From the end of the Korean War to 1990, South Korea had evolved from a country dependent on other nations for its national security to a strong and growing nation, increasingly capable of meeting its own defense needs. Civilian industries maintained military assembly lines as a separate, and generally small, part of their corporate activities.

Defense Spending

Unavailable

Figure 16. Comparison of Defense Expenditures, South Korea and North Korea, 1978-88

Source: Based on information from United States, Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers, 1989, Washington, 1989, 53.

Seoul's defense budget increased in proportion to the growth of the national economy throughout the 1970s and 1980, demonstrating how strongly national leaders felt about improving the armed forces (see fig. 16). Between 1971 and 1975, defense spending increased from US$411 million to US$719 million. Defense expenditures averaged about 4.5 percent of the country's gross national product (GNP--see Glossary). In 1976, the first year that the government included proceeds from the defense tax in published figures for military expenditures, the budget for the armed forces and defense industries increased 100 percent over the 1975 figure to US$1.5 billion. The costs involved in initiating weapons production and the loss of military grant aid from the United States were the major reasons for the gradual increase of defense spending from 5.2 percent of GNP in 1979 to 6.2 percent of GNP in 1982. By 1990 defense spending had increased to almost US$10 billion a year, but because of the dramatic growth in the country's economy, this figure was below 30 percent of the government's budget and less than 5 percent of GNP for the first time since 1975.

Annual defense budgets were proposed by the Ministry of National Defense and approved by the president following consultations with the National Assembly. Beginning in fiscal year (FY--see Glossary) 1979, the Ministry of National Defense adopted a budget management system based on the United States Department of Defense project planning budget system. The South Korean system focused on force modernization and the maintenance of military organizations in peacetime at 70 percent of their wartime strength. The government's mobilization and resource management plans for support of the military were designed to bring the armed forces up to full strength quickly and to maintain the country's capability to supply the military during wartime. Under the 1987 Constitution, the National Assembly was accorded more responsibility to review the defense budget and to recommend appropriate levels of spending. In 1990, however, the president continued to have the final say on budget matters.

Approximately 40 percent of the defense budget was devoted to weapons and equipment modernization in 1990. Defense planners est843 stablished a number of long-range goals: to establish an independent reconnaissance system with intelligence satellites and early warning aircraft to improve the quality of firepower and the accuracy of domestically produced weapons to deploy indigenously produced surface-to-air and tactical surface-to- surface missiles and to replace outdated fighter aircraft and naval vessels with technologically advanced models that would neutralize the threat of North Korea's modern weapon systems.

The operational costs of the three armed services constituted approximately 35 percent of the defense budget. Improvements in training, logistical support to combat units, and pay and benefits provided to military personnel were a part of the increased cost of supporting the armed forces. The acquisition of sophisticated new types of weapons, although contributing to national security, also increased operational costs.

The remaining 25 percent of the defense budget was mostly allocated among the armed forces reserves South Korea's share of the United States-Republic of Korea combined defense improvement program research into new defense technologies and construction and maintenance of military installations.

Data as of June 1990