Under a centralized planning system initiated in 1962, the ROK was one of the fastest growing developing countries in the postwar period, shifting from an agrarian to an industrial economy to a high-tech "new economy" in the course of only a few decades. In 1996, the ROK was officially admitted to the 30-member Organization for Economic Cooperation and Development (OECD) of advanced industrialized countries. In 2001, industry contributed 44% of GDP compared to 16.2% in 1965, while agriculture, forestry and fishing accounted for 4%, down from 46.5%. Much of this industrialization was fueled by the government's stimulation of heavy industry, notably steel, construction, shipbuilding, and automobile manufacture, as well as its support of technological advances in communications and information technology (CIT). To finance industrial expansion the ROK borrowed heavily up until the mid-1980s. By the end of 1986 its foreign debt equaled about 52% of GNP, making the country one of the world's four most deeply indebted developing economies. Steady current account surpluses allowed the ROK to reduce this figure, but in 1998, in the wake of the Asian financial crisis, the external debt/GDP ratio again ballooned, reaching an average 46.9% in 1998. Financial and corporate structural reforms helped bring this ratio down to 28.4% (est.) in 2002, with a projected 25.8% in 2003.
The average annual rate of GDP growth declined from an average of 9.5% between 1965–80 and 9.7% 1980 to 1990 to6.57% 1991 to 2000 as export growth slowed, labor costs rose, and the won steadily appreciated against the US dollar. However, Korea's economy started to grow once again at the phenomenal rate that it saw in the 1970s and 1980s in the later 1990s. The economy grew by 9.1% in 1995 and 9.1% in 1996. However, after June 1997, when Hong Kong reverted to Chinese rule, South Korea became engulfed in the Asian financial crisis. GDP growth averaged only 5% in 1997, and then turned negative (-6.6%) in 1998, in the country's first economic contraction since the Korean war. Export value fell 25% in 1998 despite a 19.6% increase in volume, due to depreciating currencies. Before the end of 1997, a $58 billion international support program had been arranged, anchored in a three year stand-by arrangement with the IMF running from 4 December 1997 to 3 December 2000, and a one-year arrangement under IMF's Supplemental Reserve Facility (SRF) with an additional $14 billion line of credit. South Korea's economy made a strong recovery in 1999 and 2000, with GDP growth rates if 10.9% and 9.3%, while inflation, which had reached 4% in 1998, was held to 1.9% in 1999 and 2.8% in 2000. The recovery was sharply interrupted, however, by the collapse of the dot.com boom in early 2001 and the decline in international investment in the aftermath of the 11 September 2001 terrorist attacks on the United States. Real GDP growth dropped to 3.3% in 2001 and is projected to have achieved only between 5.5% and 5.8% in 2002.
Tobias