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Heavy and Chemical Industrialization

0. Prologue

Economic powerhouse,
A world recognized industrial state, the key to
the Korean miracle was
Heavy and Chemical Industrialization (HCI).

HCI was a symbol of economic self-reliance
in the newly independent South Korea.

The dream of HCI had been held by the Syngman Rhee and
the Jang Myeon governments, and the Park Chung-hee
government also had such aspirations.

The key was to secure foreign currency.

Normalizing relations with Japan and sending Korean forces to Vietnam
would provide much of the funds required.

In June 1965, the Korea-Japan Normalization treaty was signed.
This ensured that Korea would obtain $800 million in Claimable funds.

In addition, from 1965, with the deployment of South Korean forces to Vietnam,
exports bound for Vietnam, and contracts for freight and construction also increased.
The salaries of soldiers and workers also brought much foreign currency into the country.

Thus, dollars began flowing into the country,
and from the late 1960s, foreign capital followed.

The government used this foreign capital to finance
the construction of a petrochemicals complex
and an integrated steelworks.

Petrochemicals were
the inputs for light industry including synthetic fibres.

In 1968, construction work began in Ulsan
on 10 petrochemical related facilities,
with construction completed in 1972.

As a result,
the basic materials required in the industry
were produced in much higher quantities.

The government restarted efforts to build
an integrated steelworks in 1965.

After a quite a few difficulties,
with herculean efforts
the largest project in Korean history was completed.

June 1973, finally the dream of an integrated steelworks came true.
In the 1970s, Park Chung-hee shifted from the aim from gradual
Heavy and Chemical Industrialization (HCI),
to a general push toward rapid HCI.

A security crisis in the late 1960s and early 1970s,
led Park to seek to nurture a national defence industry.
He also created the authoritarian regime
so as to ensure he remained president for life.
He set out plans to reach annual exports of $100 million by 1980,
and GDP per capita of $1,000.

12th January 1973, First Press Conference of the year, President Park Chung-hee
“Korea today has entered an era of Heavy and Chemical Industry. The government declares its intention to put in place policies to foster the creation of Heavy and Chemical Industry.”

From 1973, big investments were made in
steel, shipbuilding, machinery, petrochemicals,
electronic products and non-ferrous metals.

The massive investment in HCI
led to what was called then as the
‘biggest boom ever in Korean History’.

It was at this time two of South Korea’s major industries:
cars and shipbuilding, were built.

Until the 1970s, the Korean car industry
only assembled cars
with imported parts.

However, with strong government encouragement,
it’s own car models were developed,
and parts also made domestically.

From the 1970s, the shipbuilding industry was also
nurtured.
With government support,
the Korean Shipping corporation built
20,000-30,000 ton ships.
While the new company, Hyundai Shipbuilding,
built 200,000-300,000 ton VLCCs.

Amid difficult circumstances,
workers and technicians successfully learnt how to build ships.
They greatly raised productivity
narrowing the gap with Japan.

. With the sudden death of Park Chung-hee in October 1979,
and the resulting political crisis
the economic crisis the country faced also worsened.
The new military dictatorship led by Chun Doo-hwan/
saw Park Chung-hee’s HCI as the cause of the economic crisis.

The government attempted to restructure electricity generation equipment
and car industries, which were in a state of severe recession. It also ended government
policies which had targeted specific companies for preferential treatment in particular industries.

These economic stabilization and rationalization policies
resulted in rapid growth returning in the early 1980s.

And…
in 1986-88,
the economy boomed.

It was the car industry
that expanded particularly
rapidly in this period.

Hyundai, with the Pony Excel car,
took the US market by storm.
Exports increased rapidly.

Since then, the Korean car industry,
with constant improvements in performance,
and active marketing,
has grown into the fifth largest worldwide.

In the 1980s…
another industry that succeeded
was semiconductors.

In 1983, Samsung’s Lee Byung-chul,
designated semiconductors a key industry
for the firm, and entered the D-ram market.

In late 1983, when developing the first range of D-ram products,
there was a five year development gap with the United States and Japan,
but the gap was closed by November 1992.

From 1993, South Korea became the no. 1
maker of semi-conductor memory worldwide.
And it was the third largest producer of semi-conductors generally.

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10, Epilogue – the significance of Heavy and Chemical Industrialization

Beginning with steel,
petrochemicals,
shipbuilding,
all the way up to cars and electronics

HCI was the driving force
behind Korea’s economic rise.

With the government leading the way,
the ambition of industrialists, the ability of workers and engineers to learn,
as well as their hard work, made HCI possible.

HCI
turned South Korea into a top-ten economy in the world
playing a crucial role in creating a better future.