The ROK has a market economy in which both private enterprise and foreign investors play an important role. From 1962 to 1997, overall economic development was guided by the Economic Planning Board and a series of five-year plans. The Korean economy was devastated by the Korean War, even requiring foreign food aid. As late as 1965, per capita income was only $88 a year. From 1965, South Korea has been transformed from an underdeveloped agricultural economy to a leading Newly Industrialized country (NIC) to a leader in the new information technology (IT) economy. Nominal GDP was $3 billion in 1965; in 2003 it is projected at $514 billion, 171 times bigger.
The Seventh Five-Year Economic and Social Development Plan for 1992–96 aimed at establishing the ROK as an advanced industrialized economy by the year 2000. More specific goals included improving social and economic equity, continued liberalization, improving industrial and export competitiveness, as well as strengthening the role of the private sector while government intervention in economic management, especially in the financial sector, is reduced. The Plan targeted an annual GDP growth rate of 7% and a decline of consumer price inflation to 3%. The plan was overtaken by the Asian financial crisis. South Korea was assisted in weathering the crisis of confidence with a $58 billion international support program mobilized through the IMF, the World Bank and the Asia Development Bank (ADB). In May 1998 the government introduced a five-year liberalization program covering 11 economic sectors including previously closed petroleum, insurance and financial services sectors. The ROK's recovery from the Asian financial crisis was remarkably strong, aided by the show of international confidence and its government's embrace of trade and investment liberalization reforms. However, the collapse of the dot.com boom and the global slowdown in 2001, combined with the aftermath of the 11 September 2001 terrorist attacks on the United States, dealt serious blows to the economy's forward momentum. Progress in reducing the share of non-performing loans (NPLs) in the financial sector and reducing dependency on foreign borrowing were brought to a halt. At the end of March 2001, total external liabilities were at a record $137 billion. However, the ROK continued to maintain its net creditor position as it has since September 1999. Foreign assets totaled an estimated $188 billion.
In early 2003, under the shadow of increased tensions with North Korea, the ROK government announced that the four pillars of its development strategy were 1) consistently promoting technological innovation; 2) continued development of a fair and transparent market system; 3) social and cultural norms based on trust; and 4) peace and prosperity in East Asia.