"Did you say 7.1 percent?" Little wonder Fowler Hamilton, the head of the U.S. State Department's Agency for International Development, was startled at what he had just been told by Song Jung-bum, the vice president of Korea's Economic Planning Board.
Song was accompanying Park Chung-hee, then officially chairman of the Supreme Council for National Reconstruction but already de-facto president, on a visit to the United States in November 1961. There he met with Hamilton to request U.S. aid for Korea's economic development, and told him about Korea's ambitious goal of 7.1 percent economic growth. Hamilton said not even advanced countries had achieved such a high goal.
Korea was then one of the poorest countries in the world, with gross national income per capita of a mere US$79 in 1960, and a trade deficit of $300 million, 16 percent of GNP. Park felt a deep-seated resentment of his country's poverty, which he believed was due to nothing but laziness on the part of the Korean people, and made economic development his top priority.
On July 22, 1961, two months after the coup that brought him to power, Park established the Economic Planning Board and bestowed on it mighty powers to design economic development plans and policies, set the budget, and control other ministries.
In 1962, the EPB started the first five-year economic development plan. The goal was to make Korea's economy independent. But the government did not have the financial resources to carry out the plan, and a stab at currency reform ended in failure. However, when labor-intensive light industries began to decline in developed countries in 1963, Korea's exports of manufactured goods took a huge leap, and the key strategy changed to export-led growth. A cheap yet highly skilled labor force was the only thing this financially depleted and resource-poor country had. And until 1966, Korea posted average annual growth of 7.8, not 7.1, percent. Korea’s export-led industrialization was to last until 1979, when the fourth five-year plan ended.
But Park did not keep his initial promise to return to the Army when his task was done. Instead, he discharged himself from the military on Aug. 30, 1963 with the famous words, "Let me be the last unlucky soldier in this country." He ran in the fifth, and first fully democratic, presidential election in October, which he narrowly won. That was the beginning of the Third Republic.