Impact of Energy Crisis upon Korean Economy

Abstract

The Korean economy has grown an annual average rate of 9.7% from 1962 to 1979, thanks to successful implementation of the Government-led economic planning. In 1960s Korean investment policy was to develop the light industry as a means to reduce imported consumption' goods. But from early 1970s, Korea has shifted its policy and pushed forward the investment in heavy industry, thereby resulting in improvement of the industrial structure. Heavy industry

goods increased their share of the maufacturing industries from 24.7% to 57.6% during 1962"-'1979.

The reason for this policy shift was that the heavy industry accelerates economic growth by raising productivity through roundabout production, although it is more capital and technology-intensive. Furthermore, the heavy industry is energy-intensive as well. It consumes large amount of energy resources as materials and fuel. As results, the consumption of energy resources, mainly oil, has sharply increased during the same period. The amount of oil consumption in 1979 jumped to over 200 million barrels, from only 8 million in 1962 resulting in 25-fold increase in 17 years.