The figure shows changes in the composition of general government expenditure by function in Korea's national accounts. It illustrates a gradual shift in the allocation of public resources away from economic development and national defense toward social protection.
From the 1970s through the mid-2000s, expenditures on economic affairs accounted for the largest share of total government spending, reflecting the government's emphasis on supporting rapid economic growth. During the 1970s, fiscal investment in infrastructure and other development projects expanded significantly, and spending on economic affairs represented roughly 30 percent of total expenditure. In the 1980s, the government pursued fiscal discipline through expenditure restraint, particularly in defense spending, and the share of economic affairs expenditure also declined. During the 1990s, however, expenditures on economic affairs increased again as the government sought to strengthen national competitiveness through measures such as the introduction of the Transportation Tax.
In the 2000s, social protection expenditure increased steadily as various welfare programs were introduced and expanded to address mass unemployment and poverty in the aftermath of the Asian Financial Crisis. As a result, the share of social protection expenditure, which stood at only 6.7 percent in 1970, surpassed that of economic affairs expenditure by 2007. By 2012, social protection expenditure amounted to 9.4 percent of GDP and accounted for 28.7 percent of total government expenditure. These figures represent a substantial increase compared with the corresponding shares in 1995 (3.9 percent of GDP and 17.7 percent of total expenditure).
The share of defense expenditure remained slightly above 20 percent until the 1980s but gradually declined thereafter, stabilizing at around 7–8 percent in recent years. The share of education expenditure remained close to 20 percent before the Asian Financial Crisis but fell to around 15–16 percent afterward as the shares of other expenditure categories expanded. Nevertheless, education expenditure has remained relatively stable over time.
The figure shows changes in the composition of general government expenditure by function in Korea's national accounts. It illustrates a gradual shift in the allocation of public resources away from economic development and national defense toward social protection.
From the 1970s through the mid-2000s, expenditures on economic affairs accounted for the largest share of total government spending, reflecting the government's emphasis on supporting rapid economic growth. During the 1970s, fiscal investment in infrastructure and other development projects expanded significantly, and spending on economic affairs represented roughly 30 percent of total expenditure. In the 1980s, the government pursued fiscal discipline through expenditure restraint, particularly in defense spending, and the share of economic affairs expenditure also declined. During the 1990s, however, expenditures on economic affairs increased again as the government sought to strengthen national competitiveness through measures such as the introduction of the Transportation Tax.
In the 2000s, social protection expenditure increased steadily as various welfare programs were introduced and expanded to address mass unemployment and poverty in the aftermath of the Asian Financial Crisis. As a result, the share of social protection expenditure, which stood at only 6.7 percent in 1970, surpassed that of economic affairs expenditure by 2007. By 2012, social protection expenditure amounted to 9.4 percent of GDP and accounted for 28.7 percent of total government expenditure. These figures represent a substantial increase compared with the corresponding shares in 1995 (3.9 percent of GDP and 17.7 percent of total expenditure).
The share of defense expenditure remained slightly above 20 percent until the 1980s but gradually declined thereafter, stabilizing at around 7–8 percent in recent years. The share of education expenditure remained close to 20 percent before the Asian Financial Crisis but fell to around 15–16 percent afterward as the shares of other expenditure categories expanded. Nevertheless, education expenditure has remained relatively stable over time.