[The Editors' Verdict] Lessons from the Five-Year Economic Development Plan: The Value of Competition

On the 25th, the '60th Anniversary International Conference on the Establishment of the Five-Year Economic Development Plan' was held at the Fairmont Hotel in Yeouido, Seoul. Since the first Five-Year Economic Development Plan began in 1962, it is strictly the 61st anniversary. Last year, due to a change in administration, only a modest event was held, but the government chose to hold a grand event on the 61st anniversary.

Following the advice of former economic officials who emphasized the need to share Korea's success experience internationally, a large-scale international conference was held this year, the 61st anniversary. However, rather than just sharing Korea's success story, it is hoped that this serves as an opportunity to look back at the past and consider the lessons we should keep in mind today.

After World War II ended, many countries gained independence. They had to manage their economies independently after escaping from the colonies of major powers. Many countries, not just Korea, established 3- to 5-year economic development plans, but Korea is almost the only one that succeeded.

At that time, the import substitution strategy was popular in most countries. This meant producing domestically what had been imported from developed countries to replace imports. Korea, on the other hand, adopted an export-led strategy. In countries that used the import substitution strategy, domestic companies competed within the domestic market. In contrast, Korean companies had to compete in the global market. Initially, they produced low-quality products based on cheap labor, but since they had to survive in the global market competition, they had no choice but to improve quality. Companies like Geumseong (now LG), Samsung, and Hyundai became global companies by overcoming fierce competition in the world market.

The government adopted an unbalanced strategy by concentrating various supports such as financial and tax benefits on export companies and large corporations, but companies that performed well and did better received more government support benefits. There were almost no cases where government support was monopolized by a single company in a specific industry. Korean companies had to compete not only in the global market but also in the domestic market.

The Saemaul Undong (New Village Movement), which began in the 1970s, should not be thought to have succeeded solely through the spirit of "Let's live well" and diligence, self-help, and cooperation. At that time, villages that worked hard and achieved good results were given priority support from the government budget and various construction materials such as cement. Villages that did not perform well competitively strived by observing the changes in those successful villages, which was a key factor in the success of the Saemaul Undong.

How is the political sphere now? "Budget pork-barreling" and "taking care of constituencies" have become routine. Under the guise of "universal welfare," welfare is provided even to those with sufficient income, wasting budgets that should not be squandered.

It is important for the state to protect socially vulnerable groups. However, it is more important to activate competition in the market and help those who fall behind in that competition to recover. Rather than fostering vague illusions about welfare, an atmosphere should be created that encourages the will to become self-reliant.

When the government spends the budget, it would be good to activate competition among local governments and provide more support to excellent cases, or to pursue selection and concentration based on competition rather than "dividing and sharing" in university support and restructuring. On the 31st, President Yoon Suk-yeol stated at the Social Security Strategy Meeting that "social security services themselves should be marketized, industrialized, and a competitive system introduced." He introduced a virtuous cycle structure where defense spending leads to the development of the defense industry, which in turn leads to increased defense spending, and said, "The same logic applies to social security and social welfare services." It is hoped that the 60th anniversary event of the Five-Year Economic Development Plan will be an opportunity to reconsider the value of competition once again.