Economic Development Fund : Foreign Capital
1. Decline in reliance on Foreign Aid
Under the Public Law 480, the US government provided assistance to Korea by taking care of their surplus agricultural commodities and selling war supplies.
In 1957, the US aid reached up the highest sum since its start in 1954. Then the aid started to decline. When the Park Administration seized political power in 1961, the US aid dropped to $199,240,000. However 39.2% of the government’s budget depended on the US assistance, and the national defense dependency to the US was even high. Without the US aid, Korea could not avoid financial bankruptcy. Park’s slogan of “Independent Economy” came out at this point. An independent economy became a supreme order. Park wished to protect Korea from the conspiracy and also find other ways of surviving. |
2. Reliance on foreign capital rather than foreign direct investment.
The foreign capital provided a key policy means for the country’s industrialization by the Park administration. Korea preferred foreign loan than direct investments to minimize foreign countries’ possession and control over Korean enterprises. Therefore, the government established Payment Guarantee Policy to make acquiring loans more accessible.
One of the characteristics of Korea’s industrialization is that the rate of direct investments from multinational enterprises was extremely low compared to other countries. The Park Chung-hee administration allowed foreign direct investment in certain domestic industries that lack the technology and capital. However, he looked for ways to strictly regulate specific sales conditions. The enactment of the Foreign Direct Investment Promotion Act in 1971 and 1973 was also made to protect Korean industries and prevent the inflow of foreign companies.
One of the characteristics of Korea’s industrialization is that the rate of direct investments from multinational enterprises was extremely low compared to other countries. The Park Chung-hee administration allowed foreign direct investment in certain domestic industries that lack the technology and capital. However, he looked for ways to strictly regulate specific sales conditions. The enactment of the Foreign Direct Investment Promotion Act in 1971 and 1973 was also made to protect Korean industries and prevent the inflow of foreign companies.