Abstract
It is hard to imagine the successful economic development of South Korea without the Economic Planning Board (EPB). Created in 1961 when Korea embarked on its long-term economic development planning, the EPB, which occupied the center of the country’s economic policymaking and coordination structure, was in existence for 33 years before being suddenly dissolved in 1994. Korea’s economic policymaking and coordination structure and process have since drifted. With all the intermittent attempts to revive it in one form or another, the problem of ineffective and inefficient coordination of economic policy has surfaced time and again. This chapter seeks to unfold the saga of the EPB with a view to drawing out implications for developing countries that are struggling to build up organizational capacities to handle a diverse set of developmental tasks and problems.
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Notes
- 1.
- 2.
Hirschman (1958: 203).
- 3.
Plans can be—and usually are—revised intermittently. But this fact is irrelevant, at least for the present discussion, since even in these cases there still remains the need to adapt or adjust them to the constantly changing economic conditions and situations.
- 4.
By its own nature, economic policy coordination tends not only to be complex and conflict-ridden, but tedious and cumbersome as well. It is especially true for developing countries since they are, as a rule, confronted with innumerable developmental needs, but lack economic resources and other prerequisites for development. This is not meant to imply that the advanced and fully democratized countries do not need an effective economic policy coordination structure and process any more. It may, arguably, be more necessary for these latter countries because their societies tend to be highly plural, and democratic politics tends to make the process of coordination more difficult and complex. What is stressed here is simply that, in developing countries, setting up priority through effective coordination in the early period of economic development is a critically important factor in determining the course of development. In advanced countries, by contrast, it tends to be relegated to a matter of effective, or less effective, political accommodation.
- 5.
As will be shown in this chapter, the EPB’s policy flexibility did not always work in the interest of the EPB, since it tended to inhibit it from building political support for its organization, as was evidenced by the continued wrangle over its fate that led eventually to its demise in 1994.
- 6.
The meaning of central coordination needs some clarification. Central coordination is defined here as follows: among a set of decision-makers, coordination is central to the degree that there is in the set one decision-maker who (a) is much more powerful than the others, and (b) explicitly recognizes his task to be that of arranging the adaptation of decisions one to another and, to some significant degree, arranges such adaptations. This definition is borrowed from Lindblom (1965: 103–105).
- 7.
Economic planning in Korea began well before the military coup in 1961. The initial effort at economic planning was started during the Korean War by foreign assistance agencies. But the program, prepared by Robert R. Nathan Associates and known as the Nathan plan, was never formally adopted or even recognized by the Korean government. In 1959, the Syngman Rhee government developed a seven-year plan. The first phase of this program was formulated and approved by the cabinet in January, 3 months before President Rhee was overthrown. A new five-year plan (1962–1966), prepared by the cabinet of Prime Minister Chang Myon in 1961, was shelved due to the military coup in May that year. For a detailed account of planning in Korea, see Cole and Nam (1969).
- 8.
From the start, the idea of turning the Ministry of Reconstruction (1955–1961), which had a modest planning function, into the EPB, which would have both planning and budgeting functions, was proposed to the military junta by a few reform-minded officials. But the military coup leader, Park Chung-hee, decided to turn it first into the Ministry of Construction and then to the EPB. The reasones for his decision to follow this schematic approach still remain unclear. But the scanty evidence tells us that by turning it into the Ministry of Construction, General Park wanted to symbolize to the public his full commitment and devotion to the “economy-first policy.” The public was unsure of the legitimacy of the sudden military coup that had overthrown the democratic government which had been legitimately instituted only a year before, following the April 19 Student Revolution. Also, General Park himself was uncertain of the fate of the military coup. He felt it was too premature and bold to go forward with the establishment of the EPB and launch full-scale planning efforts while the prospect of continued foreign aid flows remained bleak due to the reluctance of donating countries to recognize the coup. This economic policy concern was the reason for giving the Ministry of Construction its English-language name, the Ministry of Development, which was thought to be instrumental in keeping up the inflow of foreign aid, given the fact that foreign aid was necessarily tied to reconstruction and development projects. See Kim (1999: 23–74).
- 9.
This does not necessarily mean that the economic ministries had no policy conflict with the EPB. In many instances, the more hotly and intensely fought battles were mainly between them and the EPB.
- 10.
The idea originated from the author’s 1987 doctoral dissertation on Institutionalizing A Liberal Economic Order in Korea: The Strategic Management of Economic Change.
- 11.
To put it differently, the commitment cost to be borne by the EPB was almost always less than that of other economic ministries.
- 12.
Certainly there was an economy of scale and scope for the organizational growth of the EPB. But it should be noted that it provided a cause for the frequent claims by other ministries that the EPB had become an overarching ministry and needed to be reformed.
- 13.
It is noteworthy that, around this time, it was the military and not the government that had gone through the Korean War and been exposed to the advanced administrative knowledge and skills handed down mostly from the United States military. Right after the coup, therefore, young military officers and reform-minded government officials exchanged ideas and worked closely to turn the government into an agent of change by giving each government agency a clear mission and objective and ensuring its performance by adopting an evaluation system. It is no surprise, then, that the government structure quite closely resembled a military organization. Using an analogy, the EPB acted like a military headquarters, run by competent staff, responsible for logistics, planning and strategy, and coordination and feedback. See Kim (1999: 23–74). Incidentally, it was also no accident that the Graduate School of Public Administration, Seoul National University—established in 1959 with the aid of the United Nations Development Programme—began to provide administrative knowledge to upgrade the country’s bureaucracy.
- 14.
- 15.
Schick (1981: 108).
- 16.
As a matter of fact, the leaders of the military coup called their takeover a revolution to rebuild the country from the root up, pulling it out of corruption and poverty.
- 17.
It is notable that President Park—and for that matter other presidents after him as well—rarely gave the DPM a voice in the assignment of economic ministers.
- 18.
This has a profound implication for the effectiveness of the coordination process, as other ministers, recruited from the EPB, were well versed in the process of economic planning and policy coordination.
- 19.
The ESP had only a few staff members, so that it was difficult for him to get involved in program operations. As a result, the ESP acted more as a president’s clerk, or sentinel and guardian, rather than a high official with his own power and independence. As will be shown later in this chapter, the ESPs subsequently tended to be advocates of a particular economic policy. For the differentiated roles of presidential advisors, see Porter (1980: 73–83).
- 20.
This tendency became pronounced from the early 1970s, when President Park had enough time to handpick capable men and further strengthen his grip on the bureaucracy.
- 21.
The Yushin (meaning “restoration”) is the political regime that President Park instituted in 1972 to prolong his rule of the country under the pretext of securing it from a military threat from North Korea. On one hand, he amended the constitution, under which the president would be elected indirectly by an electoral college and all term limits would be removed. On the other, he promised the people that by 1978, when his first term in office under the new constitution would end, he would accomplish the dual goals of “national income $1,000, exports $10 billion.” The development of heavy and chemical industries for automobiles, electronics, shipbuilding, petrochemicals, and so on—which were evaluated as economically non-viable by the World Bank, among others—constituted the core and integral part of the heavy and chemical industry drive. The Yushin regime met with vehement resistance, including from opposition parties, labor, and university student bodies.
- 22.
See Hirschman (1979: 63).
- 23.
The development of almost all of the heavy and chemical industries fell within the jurisdiction of the MCI.
- 24.
There can be a counterargument that the significance of the inflation problem was deliberately exaggerated, since the EPB was not in favor of industrial policy, such as developing heavy and chemical industries from the start. It tried to take advantage of the inflation problem in an effort to occasion a retreat from it. But, as will be seen, this seems to lack historical evidence.
- 25.
It should be remembered that the EPB housed the Bureau of Statistics, and its analysis was supported by the Korea Development Institute, established as its think tank.
- 26.
General Chun Doo-hwan, a leading protégé of President Park, took power through an insurgency in the aftermath of the assassination of President Park, and repressed by force the strong resistance against his usurpation of political power.
- 27.
A writer who depicted the structure and process of economic policymaking during Chun’s rule called his book “With Respect to the Economy, You Are the President,” emphasizing the extent of the confidence President Chun had in Kim Jae-Ik.
- 28.
It was so especially after Kim Jae-Ik accompanied President Chun on a state visit to Burma and was killed by a bomb that North Korea had set in the national cemetery that President Chun was due to visit.
- 29.
For a definition of the roles of the presidential secretary, see Porter (1980: 73–83).
- 30.
Another reason may be that, on account of his longtime military experience, President Chun may have believed that it would be better for him to communicate with field officers individually and make his decision in front of them in order to leave an abiding impression that he was a decisive leader.
- 31.
President Roh Tae-woo was also elected democratically under the new constitution, which had been entirely revised in the aftermath of the massive civic movement for democratization in 1987. The claim of President Kim Young-sam that his government ought to be the first “civilian” government was unjustified, except for the fact that Roh was a man from the military.
- 32.
Through the reorganization in December 1994, the Fair Trade Commission and the Bureau of Review and Evaluation, which had been housed in the EPB, were moved to the Office of the Prime Minister.
- 33.
Szanton (1981: 2–3).
- 34.
Szanton (1981: 8).
- 35.
For a discussion of the political meaning of organizing as a powerful source affecting the distribution of power, see Seidman (1981: 33–57).
- 36.
It should be remembered that all the ESPs were chosen from the high echelons of the EPB, with rare exceptions from the MOF.
- 37.
Hwang (2011: 283–313).
- 38.
There seems to be no such vestige of thought that to make the EPB powerful and influential it should be given institutional autonomy. The available evidence suggests that to lend effectiveness to the planning system, it must be accompanied by budgetary power. This argument has been criticized by the present author because this could not have been a sufficient condition for the EPB to play its role effectively and competently, given the general truth that budgetary functions tend to be easily subject to political interference.
- 39.
Szanton (1981: 7).
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Choi, BS. (2014). Managing Economic Policy and Coordination: A Saga of the Economic Planning Board. In: Kwon, Hj., Koo, M. (eds) The Korean Government and Public Policies in a Development Nexus, Volume 1. The Political Economy of the Asia Pacific, vol 13. Springer, Cham. https://doi.org/10.1007/978-3-319-01098-4_3
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