra not avallahlc.
29
i
i
N
r

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7-
s
FIGURE 16. COMPOST11on of Imports IUJOUJ
(Volvo in (milions of US; dafforsj
10121
of
of
of
VAN,
total
Yti tur
fatal
valme
WWI
Sugar And 'p4gar prrpmrstio",
303.0
ha
Pic
Animal Irecio
0
/.0
3N. j
3310
r.ri
as
fin
Qdaerfo&!, b nrW wh
.1.9
A
_r.0
�uml. pulp, and paper
I
lql.tl
9-0
Ka
I: 3.1
QQ
Crutir swi.raTcum
I law cotton
z3.4. 0
3
171,0
7
217.;
8.6
Jean atttl steel wrap
sq.3
313.9
1.9
S112
33-4
rt.3
as
au
1.7
3
21
1.0
Oth" ornar mo; rrink.
133,3
b
0 14
OW
Ad
i 11.2
ad
414
Tricilt
Iron and mveLl
09
*:".3
11.4
Text lit machipirry
5 t
:7.
2.8
M.
7.0
1 t)7-8
r1.7
Vecl.rical 44julptnirtIL
4.8
2
1.67.
31.2
1-
Odwr machitirry
113.:1
JI
1-
17
Xv. 0
Transport e4u
1-13.4
14.
W7.3
7
r71:.
Other MR11J9CtilrVA
105-5
rte
Total import_-
M.2
100.0
2,391.3
IV-0
2.,Mt
kTAjl.l)I(m.
'lF1Vj4d(4 all yAfrj fll "J f
21
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s
i
t
J
j
5
l
t
F
J)IIUI .1 of Kowa: liatel illllsort%. Ablolaigh 51111[11
Korean v.%imms lie jal:rn s;4vi d fnoat &W2 millitm
in M&I 111 82112 111111111:! in 11171, lllec' dcere;cuWtl ;es a
permillage ief lol,�Il v%INIrlx, from 32e- No but
ILIA sllghlly 111 25,1 i ill 1072. Soulh Korea's trade
&Peil with Japan row fecitlt $228 sslllllon il� 191111 to
SGM2 usillloli in Ire 1, Japan is :I stialtir enstosnrr for
Scsttlb KoWalt clolbiug;, raw silk. uml marine pfmlocls.
l'hc nxnsl impurl:ull Imports from japan arc
11mchiner�, Icx[�IC %-Irn a11d falde -S. freltt :utd >tel'I. 31A
Irk�slsod c
Among; South Kowa's olht-r in dhig 1xidner%,
Sing illwre tilt(] 'C�Inad:::ue ittlIM asst 111MI a�Is For
WWII! preKlucls, ;ant- lilt' I'llilippial-�i. ]ndoltesia. a11d
Malnysia :Ise South Korea's tnalor soorves 4f
hardwood. tonlxsrls from tilt- IwItIPIconl- prodovilig
ainmsics of Kimail :Ind Saodl Arch�;s have 14c6d tits
untim"bly, ;wc ontsliog for 7.2Si of Swath Kuala's l,otal
Imports ill 11171 voltilsar �1 to 2.11iri ill 1968 :end 11n11u
1st 19(11). GI 119 1, axlxlrts I 1 F tojm anlamttQd to
USSS7.8 million, an irltlxsrts fnlnk 1111A casltllnent
michrd $�2 Ihllilrn� West C.:'tromov aii4 :F.fliks
supplieYl almol $li% of the iuslme Will W vskiek
Ektrolw, mainly m acitinery and Ine slxirt alullimenl,
I;& tau: first IIIIIV I lips lIts of 19 7 2, there was11n Iltcreaw
of almot QfP its Korean exlxtrtc to W lern Iamixt
[hat was I.Irgely oveontaml. for by lemilrs, Sonth Koteu
JIM!, fOLVI11I hugull lindled 141111. Willi Huslt-r[t
rwlelpran eh4111 ries, most of which i�. volldnele�cl
tisrough fire Netlnrd;mds. 'Phi� lrsdr re110rIVI.Ily
am :isined to S2 million Ili 11171, and efforts ore
1 1, ing: made to e'xp:md it.
South �:area gradunfly reduced its import
rv%trlellolls il,: I416i, hilt it lighivned them iu If1GS
:old aguhs in 16171 below- of alarru at the� rapid
mpaneitm of Imports, Saulb Korea uses it "ucgative-
ll .4t" %yStetll thug prc0hiblis u1. frstriels the imlxot of
listed eeuttmodilies. Means are 16fetL" if lbe are
none w-otiol g000h; lsr if r Aricting; their ingxodalion
wild aid domeslle �ndmUle -j. In 14171 l`.Ie
govemincid temk measin s to cure Imisorts of wrialek
114111t.-mc11tial �leas and revised regnlatlom governing
111113011.4 Erma J111 %tIl and c >Ilscr eaunllrics With svhiclk
tioulh Korea had large Irade de Nil Friim NovrIli w
1970 to Novesnler IVeI lice nu Fill w.r of m, Idcled
impoFis iltctcawil from 5241 to 570: Tile nurnber of
pneltibitc-d items rose from 2.1 to 7:1; and the number of
Hems aeuoma[kolly spprlved for lutimrt drelksled
from 7111 to COW.
Z. Balance rf pnpasents
Until 1972, a"nlsth Kow 's Ikd.11Im of Ito ytoculsaas
chamclerized by a gmtl dcficil of Ile: currcnl
sl:eounl, which seas offset to u laige extent by priv;de
4 11 =x4ti e'.r ;:jw. S: w.y .�:.k :.ulr..yti4.G
eallilat lllf1uu's, IAticvicen 1967 :still 1971. Ilse clurent
ammounl deficit r �e from USS192 million to 3`118
millivu, htrgelp -is -I resu of rapidly imliandbir
imliurk (Figure 1111, Daring III& Merin(]. the trade
defid[ gn�sv from $37�I miiiioo to $I,[1tG nailiion,;itid
the nonuillilmy x vine. deficil lose fnllte. Sad srl�IlJoa to
3191 million, rsainls- IN�causo of gam-ter fmiKhl and
illlllrm@e eo.ls and illvestil1r11t Illcolrlr 1141Y14V iK.
1�ecripts from U.S. forms Ill Korim. 111c prcticrnCe of
Smith Korean [moan its Vieliwin. ;u!d Viclrmin- rviallyd
servievs,''htell Usgclhar eanlccl $219 11llilio2l in IlriI.
hove juirliativ offset tilt- otlxwr sen�ive duficits, 'flats'
tmvipb. h(merver, hove declined SKIM 1969 ond evert
calxYled tip full Garllir: bmiti4wof the U.S. wilthdeaual
of troops lrclns Vietnam :kill[ radncliclis in South
Kowa. South Korea also has withdraa-ti Its ir op., from
Vielleatra. In 11ddi[kolt, the ;all mtrip[s ilt privale
ir:etkbfca d(TUAlxl funk 81.12 m�Ilira ill 1116 lie $I(1.
million 111 197 1. auk! I)e 11 et nctidpts in govevinttielnt
I r mfem. ruuiIlly :liit alt(] gAlIFI%. dimlimd from 3191
miMom iu I069 to $64 million kn 1971, In.1972, lire
wp�d'itmeast- in exlx0rls rtKUltcd in a n�detOIsm of the
!rule dcflcil (0 33713 nsillion mall it lIvAlie Ili [he
clUmIlt accutoll drficil to $3, 0 111�1liost.
oil the withal 111tcr0ltnt, lilt net Inflow of private
Inrig -lernl capital, iltcrcaxtil fnnn less than US810
rnilliolt irk l�164 to $111 uoillion in 1967 1111d to 3261$
million lot 1971. Net foreign lending; lip jimuclur)
inslilulions amt uel psivatc short�lerm capilal inflows
have inereawd significantly in mwent years. ice[
piv:de >iiurl�lrrnn copi[al itintm, rose from $�15
oaillion Its l9o7 to almost $133 nsillion 111 114171, lilt[
dtxlilled its 1972. ,`'cl gilverumesll iomign luaus
Inerl:axd suesimitiallc�, lolaliug $23S million ht WTI.
c�tnnluarccl to $13 million ire 19Ci7.'fast- overall soipess
on tale. IlwnnlolkeluY capital MT111lstt grew from $292'
million in 1967 Its $6ti2 million in 1071. Net
11(111 plus eslllt;ll I116lwS dltlirig 1971 fell Sill rt of
the viwenl.:ammint deficit by SO million. and lire
s�iffeit'ncr Was G: ancvd: I:y nel mum lary scxtur
rctiY;llls and nrl c h anges iu resecvvS. 'nic think of
Kowa'; gcsld will foreign exchange reserved increased
fruan 3M7 million al lheeml of D67 141341110 millio11 kit
I r rml of IKO. Ibeti full In $.ilia mi1boit at lheeml Iif
1971. At the em: of 1972. dw rmm laid reachmi
v1%1 nsillion.
'file Souib Kuwaiti ca:norna gradually is beaolsing
IM CICIWnderii wu forelgu aid, particuhirly grunt -typi-
ito-Wanee. and is relying mom on private 111MISaetdtlid
front iulenllatialkal fitr;tncial itislk[istions. South
Korea% exgxod earnings have liven; financial; an
Incrr;ising 11orliots of Jas imports -67% W.. 1971
rompawd to Wt in 1116:1. Fon32n tunlnwicitif loatis
finasicrd 2, r of lolul imports ill t911, vortilmred In
l
1`
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=r n n. rn r.a r..n
FIGURE 18. Balance of payments, selected years (U /OU)
1 (Millions of U.S. dollars)
1967 1969 1971
Ggods and services:
Merchandise:
Exports f. o. b.) 334.7 658.3 1,132.2
imports f. o. b.)
908.9 1,650.0 2,178.2
Trade balance 574.2 -991.7 1,046.0
Services, net:
Freight and insurance -52.3 -85.2 -122.1
Other transportation
-2.2 -3.7 -2.8
Travel
7.9 5.2 16.4
Investment income
-1.8 -4.6 -90.6
Military expe- iditures
171.4 249.4 219.3
Other government expenditures
18.3 24.9 -8.4
Other private expenditures
15.8 11.3 16.1
Total services 157.1 197.3 27.9
Total goods and services
-417.1 -794.4 1,018.1
Unrequited transfers, net:
Private............ 90.7 141.9 106.6
Government
-�_c d 1345 1039 64.0
Total transfers 225.2 245.8 170.6
Total current account
191.9 -548.6 -847.5
Capital account, net:
Nonmonetary�
Private long- term 233.4 372.1 292.7
Private short term
45.2 56.5 134.6
I Local and central government
13.1 202.8
Monetary sector: 235.1
Bank deposit money
0.9 88.4 134.1
Central institutions
0.0 -3.1 26.3
Total capital account 292.6 716.7 822.8
Changes in reserves:
Reserve position with IMF 0.0 0.0 -37.3
f Foreign exchange
111.8 -161.8 48.9
I Total changes in reserves 111.8 161.8 11.6
Net errors and omissions
11.1 -6.3 13.1
t 7% in 1965. Aid financed, relief, and other goods %i ere 3. Foreign aid
less than 10% of imports in 1971, compared to 40% in
1965 and over 70% in 1960. Since World War II, South Korea has received large
The surge in foreign commercial borrowing resulted
sums of foreign economic aid, mainly from the United
in an outstanding external debt of over US$3 billion States. U.S. economic aid commitment during U.S.
on 1 anuar fiscal years 1946 -72 totaled US$5.6 billion. Between
J y 1972, and the debt service in 1971 on
1948 and 1954, U.S. assistance was concentrated on
loans of over 1 year maturity was estimated to equal
providing food, clothing, and shelter to the populace.
about 20% of total foreign exchange earnings -up From
1955 into the early 1960'x, the emphasis was on
ti from only 11% in 1969.
development of infrastructure and on technical
South Korea is affiliated with several international
training. In 1962, the U.S. aid program began to
institutions, notably the International Bank for
concentrate on the establishment of import-
Reconstruction and Development (IBRD), the substitution industries such as fertilizer,
cement, and
International Development Association (IDA), the food processing, and export- oriented industries
such as
International Monetary Fund (IMF), and the synthetic textiles. At the same time, however,
regionally- oriented Asian Development Bank (ADB). infrastructure projects continued be
to important,
23
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notably thermal power and telecommunications
facilities. The shift from grants to long -term loans also
began in 1962. During U.S. FY1946 -61, American
loan commitments to Korea totaled only $52
million, while grant commitments reached $3.2
billion. In contrast, loan commitments during U.S.
FY1962 -72 rose to $1.1 hillion and grant commitments
were about $1.4 hillion. The phase -clown of
development loans on concessionary tt."ms began in
U.S. FY68, as loans from the U.S. Export Import Bank
on commercial or quasi- commercial terms increased.
-term economic loans exceeded $212 million in
Long
Long compared to less than $4 million in 1967. Food
1971, for Peace (P.L. 480) aid, which fluctuated inversely
with South Korean harvests, totaled $1.5 billion
during FY1946 -72. Following average or good
harvests, it ranged from $60 million to $70 million
annually, but it has been much higher during times of
drought hitting a high of $212 million in FY72.
Japanese official economic aid began in 1966 under
the terms of the 1965 Normalization Treaty, in which
Japan pledged US$300 million in grants and $200
million in loans over a 10 -year period. West Germany
also is a significant source of foreign aid, pledging
about $64 million in loans and technical assistance
grants in 1964 -71, of which $36 million had been
disbursed by the end of 1971. International financial
institutions have also markedly increased their loan
commitments to South Korea. From 1959 to 1971, the
country received loans totaling $387 million from the
Asian Development Bank (ADB), the International
Development Association, the International Finance
Corporation, and IBRD. Most of this aid was
committed in the last 3 years and was used for
development projects such as highway construction,
irrigation projects, cold storage facilities, school
construction, and sericulture development.
1
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