TCL D A NEW PUBLIC POLICY FOR HOUSING DEVELOPMENT IN KOREA
By
Hyun Doo Park
Bachelor of Science in Econcnics and Business Administration
St. Andrews Presbyterian College, Laurinburg,N.C.
May, 1967
Subitted in Partial Fullfillment o
Master in City Planning at the
Januarry-7
Requirements for the Degree of husetts Institute of7echno1logy
Signature of the Auth rF4I
D artpnt of
Stu es & Planning
Certified B
I /
Thesis Supervisor
Accepted By
/
Chairran, D partment Committee on Graduate Programs
APR 121974

Room 14-0551
77 Massachusetts Avenue
Cambridge, MA 02139
Ph: 617.253.2800
Email: docs@mit.edu
http://ibraries.mit.edu/docs

ABSTRACT
DEXRD A NEW PUBLIC POLICY FOR HOUSING DEVEIOPMENT IN KOREA by
Hyun-Doo Park
Submitted to the Department of Urban Studies and Planning on February 11, 1974 in partial fullfillment of the requirements for the degree of Master of City Planning.
This thesis is concerned with examining the housing policies of the Governrent of Korea, in particular evaluating the socio-economic impact of various housing programs on the national drive toward modernization. The thesis introduces the theme of self-help housing and discusses self-help housing activities as an alternative to traditional governnnet housing policy, and as a vehicle for social change and modernization of the nation.
More specifically, the thesis examines the conflict
between the housing producer, whose interests are based on the
rapid and efficient production of housing and the housing consumer, whose interests are based on a holistic approach to the housing problem. The thesis endeavors to explicate the cost-benefit differentials of different types of housing programs which have been sponsored by the Government.
Chapter I develops the context of the housing situation in Korea; the housing problem, its causes and effects. Chapter II discusses different types of Government housing programs which have been primarily based on efficiency rather than equity. Chapter III evaluates the socio-econamic costs of Government housing programs, particularly the Seoul Citizen's Apartment Program. Chapter IV examines the feasibility and public benefits of each strategy in confronting the national housing problems especially. in urban context. Chapter V concludes with a discussion of the ability of various Government programs to solve the nation's housing shortage problem by projecting future housing needs for Korea.
Thesis Supervisor: Ian Donald Terner
Title: Assistant Professor of Urban Studies and Planning

ACKNOWEDGEMNTS
It has been a privilege for the author to have written this thesis under the guidance of Professor Ian
Donald Terner. Its content has been greatly influenced by
Dr. Terner's understanding of the concept of self-help housing and housing problems in developing countries. Since the purpose of the thesis is to study the viability of the theory advocated, it should be recocnized that the analytical tools used in the process of writing are more important than the actual camputational results.
I am also indebted to Gregory Pai who read the rnuscript in draft and provided valuable criticisms in both form and content, and Anne Aylward who provided editoial suggestion after the first draft.
I owe a particular debt to the Ministry of Construction of the Republic of Korea and the United Nations for fellowship grants which made my research in Urban Studies and Planning at
MIT possible. Finally, to my wife, Kyung-Ran, I owe much nore than I can express for her patience and moral support during the writing of this thesis.
Cambridge, Massachusetts
February 11, 1974
.
Hyun-Doo Park

COINTENTS
INIRODUCrION
_____
--1
CHAPTER I CONTEXT OF HOUSING PROBLEM ----
Economic Analysis of Dualistic Urban Society
------
Scoiological Analysis of Squatter Problems ---------
5
10
Measuring Housing Needs and Shortage in Korea --------- 14
5
CHAPTER II GOVEPNMENT HOUSING PROGRAMS
-------------------
Ideology of Government Housing Develogw-nt Policy ----- 19
Past Government Housing Action Program
----------
Slum Clearance and Housing Development
Relocation Program in the New Settlement
31
Current Government Housing Action Program
19
CHAPTR III COST EFFECTIVENESS ANALYSIS OF PUBLIC POLICY FOR
HOUSING DEVELOPMENT -------------------- 39
Conflicting Values Between Housing Actor and Users --- 39
Comparative Cost Analysis ----------------
Undercharged Social Costs
----------------
43
54
Chapter IV INDUSTRTALIZED HOUSING SYSTEM AND PROBLEM ------------- 57
Physical Description of Industrial Housing System ----- 57
Evaluation of Industrialized Housing System with
Alternative Housing Systems ----------------- 62
CHAPTER V TOWARD A NEW PUBLIC POLICY FOR HOUSING ---------
Projection of Future Housing Needs in Korea ---------- 79
Forecasting Nation's Economy and Housing Resources --- 84
Solving the Nation's Housing Shortage Problem Within
Indigenious. Constraining Factors ------------------- 93
79
107 BIBLIOGRAPHIES
APPENDIX
APPENDIX
I
-
114
137

INTRODUCTION
The task of modernizing Korea calls for a new public policy conmitment toward development of the nation' s housing.
The purpose of this thesis is -to help devise a new national housing development strategy that sees housing not only as a government programs to fulfill national housing needs, but also as a vital means of achieving more equitable housing opportunity in Korea. With this in mind, the thesis will concentrate on analysis of the major public policies and projects implemented in the past to resolve housing shortage problem in Korea, and will propose an alternative policy through which more equitable housing opportunity can permeate readily for the low-incame households.
Housing opportunity by definition contains holistic concepts including social, economic and political problems interrelating in the arena of national development. In other words, the housing opportunity can be understood in a synthesized term of socio-economic determinants that influence the individual's initiative to improve his living conditions. In this respect, the level of a nation' a clear indicator of the current state of the nation's wealth and socio-economic state of welfare.

2
Nevertheless, housing issues dealt in this thesis is the basic argument that socio-econcmic developrent is not always a necessary and sufficient condition to augumenting the housing opportunity for the low inccme households. In fact, appropriate housing procedures and the creation of proper dwelling environment can act as vehicles for personal fulfillment and stimulate real social and economic development, or to use Sapir's phrase, "genuine culture".1 Therefore,
by what the housing opportunity mean is the opportunity of the individual households that can maximize the participation of the housing procedures without additional economic and social burdens to either nation's scarce economy and to the low- income households.
One of the major tasks in this thesis is to define the cbjective goals of national housing policy to be used in evaluating the adequacy of the housing programs or the public agencies performance; and on the basis of objective criteria, to sharpen policy choices and elicit the best possible results.
The assumptions that underlie the selection of criteria for determining the national housing goals are multi-faceted especially those criteria which measure social benefit. It is because the housing problem has a multitude of socio-
John Turner, Freedom to Build ( New York: The Macmillan
Company, 1972), p.
2 5 5
.

3 econaic implications that can not be evaluated merely by quantitative analysis. Furthermore, it has physical and environmental dimensions that can not be understood merely qualitative terminology. Having this factor in mind, the national housing goals stated in this thesis are basically derived using professor Solomon's method of setting abstractive standards and criteria for measuring the efficiency and equity of national housing programs. Solonon's most explicit housing goal is to maxinize aggregate housing consumption, especially for low incame households. Thus one objective criteria for the analysis is to determine which housing program contributes most to overall economic consumption.2
This means increasing housing stock and at the same time decreasing nation's housing shortage in the most cost effective manner by the government housing agency.
Second objective is to find what kind of housing measures implemented by the government housing agency is the least castly approach for providing low income families with decent shelter. This is particularly related to the public housing program that reduces the financial burdens of the target population.
The third housing goal recommended by professor
Solamon is concerned with equity of housing consumption.
2 Arthur P. Solomon,
" Housing and Public Analysis"
(Cambridge: M.I.T.-Harvard Joint Center Publication, June 1972)

4
"This is a measure to determine the proportion of the total subsidy reaches the target population (;rertically) and the equal treatment of households who are similarly situated
(horizontal efficiency) ."3 All of these housing policy goals are used to measure the cost effectiveness of public policy for the nation's housing developrent.in Chapter III and Chapter IV.
Moreover, for the normative analytical purposes, empirical estimate of housing costs and prices are made, using data obtained from various sources in Korea. In concluding the chapter, the nation's housing needs are projected especially for the Fourth Econcric Development
Plan period (1977-1981) by using professor Rocin's method of measuring housing needs in developing countries, "Housing which satisfies socially determined set of standards;housing as a consumption good as self-justifying human preference; and lastly housing which suits political requirments." 4
And also the second phase of the concluding chapter has been to estimate what amount of nation's resources could be devoted to housing and how the total available resource use should be distributed among the various types of housing activities assuming the nation must resolve its housing shortage within the five years between 1977 and 1981.
3 Ibid.
4 Lloyd Rodwin, Measuring Housing Needs in Develping Countries , Taming Megalopolis Vol.II Eldredge, Wentworth, ed. 1967.

5
CHAPTER I
THE CONTEXT OF THE KOREAN HOUSING PROBLEM
Econanic Analysis of Dualistic Urban Society
The unprecedented rapid growth of the Korean economy during the 1960's caused dramatic changes in the nation's urban econamic structure. Industrialization of the nation's traditional economy has taken place in the urban centers, resulting in great social mobilization toward overurbanization.
5
The rapid population migration frcm rural to urban areas has caused great social and economic strain that may affect the stability of the nation. The major effects of rapid population migration from rural to urban centers are made worse by the fact that most migrants move to one or another of -the expanding shanty neighbourhoods of the cities. These neighbourhoods are a manifestation of the dualistic structure of urban life in a society undergoing dramatic social and technological change. As a matter of the fact, most of Korea's housing problems result from the rapidly changing phenomena of urban structure by the nation's rapid
5 In the phenomena of excessively rapid growth of marginal social cost is greater than marginal social benefit.
In this context, over-urbanization refers to pollution, poverty, crime and etc., are resulted fram continued influx of rural migrants into the urban centers.

6 industrialization.
The population data on Table 1-1 reflects the spectacular growth of the capital city, Seoul, in both absolute and relative terms during the past two decades. During the
Korean War, large sections of the city were destroyed and much of Seoul's population dispersed throughout the country. The ceasefire and the early years of reconstruction restored the city's pre-war population. During the 1960's the city's growth mirrored the accelerating economic growth of Korea as a whole. Fram a slow start, the annual rate of increase in Gross National Product (GNP) reached 11.6% between 1967 and 1971. Much of the nation's industrial and cammercial expansion was concentrated in Seoul, and the city's population more than doubled over the decade.
TABLE I - 1
POPULATION GROW'H OF SEOUL; 1950 -1970
Year
1950
1951
1953
1955
Population
1,693,224
648,432
1,010,416
1,574,868
Year
1960
1966
1970
Population
2,445,402
3,805,261
5,536,377
SOURCE: Seoul Statistical Yearbook (Seoul: Seoul City
Government, 1971) , PrelimE r Count of Population and
Housing Census (Seoul: Econcmic Planning Board, 1970)
Data for 1955 and later years is -Census data.

7
Needless to say, these trends contributed to overurbinization, resulting in serious problems of social and economic absorption for the city and further accentuating the dualistic texture of the nation's economic development patterns.
Dualism in the urban economy exists most markedly in the context of industrial and commrcial life. Modern, large scale capital intensive industrial firms using advanced technology coexist with traditional, fragmented small scale, labor-intensive economic activities such as cottage industries.
This dualistic structure of urban economic activities is paralleled by a dichotomy of income patterns. White collar workers in the modern sector have experienced substantial increases in real incme while unskilled and semi-skilled workers in traditional labor intensive indusiries, such as construction laborers, have not increased their real inccme at a comparable rate. Because of the flood of rural migrants the campetition for such jobs is so intense that wages remain permanently depressed. It has been estimated that nearly 30% of the entire work force has realized little if any improvement in living standard in recent years. Wage increase in this sector have until recently barely kept up with inflation.
Employers, both foreign investors and Korean factory managers who are making large profits, nevertheless claim that they are able to stay in business only because of low labor costs.

8
The embryonic stage of the labor novement, and the governrent's concern with preventing any disruption of stability and the tempo of production, has so far prevented any organized expression of worker unrest. The increasing modernization of industry which tends to beccme more capital intensive has resulted significantly in declining opportunities for uneducated and unskilled workers. However, mass migration of such workers from the villages to the city continues, creating an agricultural labor shortage in many rural areas and a high unemployment rate in the city.
Tens of thousands of the urban poor scrape by on the basis of tiny open air retail enterprises or through door to door peddling, but these sources of income are disappearing with the gradual modernization of Seoul's marketing system. As a result of this kind of persistent existence of dual urban econamy, business profits are accumulated by wellto-do businessmen.
The dual structure of urban economy can also be observed in consumption preference patterns.. LI income migrant households spend a large portion of their income for their food and education for their children while middle income urban households spend a large portion of their incame for housing. A recent survey on social and economic behavioral

9 patterns made by the Yonsei University's Institute of Urban
Studies and Development has revealed that effective demand for housing is much greater among the urban middle incame bracket than among other inccme groups. This does not mean that low incame migrants do not demand housing, but rather that their housing demanded deferred until they raise their earning capability to middle income level. The foremost concern of the migrant households is getting education and occupational traing for themselves or for their children.
This trend has been documented by Barringer' tion on migrant adjustment to urban life in Korean cities.
Social mobility, approximately equal for migrants and urban natives, appears to be more closely tied to factors within the cities themselves. Education in the urban place, length of residence, age, and occupational routes seem to predict adjustment better than background status of migrants. 6
Without forml and informal process of adapting urban culture, migrants, on the other hand, find themselves that they are segregated in large urban squatter and slum comunities, that they are not able to cbtain the jobs they want, and that the prospects for eventually merging into the city as regular residents are not very good, either
6 Herbert R. Barringer and Man-Gap Lee, "Rural-
Urban Migration and Social Mobility," paper presented at the 1973 annual meetings of the Association for Asian Studies
Hawaii, 1973.

10 through upward mobility themselves or through education for their children. The sense of exclusion fran the ease and rewards that the. city has to offer is strong. Although the desire to identify themselves as urban residents can be effectively expressed in relation with their country relatives, among themselves and in dealing with others in the urban centers, they know that they are only just barely tolerated on the fringes of urban society. So far because of lack of organization and the political apathy fostered by ignorance and feelings of helpless inferiority, the slum dwellers have not been a significant political force. Their participation in decision making on issues that concern them
-- even to the extent of making their view known
-- is negligible.
Sociological Analysis of Squatter Settlements
One of the most fundamental factors that facilitates the social mobility of the migrants is unusually unique characteristics of ethnic and linguistic homogenous element of people.
Mirants to Korean cities are not hampered perceptibly by language or cultural obstructions, as has been the case with most (foreign) migrants to Western cities. --- For all practical purposes, it would seem that Korea is ethnically homogeneous with respect to migrant adaptation. 7
7bid.

11
Unlike many of the slums of the Western cities, most of the slum and squatter settlements in Korea display the characteristics of the "urban village" as described by
Gans. 8 The general pattern of upward social mrobility of the migrant can be seen in their process of urban adjustment.
Most of the migrants in the squatter settlements are determined to achieve a clean life in the city through their own efforts, and a major part of the migrants' ambition is focused on obtaining an education for themselves and/or their children.
Except for some aging parents who have been uprooted from village life, migrants prove themselves to be extremely adaptable, adjusting rapidly to uaban life. This relatively rapid adjustment is generally facilitated by a background of ccparatively high level of education in their native places.
One sizable survey found that less than 3% of the male migrants under the age 45 had no schooling at all. 49% had at least some high school education, and surprisingly 21% had soe college training or were college graduates.
9
Another characteristic of the migrants in the slum and squatter camm.unities is that they are mostly of working
8 Herbert J. Gans, The Urban Villagers, Group and Class in the Life of Italian-Arericans, (New York: The
Free Press, 1969)
'9
Joan Nelson," New Policies Toward Squatter
Settlements: Legalization Versus Planner's Standards,"
(Washington, D.C.: Smithsonian Institution, 1972)

12 age. The mediian age is in the early thirties; 51% of the total migrant population fall into this age group. Surprisingly,
94.5 percent of the total ni.grant population are between twenty and fifty, while population as a whole between this age group is 36 per cent. Therefore, it has been evident that the migrant squatter ccmnunities have provided a constant surplus of manpower that campetes for all the unskilled jobs in the city. Seoul entrepreneurs have found that most rural migrants are tough, industrious, conscientious workers.
Many of the ccnpanies, particularly those in the modern sector, are primarily concerned with a prospective employee's educational attainments, but small self-made plant owners, who provide very job training, find that recruitment
of young peopls in the villages or among newly arrived migrants is advantageous. This kind of labor demand can be amply met by the 'labor pool' in the slum and squatter camnunity.
The migrants' ambition and desire to advance in the urban context appears to be much greater than the urbanites. This is evidenced by a housing census that shows the rate of hame ownership among the migrants in the slum and squatter conmunities is higher than the rate of hame ownership of the total households in Seoul. The home ownership
10 Barringer and Lee "Rural-Urban Migration and
Social Mbbility"y

13 rate in Seoul has been reported to be 54.7% of the total households, while a survey conducted in a sample squatter carmunity shows that 78.8% of the migrant families own their house in one form and another.ll This fact indicates that a large portion of the migrants have been able to find a place to live within their financial means. These squatter residences are ignored in official calculation of national housing needs.
Instead of acknowledging the existence of these self-built structures and planning for their improvement, the government considers the squatters 'blight' and plans new units less appropriate than those in which they now live.
Here, housing problem in Korea could be considered much more than singular aspect of qualitative mentality but more importantly, in
Turner's term, "the opportunity to do for oneself what one is able to do so."
In many aspects, the urban assimilation process of the migrants of the slum and squatter cannunities of Korea is similar to Marshall Clinard's theory of slum sociology.
Throughout history, the slum has met various needs and has served several useful functions for slum residents. In particular, it has provided cheap housing for the poor, has fostered group associations, has educated people in urban ways of life, and has given sam of its residents an element of anonymity.
12
11 Young-Mb Kim, "Social Behavioral Analysis of the
Slum Carmunityl" Seoul: The Municipal Affairs, September 1971) p.29
12 Marshall Clinard, Slum and Corrmunity Development,
(New York: The Free Press 1970) p.17

14
The functions of the slums described above can be seen the migrants' slum and squatter ccmmunities in Korea, in which social norms and patterns of behavior still possess both rural and urban chracteristics.
Laquian's statement on the functions of the Filippino slums are particularly germane to urban situation in Korea.
The econamics of slum life enable slum d
to save and thereby improve their chances for econonic and social mobility; community life in the slums retaining as it does primary group relationships characteristic of rural comnity life, is found hospitable by slum dwellers and squatters in transition. 13
These are all dynamic factors which facilitate the participation of the migrants' squatter in the nation's drive for modernization. In this respect, Oscar Lewi s' theory of
"urbanization without breakdown" is the social theory most relevant to the problems of socio-economic integration in the dual structure of Korean urban society.
Measuring Housing Needs and Shortage in Korea
The migrant slum and squatter ccrmnities are frequently regarded by planners and government policy makers as a basic cancer to orderly urban developnent. As denonstrated, the low incame migrants are blamed for creating communities of
" sub-standard " housing; shacks and makeshift
13 Aprodicio Laquian, Slums are for People, (Philippines: DM Press, Inc.) p.xix

15 shelters which violate public building codes and regulations.
Squatters have built their houses covertly on public land on overly crowded sites where they do not usually pay for land or house. This situation is worsened when the squatters who accumulate sufficient savings to rove out, lease their houses for profit to the newly arriving migrants. These illegal housing activities are particularly regared as pathological social behavior adversely affecting the rest of the urban population. Furthermore, these illegal housing activities have contributed to the influx of rural migrants to the urban centers, causing even greater housing needs for urban population. According to a survey prepared by the Ministry of Construction, 22.2% of the nation's households needed housing in 1971 while 45.3 % of the households in Seoul needed housing twice as much as the national average.
(See Table 1-2 and 1-3)
This housing shortage in the urban centers is a direct result of the phenorrenal urban population growth.
The general rate of population increase of all the nation' s urban centers averaged 6 to 7 % per year during the 1960 's, most of the major urban centers were incapable of providi.g
the necessary mechanisms to handle the housing demands and

6
1967
196A
1969
1970
1971
Year
16
?
TABE I1-2
NATIIAL 1O:SIN Srn'ATICN -1967-1971
Rmoer or
Iccu
.oc. ts .c:1i mues r:n Percen.tae
Households (1.000) thics (1.000) Ccnstru:ted Shortae Shortage
(1.000) (1.000)
5.145
5.317
5.481
5.574
5.690
4.097
4.183
4.278
4.338
4.428
95
96
105
115
130
1,048
1.134
1.203
1.236
1.262
20.4
21.3
21.9
22.2
22.2
Soce: Ministry of Censtructien, " ?r -ed '~-:in' Ceterien Poct t.der
A. 1. D.
P l--tInFs'.=. -.
TABLE 1-3
REMiOMD I:CR\SES IN THE STOCK CIF E0CSI:C
LV S-rTL.: 1965-1970 lu:cr or ac:a%7
.
.ca :.nz
Year Homeolds (1.C00) thits (1.cc) zum trza:e scarly
.creasc o:
Sortage of Gross deficit HcusinS stock
1965 649.3 345.7 303.6 46.6 14.5
1966 724.0 361.9 362.1 50.0 29.2
45.6
1967
.1968
754.3
839.4
1969 961.5
-1970 1.097.4
406.1
516.8
543.6
596.8
348.2
320.6
417.9
497.0
46.2
38.2
43.5
45.3
73.T
110.5
Source: Seoul City C-.rct, ccu St
Burau of Statistics (Bo) lorca tinticail Y ck, 1970
C
.
c.c or the o'--lation and Ibusin7 1970 ) housir- Cor-cratim., u: c.: -.- t'r-- ( Ecusine' S.r:Cv statistics )
Mnistry of Cc-z.ruction. :-crea o - rpora:.on., -anguk chut'ack kyngwang
( Mousing conditions in Korca ) 1968
I

17 other social needs of these migrants. As a result the mass migration to the urban centers has caused incongruous and bizarre patterns of urbanization, particularly with regard to housing settlement process in the nation's urban centers.
However, the nation's housing shortage cannot be entirely attributed to this movement of population to the urban centers. As Rodwin points out, "Housing needs growing out of neglect of the existing stock of housing may be enornmus, as the housing experts in France and more recently
Britain have discovered. Just because the total amount of new housing will be so limited, it may be dangerous to invite hardships by ignoring possibilities for more adequate and complete utilization of existing housing." 14 Housing needs also result from depreciation of the existing stock and blighted units which arount to about 30% of the total housing stocks.
1 5
There is another significant variable in estimating housing needs in Korea. Housing needs have been affected by a profound change in the family structure in Korea. The traditional Korean family system was typified by a central
14 Podwin Measuring Housing Needs in Developing
Countries
15 Young-Mok Yu, Housing analysis aid Poijcy in
Korea (Seoul: Korea Housing Corporation, Chu-taik, Housing
1971) p.11

18 partriarchal unit in which the married sons and their families remained in the parents' hane (gemeinschaft ). This has been gradually replaced by a nuclear family system (gesellschaft ).
This reformation of the family system, especially in the urban centers, has created additional housing needs. Recently
Time described the sociological change of the Korean family in the perspective of contemporary history.
The trauma of the war, followed by the impact of Western technology, has eroded much-of the traditional Korean family life,.
especially in the cities. Custam had campelled all family members to live together in one house, but the young generation today wants to move out. 16
This process of restructuring traditional family systen is synonymous with the trend that housing demand increases as self-justifying human preference changes especially when the consumer's incame level increases while the nation flourishes with more economic growth. But the fact is that very few people have been affected in increasing their incame
by the nation's economic growth.
16 "The Delight of Peace" Time, July 30, 1973 p. 3 3

19
CHAPTER II
GOVERNMENT HOUSING P1F0GRAMS
Ideology of Government Housing Developent Policy
In the midst of steady industrialization and overurbanization during the 1960 's, the allocation of national resources for government housing programs has been a major controversy. Public investment in the housing sector has been considered 'equity' programs by the government planners whose priority in public investment lies in the measure of productivity. This notion of government's priority is particularly prevalent when a government program that maximizes efficiency will not necessarily achieve a specified high level of incame redistribution. In view of this, public concern with low income housing problems is considered extravagant. It is believed that the nation must concentrate its resources in the most profitable export sectors which generate the nation's econanic growth. From this perspective of setting public investment priority, social welfare problems such as income distribution or the quality of life among the urban poor are not regarded-as urgent. In this way the government officials

20 justify their low level of housing investment. The low level of public investment discourages private housing activities because of the limited subsidies for housing activities. The scale of housing investment of the total government expenditure in its first Five Year Economic Development Plan is only
1.7% of the total investment plan; 2.6% in the Second and
2.4% in the Third of respective Five Year Economic Development
Plans.17 This ratio of housing investment to total investment remains at less than a half per cent as compared with 6 to 8% recomnended by the United Nations to Economtic Carmission for
Asia and Far East (ECAFE) regions.
Like other developing countries, Korea has experi--enced rising expectztions and increasing aspirations for upward mobility as the nation's economic growth has accelerated.
This has meant increased demands for social development in balance with economic growth. Here, the meaning of econamic growth and development needs to be clarified. Professor
Kindleberger pointed out:
Econcmic growth means more output, and economic development implies both more output and changes in the technical and institutional arrangement
by which it is produced. -- Growth may well imply not only more output, but also more inputs and more effciency. i.e., an increase in output per
Economic Planning Board, Economic Survey,
( Seoul: Economic Planning Board, 1970 )

21 unit of input. Developnent, goes beyond these to
imply changes in the structure of out pyt-s and in the allocation of inputs by sectors.
Korea' s economic developnent strategy has been mostly cono~rned with raising production levels in export industries and has too little emphasis on the need for investment in human resources.
Growth-oriented econanists in Korea strongly support the notion that the existence of a large pool of -cheap labor and a certain amount of social dislication of marginal labor force is an inevitable part of the initial stage of economic development. According to this argument excessive housing investment for low inccm people would reduce the acceleration of the nation's economic growth. This notion is not supported
by other nations' experience. " In Israel, where the population doubled between 1949 and 1957, and enormous housing program did not halt economic progress generally but probably aided it. Despite the extensiveness of the country's conritment to housing, the excess of imported over exported building materials was only 4.2 per cent of the total deficit on the balance of payments in 1957." 19
The Israeli experience in generating national growth while at the same time meeting the nation's housing shortage
18 Charles Kindleberger, Economic Developnent (New York:
McGraw-Hill Book Company, 1965) p.
3
.
19
Charles Abraims, Man's Strucle for Shelter in an
Urbanizing World (Cambridge: The M.I.T. Press ) p.109.

22 i
TABLE II-1
CaZ40SITION OF GROSS DIXSTIC CAPITAL FOPATION
In Billion
Von
At 1965 Consta:it Market Prices
1966
Agriculture, forestry
and fishery
Mining ana guarrying
Manufacturing
*Construction
Electricty. water & sanitary service
Transportation, storage and comnunication
Amount
23.16
2.u1
61.72
2.00
9.55
46.97
'=
Gross dur"estic capital formation 2u7.38 100.0
Fixed capital formation 190.63 -91.9
11.2
1.0
29.7
1.0
4.6
22.6
Mholesale and retail trade
Banking, insurance and real estate
*Ownersbip of dwelling
?wblic administration
6.99
0.87
18.42
2.28
3.4
0.4
8.9
1.1 services
Increase in stocks
16.66
16.75
8.0
8.1
1967
Auount
241.72 100.0
232.09 96.0
19.24
2.24
64.22.
2.11
19.13
67.68
9.25
0.75
21.01
4.55
21.91
9.63
8.0
0.9
26.6
0.9
7.9
28.0
3.8
0.3
8.7
1.9
9.4
4.0
1968 de
344.12 100.0
325.63 94.4
23.82
3.2u
79.71
10.82
34.53
89.50
12.38
2.77
33.66
7.87
27.37
18.49
6.9
U.9
23.2
3.1
10.0
26.0
3.6
0.8
9.8
2.3
8.0
5.4
1969
Aount e
451.47 100.0
407.76 90.3
24.26
3.39
90.76
10.90
48.10
122.55
20.43
3.78
36.11
7.90
39.60
43.71
5.4
0.8
20.1
2.4
10.7
27.1
4.5
0.8
8.0
1.7
8.8
9.7
170
Amount
433.94 100.0
400.37 92.3
25.06
2.81
86.16
8.26
47.84
109.13
22.89
4.30
*
43.00
7.92
43.00
33.57
5.8
0.7
19.9
1.9
11.0
25.1
5.3
1.0
9.9
1.8
9.9
7.7
1966-
1070
Average
100.0
92.7
6.9
0.u
22.8
*2.0
9.5
26.0
4.3
0.7
*9.1
1.8
8.8
7.3
Sources The Bank of Korea, Economic Statistics Yearbooks 1971, pp. 28-31.
Institute of
'A Survey of
Urban Studies and Developnent, Yonsei University the Housing Market in Urban Korea' 1972

23 with large capital expenditures in the nation's early development period directly contradicts the proposition that a nation's housing investment has little effect on expanding capital formation in a country like Korea. As Table II-l reveals, the ratio of housing production to total capital formation has been recorded at the average 9.1 per cent fram 1966 to
1970. This indicates a relatively higher rate than that of other economic sectors with the exception of manufacturing, transportation, and ccmnnication. Moreover, the multiplier effects on the econay of the nation's housing investment are substantial. Investment in construction industries has substantially affected the national economy enlarging the nation's production, and increasing incame and erployment opportunities as shwn in Table 11-2. Calculation on interindustrial relations prepared by the Bank of KoreaO shows the change in production, income and employment opportunity that resulted frcm one million Won (U.S. $ 250,000 ) investment in the nation's construction industry. The figure in
Table 11-2 reveals that the production almost doubles, the total increased income is calculated at W 745,918 (U.S.$1,865), and a total of 3,572 new jobs are generated.
In view of the very limited national funds available for housing investment, the question of equitability in dis-
20
Input-output analysis -of inter-industries with calculated coeffcient of the nation's major industry.

Classification
Rice & Barely lhe other corn .
Forestry
Fisheries Idustry
Coal
'She other :nni.nes gm-risions
Drinks
32.002 'bn
3.632
28.212
1.090
8.763
38.119
2.959
483
1.933
2.109
3.149
Fiber silk
Tcxtile -,oods lbven goods
Inxdering &
Voner
Boars ode-m
Fnire
Papers & 'aper-.-1: r-os
Print .& i>L ii:tion
Trndn:, & Let:-.er
102.323
13.459
37.24
2.393
300
Rubber ''ods
Basic C-.cai ?rd-.:.ets
3.010
6.335
The other C=-.cal iro .:sts 16.331
Chn0c1al FCrtlizers
Kcrosenie Produs
1.351
26.117
Coal Prod.Lets
Articles of 3lass &
:
3.015
215.867
P iron s:cel aufacture
Pri::ry pro-biets of Steel
Inpot Gold or on steL-7tal 24.813
Onliry :.-r
Elertric :cai.:r
25.433
83.076
3.632
6.424
13.542 acrhinery for trr;)ortaion
Ihe other mufactres
6.253
6.005
Constrution fixin
Electric Par
Real Estate i:Lrrece
$bter Serrice
Ccrarce
&
Corrmriitication
Sanitation
-
1.005.6Y4
22.83
12:5)5
1.344
& Trar.-portation 5.946
118.103
Other Services 13.733
Utilivition of *.Z1ste -terials 13.259
Mansportazion
"
Cstey 56.606
24
TABLE 11-2
EXIE2OEC EFFEC= 07 CO6TIJCfION LNESTVfr
Pro.t'on i2
Causing -M-unt Causing Anunc rpoy-rn ausm r-ber of person
25.936 'aan
2.341
23.613
769
4.293
22.947
721
198
576
497
862
5.493
15.701
854
6.575
2.113
5.506
1.425
1.657
323.834
13.683
10.403
787
4.923
93.261
9.448
--
35.039
17.394
3.637
10.057
791
95
650
2.477
5.339
579
10.943
313
75.121
-
0.090
0.041
0.036
0.002
0.006
0.005
0.005
0.017
0.007
0.001
0.001
0.292
0.007
0.040
0.005
0.057
0.038
0.014
0.004
0.019
1.308
0.009
0.006
0.033
0.010
Vf
0.071
-d'
0.111
0.305
0.033
0.312
0.007
0.018
0.094
0.004
0.033
0.003
0.004
0.005
Total
Source. i.e ar.e or iorca
Institute of
Urban
1.979.493 745.918
Studies and Ceelegrent, Yonsci University
* A survey of the Hcusing arket in Urban Ycrea' 1972
3.572

25 tribution to housing consumers is extremely important. This matter of distribution has been debated very little by the government, which has actively channeled funds to middle incae people on the premise that economic profits fram middle class housing investment will be mIch greater than from low incame housing investment. This is more or less carpatible with a general theory that dwelling units will be filtering down to lower market value and price, which can result in changes of occupancy fram higher to lower incame households with basic assumption that there is a constant upward nbility of households in a society. Howevery the assumtion of this theory has less provable validity in a society where very few rich and many poor existed (see Figure II-1 and
Table 11-3 ) and the nation's housing problen has becare a highly charged social issue affecting mainly the large segment of the nation's population which is at the verge of subsistence level. Under this circumtance, there is also a little skepticism over the power of supplying housing to the poor at the low price generated by the free market operation, Eo called, filtering down process. With this respect,
Harms insists:
Filtering depends, first, on a supply of new housing for the middle and upper-mitddle classes, and second, on a supply of used vacant housing in a fairly good condition at relatively low

10
26 so
Manthly Irome Distribution Pattern ot the Houseless Families
In Cerwparison to cent
FIGaE Il-I
the Nation's
Inccre Distribution of
IIousehold
Far.ilies
40
30 x~cre
Distribution of the Nation's aseless Families
Monthly Ircre Distribution of the
Housec.'ld Families
Nation's
20
20)00 28X00 35.000 45.000
TABLE 11-3
Status of Hlousin By Mnthly Incore Level
( As of Der'c-ter 1971
Source: Table 11-3
Ptnthly Inccre Below Belcw Below Belcw Below Below Over 'Ita'
Arunt
( Won ) 20,000 28,000 35,000 45,000 55,000 60,000 60,000
Households
Distribution (1,000) 352,7
Mxrposition Patio 6.2
1,441
24.8
1,633
28.7
1,092 489
19.2 8.6
347
6.1
365,3 5,59'
6.4 100
None-possessed
Household (1,000)
Couposition Patio
328
26
568
45
204
16.2
Source: Kinistry of Constructicn, Republic of Korca
89
7.1
39
3.1
20
1.6
14 1,26:
1.0 100

27 prices for the lower and lower-middle classes.
As soon as a substantial vacancy rate in new and higher-priced housing develops, however, the situation can turn into a buyer's market,
so that at tires when Ciltering begins to function freely, private develpers begin to liiit the the supply of new buildings. They are intersted
in a seller's rarket. and the roor are again caught
short. Another reason for the failure of the filtering process is the shortage of existing lcwand moderiate incoxm housing. This shortage is aggravated by the ideItion of older housing stock in urban renewal areas in favor of middle incoe and luxury housing, or non-residential land uses such as public buildings and highways, or new office buildings to increase the tax base of the central city.
2
1
Harms' explanation has a great relevance to the urban housing situation in Korea with respect to the fact that the price of the lower income housing in the urban centers has tended to rise evermore since there has been the limited increase of dwelling units supplied by the public and private entrepreneur. In view of this, the government housing investment policy which gives first priority to the middle class is hardly socially justifiable.
Besides these bias trends of housing supply against lower incme class, there has been same delicate ground of pretext and superficial reason why the government has persistent-
ly pursued to provide more middle inccme housing than lower incame dwelling units. It could be well pointed out that the
21 Harms, Hans H. The Housing Problem for Iow-Income
People, Freedom to Build, ed. John Turner and Fobert Fichter,
(New York: The Macnillan
Corpany, 1972) pp.79-80

28 housing problems of the two classes reflect the nation's dualistic structure of consumption preference. The low incame migrant group is confronted with the tremendous housing settlement problems in the urban slum and squatter ccmmunities while middle income group encounters the problem of cwning and further developing their homes in the more conventional housing market. A significant governMent Motive for investing in middle income housing has been to act as cultural innovator, reshaping the living style of middle incame people by introducing new structures of industrialized homes. Most middle incame houses and a small segment of upper incame houses are still traditionally built in which buildings do not contain modern utilities, heating systems, hot water, or modern equipment.
With this respect, the government roles has been to introduce a new lifestyle by placing the middle class in modern dwelling units, such as the mass-produced apartments.
This priority of introducing a new way of living to the middle incame class households is based on the belief that the middle class households adapt most easily to a modern environment. This approach to housing developnent has meant that the government has been nore concerned with the final housing product than with the housing developnent and its eccnar-ic effect. The government has usually assumed unilateral

29 responsibility for supplying houses. It has decided how many units should be built, where they should be located, how they should function in the lives of essentially passive users.
M'breover, trends in the Korean government's housing development program in the past have concentrated almost exclusively on project construction, emphasizing the surface improvement and beautification of the cities by housing projects.
This has been particularly true in Seoul where the official goal is to make Seoul an international city to attract foreign tourists. Therefore, the government's housing developnent programs have been of a strictly limited nature because the major purpose of the public housing activities is to symbolize the government's efforts.
In this context of urban development scheme, the city's slum and squatters are particularly unfortunate objects. They are considered to be unwanted eyesores; the squatters are looked down on as a potentially dangerous nuisance living in overcrowded and dilapidated housing. With poor sanitation and high crime and delinquency rates, these are external factors which seem to be serious physical and social problems. The internal structure of these low incame cammunities is much more vital and healthy than an observer might expect.
The Institute of Urban Studies and Development of Yonsei

30
University has reported that these lo income comunities posses strong internal structure which has a positive developmental function in the urbanization process. They have developed evidence that within three to five years the squatter areas develop into fairly stable lower middle class ccamunities. This evidence would seem to confirm Turner's view:
Housing should be seen as a holistic rather than a sectoral phenonenon. It is not the products of housing but the housing process itself which is important. The dwelling environment and the manner in which it is produced and maintained serves as a vehicle for social and economic development.
2 2
In view of this, the low incame housing process could have national effects on the socio-economic development of Korea where the majority of the population is in the low income bracket in both urban and rural communities. In other words, government investment in housing for low income groups in
Korea can play a major role in stimulating employmient directly and indirectly by revitalizing the positive developmental factors such as the strong upward mobility of the squatter population.
22 John Turner, "Housing Improvement and Local Participation in Industrialized and Transitional Contexts, ( A restatement of contributions made to the Workshop on Urban Deterioration and Alternative Solutions , Concepcion, Chile, June 1970,
(miMiographed).

31
Past Government Housing Action Proqram
Slum Clearance and Housing Developrent
All-out government efforts which stress efficiency, econcmy and effectiveness in dealing with the nation's housing problem have called frequently for instant housing development programs. These efforts ccm fran the pressure of the housing shortage which was measured in terms of socially determined set of standards measured by the "quality of housing"; what the government is willing to pay for such thirgs as the basic sourdness and quality of the structure, the lack of detrimental effects on the surrounding area. The citizen'is apartrents constructed by Seoul city government's subsidies during the period fram 1967 to 1969 are a good example of a direct governm-ent policy measure which was based on the need to achieve a standard of housing decency for the urban poor. The rain purpose of subsidizing the citizen's apartments was to replace the inner city's slum and squatter area which occupied the hillside of central Secul with five and six storey walkups.
In 1969 alone, the Seoul city government constructed 403 walk-up buildings providing 15,800 dwelling units at a total cost of some 5.1 billion won ( u.S.$ 17 million and $ 1.077 per dwelling unit) .
23
These government subsidized icwr cost
23 W0o-sung Kim, "Urban Hcusing and. Physical Prototypes for the LOw-Incac Sector in Metropolitan Seoul, Korea"
Master Thesis , M.I.T., 1972) p.34.

32 apartments were built under arbitrarily established housing codes covering irainly the structural building shell whose internal walls, finished floors, heating systems, sanitary fittings and cupboards were to be installed by the residents of the apartments.
In spite of the neat appearance of the Seoul citizen's apartnent, the basic quality of the housing construction and foundation work was unstable. Many of the apartment buildings have developed cracks. The subocontractor has tried to prevent further cracking by adding a few narrow legs on the precipitous slopes. Housing specialists and architects point out the reasons for many of the buildings' construction problems are as, follows:
First, many of the buildings were built hurriedly in cold weather when cement couldn't becme concrete before freezing because the city government wanted to construct them in-a short period. In such cases, the structures became fragile. Furthernore, ground work done on frozen ground could 7-ake the whole building unstable.
Secondly, in spite of these faults, same of the buildings could not be built stronger than they are if they had been built on flat sites. Nearly half of all the buildings were built on steep slopes. The rear part of those buildings were rooted on the ground, but the fronts were left in the air, supported by thin pillars of 30 an
by 60 an. It was found later that those pillars were not rooted in the ground. Because sloped areas

33 are usually rocky, the construction campanies did not bother to dig the rocky bed to rest the pillars on the surface.
Thirdly, most of the buildings were built with inadequate materials. Iron reinfocement was not sufficient, and the cement and sand ccbination was not appropriate. Fourthly, the city government has used 12 million won for construction of each of the buildings while architects think that a normal building of that size requires about three times more. Lastly, many of the citizens believed that a considerable amount of the construction fund flew into the pockets of the persons in charge of the supervision of the construction.
2 4
As a result, the city government's project on the multi-family blocks of the citizen's apartment built with the motto of " An Apartment for Each Homeless Household,'" turned out to be a grotesque fiasco. On April 8, 1970 one of the citizen's apartments collapsed down the hillside killing thirty-three and injuring close to forty persons. This catastrophe led to the end of the city government's low cost citizen's apartment program.
At the time the citizen's apartments program was launched, Seoul city government also initiated a new town scheme through which the city government intended to create a new urban center for the relocation of families fram the
24 "Weak Foundations Collapse long Foreseen",
Korea Times, April 9, 1970.

34 inner-city slum and squatter households. This schem is the
Kwangju New Settlement plan which is the first of a series of satellite pities in a rural area about 28 kilcmeters southeast of Seoul. The city government has secured eleven and a half million square neters of land as the site for the relocation of households fram the inner city slum and squatter commnities in Seoul. The site is planned to acconodate approximately 40,000 households which were predaminently squatter families, displaced and forcefully evicted by the construction of the citizen's apartments.
The plans for relocating the squatter cammunities outside the city's built up area were also grossly insufficient.
"Planning during the first phase was inadequate, and the settlers found no water or sewer facilities, no financial or material assistance for building houses, and worst of all, no employmrent.''
2 5
In view of this, the relocation has aggravated not only the housing conditions but also the economic and social conditions of the migrants. By and large, the squatter and slum camrunities were located close to the places of work so that the residents had minimal transportation costs. Savings in this area were significant given the low inccme of irost
25 Joan Nelson, "New Policies Toward Squatter Settlements : Legalization Versus Planners' Standards." (Washinton,
D.C.: Smithsonian Institution, 1972) p. 1 8
.

35 households. The relatively large and tightly knit family group camposed of smaller, related, and closely cooperating households had provided a secure economic base for f airly life in the squatter cmmunities before their relocation outside the city.
In the inner city slums and squatter settlements in Seoul the kinship ethic remained strong. Several working members of the household pooled their earnings to make it possible to provide adequate food, shelter, and clothing for the extended family and even to send children through vocational or high school and perhaps college. The multi-family citizen's apartment and the mass relocation program of the city government destroyed this cooperative social structure by constructing units
This is an example of a corrective public policy, imposing conventional rininn standard for low incce housing and at the same time, relocation displaced households, which has had detrimental effects on the life of low incce groups
This has caused discontent and frustration ancng the migrants rooted in an inability to cope with rising comlex of socioeconamic problems resulting from living in the new locations.
Consequently, a socially dislocated low inccre urban. population of about eight million has emerged as a pressure group, and have increased the political demand to the government.

36
Current Governrment Housing Action Program
The government concern with political and socioeconomic strains caused by the rigorous squatter relocation program has led to legalization of the squatter settlements which were built before construction of citizen's apartments and relocation program. This program to legalize existing settlemrents includes irproving housing conditions of the squatters by granting their right to settle on public land under the follcwing conditions: a) Settlements must be located on land not reserved for military or other critical public purposes, b) settlerents must be situated so that roads and other necessary infrastructure may be constructed without undue interference with the city's development plans, c) Settlements nust be located on a site less than 100 meters above sea level, and d) sette ents must have a minim of thirty houses.
For those settlements that meet these criteria, the process of legalization has three phases. First, ccmunity facilities must be upgraded to meet minimum standards.
In particular, main roads must be of a mininum width, and storm drainage must be adequate. Second, all lots in the community must be at least 89 square reters (27 pyung) in size, and all houses must be at least 40 square meters. No house may occupy more than 60% of the lot on which it stands. To meet these
26 Ibid., p.21.

37 standards, much or all of the land in the settlements will have to be reallocated, and many or most houses will have to be substantially altered or destroyed and condtructed anew.
After comunity facilities and house and lot size meet city standards, residents will be permitted to move to the third phase of the process: purchase of land title from the city.
2 7
Although the first phase of legalization process that is basically to upgrade squatter cammunity site and service program has been proceeded with the government's substantial technical and financial assistance, the second and third phases of processing legalization are left almost to individual initiatives. The first agenda that government has to decide is what kind of community facility improvment investment can be best made to serve not only the squatter area but also the general public. In case when the public agency has made to proceed a certain project to improve ccmmunity service, it will contribute materials covering, on average, 35% of the total cost of such improvements. The remaining estimated costs
should be covered by cammunity household by their share in cash or labor. The actual construction will be left to private firms through ccMpetitive bidding , and carried out under the supervision of district office. Fron the point of view that
27 Ibid., p.
2 2
.

38 the priority of the city government is to provide the designated squatter areas with access roads and pedestrian way and other public utilities, the major aspects of legalization process for the squatters proclaimed by the city government has been to simplify the procedures for granting house construction permits and to give willingness to sell to private users land originally planned for public use. Nevertheless, there has not been any policy indication to provide easier credit towards the costs of expanding existing houses or building new ones.

39
CHAPTER III
COST EFFECTIVENESS ANALYSIS OF PUBLIC POLICY FOR
HOUSING DEVEIJPMENT: SQUATTER SETLEMENT
VEISUS THE CITIZEN'S APARMNT PRCJECT
Conflicting Values Between Housing
Actor and Users
The most controversial issue in a city like Seoul where
30 per cent of the land is squatter and slum communities, is
how the problems of the squatter conunities can be dealt with in a context of socio-econanic develoocment and environmental improvement. As discussed in Chapter I, the prevailing tendency among city officials and planner is to regard the squatter as a cancer, destroying all hope of orderly developnent of the nation's cities. This attitude has been clearly manifested in the municipal housing programs in Seoul first objective has been to clear and prevent the squatter canunities and other illegal housing units which contaminate the city. The second objective has been to construct massive public housing blocks campatible with an improved urban environment and enhancing the city's esthetic appearance.
The third objective has been to optize the urban space for other important public uses; and the fourth objective has been to redevelop the land now occupied by inner's city's slun

40 and squatter camunities; 30 percent of total land within the
's bundaies28 city's boundaries. However, a basic assumption of the city government in carrying out the large scale clearance of slum and squatter settlement has been importance of discouraging the rural poor from moving to Seoul; hoping to remove the basic impediment to orderly development of the city.
TABLE III-I
TUIrAL ICUSDG CONDITIC IN SEOUL
As of Dece:,ber 31, 1971
Nuuber of Illegal Housing hits Total 168.307 Houses
locatim Ccndition
Structure per Squatter
Housing Lhit
70 % of Squatters located in clustered form
30 % o'f Scuatters located in scattered form
Floor Space 11.2 pyong land Space 13 pyong
Building Type Condition 46 % Good Cndition
54 % Bad Condition
Source: Seoul City Governm-nt, Clearnr Prors of Iller'al Buildint 1972
Note : I pyong is equivalent to is square Zeec
Urban slum and squatter settlements have historically been occupied by migrants who are in the lower income group.
They have been self-conscious about their differences from the rest of the urban cornunity and have been anxious to live
-28 J.S. Park, "Necessity and Economy of Establishing the
Citizen's Apartments," Seoul, Korea: The Municipal Problems
Volume IV No. 8 (August 1969): p. 13.

41 in close proximity with households fran similar backgrounds.
They have been largely ignorant of their civil rights, of their rights as tenants, and of the housing code and other aspect of the law. Janet Abu-Lughod in her study of urban migration in Cairo, points out that the squatter settlements often serve as active social institutions designed to protect the migrants fran the shock or anamie resulting fram a rapid
29 switch fran a rural to urban society. Moreover, living in the squatter cammunity for the urban migrant means that desperately scare funds need not be spent on exorbitant nonthly rent.
Fran econcmical point of view, the squatter settlements could be considered a strong developmental element with potentially positive effects upon the urbanization process instead of being regarded as a cancer to the urban society.
The squatter community provides a cheap labor force to the city. For instance, over 50 per cent of the cottage and service industries in Seoul are located in the squatter cxanunities. These people invest their earnings from their labor, and capital returns from small self-made cottage plants in improving and building up their hcoes and cammunities, without even the security of any kind of land tenure. 30
In a
2 9 Institute of Urban Studies and Developmnt, Yansei
University, A Proposal for a Pilot Research and Developmnt
Program for Urban Self-Help Ccmmunity Center (Seoul: Institute of Urban Studies and Developmnt, Yonsei University,
November 19, 1970).
3 0
Ibid.

42 prosperous city like in Seoul, nost of the squatters stretch their income by considering the extended family as a single economic producticn unit. Not only the head of the family but the nother and the children earn something by whatever menial job is available in the city.
However, the Seoul City government has set an official policy of massive slun clearance and public housing programs which directly repudiate the potential positive econcmic attributes of the squatter camunities. A major concern for the city government has been the increasing demand for public funds to provide public services at the threshold level.
The rapid growth of the city has severely strained the ability of the government to provide services for the growing populatian. "If the annual increase of population in Seoul is
450,000, then the threshold public budget to provide needed municipal services is W 1.900 million (U.S. $4.6 million) inclusive of housing costs. The Seoul city governnent's budget originally allocated W 4.570 million (U.S. $11.1 million) in 1970 and W 6.160 million (U.S. $15 million) in 1971. This means the increase of W 1.590 (U.S. $3.8 million) with deficit of W 390 million in cxxparison to W 1.980 million of city budget increase in 1971 exclusive of housing costs." 31
31J.M.. Son, "Potentials and Limitations of Urban Development" Seoul, Korea: The Municipal Problems Volune VI No. 9
(September 1971): p. 17.

43
However, within this tight municipal budget W 3.980 million
(U.S. $9.7 million) was spent in for relocation of 22,722 squatter households and W 5.435 million (U.S. $13.2 million) in construction of 499 citizen's apartments. Between 200,000 and 250,000 people were affected by these massive public programs assuring that each household contains 5-6 persons.
TABLE 111-2
Citizen's
SECUL NUNICIPAL BUDGET FOR CITIZEN's APARINENT AND SQUATTER RE.OCATION
PROGPAS
Apt
Relocation Program 22.722
Total Affected
Atrected
Housing Units
17.452
40.174 oscz per
Housing Unit
311.425 1bn
( U.S. $778
175.160 tbn
(U.S. $437)
) secuired
Total Resotce Ftnd (in millions)
W 5.435
( U.S. $ 13.5
W 3.980
(U.S.
W 9.415
$ 9.9)
(.U.S. $ 23.5 )
)
Source: Seoul City Govermrcnt, Clearinp' Prorra of Illea1l Buildin, 1971
Camparative Cost Analysis
In evaluating housing activities specifically the Seoul citizen's apartment in cost-benefit terms, it could be concluded that these public programs are extremely uneconomical both to consumers and the government. The government has failed to distinguish among the squatter settlements and individual

44 households as to their econanic resources, and failed to recognize how housing priorities of a household change as the process of economic integration advances. With the average nedian incone monthly about 28.000 (U.S. $70) per squatter family (see Table 11-3), the cost of citizen's apartment is a great financial burden to the forner squatters who are relocated to the newly built apartments. When former squatters are forced to live in citizen's apartments in capensation for squatter clearance, Vincent Brandt insists that a good argument can .be made that. squatters were .fleeced
by the city. This is because the squatters have no choice but to go into debt to finance the new apartment.
The 4-6 storey milti-family apartnents built by the city were essentially vertical core structures with little nore than a structural shell, access roads, and the utility trunk lines built by the city. Each unit was between 8 and 11 pyong (268-363)sq ft in floor area and the cost with a downpayment ranging around W 200.000 was to be paid by qualifying families over a 15 year period at 8 %- nonthly payments averaged W 2.835 ($6. 91). Total costs, including installnent fees for electricity, water and sewerage hookups, and the cost of finishing the interior have been estimated at W 350.000 (U.S.$ 8540 to W 400.000 ( U.S.$ 975)

45 exclusive of interest costs. Deposit rents for finished units reportedly run to W 900.000 (U.S. $2.195).32 It is nore likely that this is the selling price: the initial policy prohibiting sale or transfer was modified to allow the original recipient to dispose of completed units after six nonths.
In sane of the projects only 30% of the units have passed to outside buyers, while in others perhaps over 70% of the original occupants have sold out. The study by Kim and
Podgursky indicates that 75% of the original recipients for citizen's apartments in two project areas were forced to, borrow noney, and have average debts of roughly W 115. 000
(U.S. $300), typically borrowed at interest 5-6 interest per month (60-72% annually).
A survey of the squatter family's nonthly income and patterns of consumption preference conducted by IUSD of
Yansei University shows that median monthly consumption for a family of five persons is W 20.205 (U.S. $49.26) while their nonthly incane is W 20.457 (U.S. $49.90) which explains their life at subsistence level. The survey also shows that the squatter family spends the highest portion of its incane for food, the next highest for education. On the average, squatters do not have funds to spend for housing. However,
3 2
Vincent S.R. Brandt, "Personal observation on
Urbanization Problem in Korea," Harvard East Asian Research
Center, Cabridge, April 1972.- (Typewritten.)

46 since they are squatters they do not have to pay rent, and their residences are close to the place of work so that they do not pay transportation expenses.
However, living in the citizen's apartment project forces econonic and cultural pressures on the squatters by imposing financial burdens to pay off mortgages. Each household must pay W 2.835 (U.S. $6.90) monthly over a fifteen year period. (See Table 111-5.) It is obvious that the cost of the apartment to the resident over 15 years is far greater than the value of the apartment. Furthernore, the average living cost is far more than it appears. The initial costs of moving into the citizen's apartment were extremly high for the squatters and most of them not only used up any capital resources they had, but in a great many cases they also went heavily into debt. Therefore, in discussing the current cost of living in the apartments, these noving expenses and debts, which do not ordinarily appear in family budgets, should be considered. In other words, if money is desperately needed for educatian, business investment, etc., a household is likely to have already exhausted its financial resources in order to cbtain ownership of the apartment.
In the newly built citizen's apartment as well as in the squatter settlements, the usual living space is overcrowded

47 which means that the individual accamodations are inadequate.
Normal housing space per family is 17 x 10 ft room, which mans a whole family normally five or six people must live in a 11-15 pyong house. Joan Nelson has cbserved that the cost of self-built houses at the size of the citizen's apartments is far less than the cost of construction of the citizen' s apartment.
One informed cbserver of the squatter settlements estimated that materials for a 12-pyong house of cement blocks with a "slate" or pressed asbesto-sheet costs roughly 100.000 to 200.000 won ($250-$500 at the spring 1972 exchange rate). By way of cmparison, the citizen's apartments built by the city as lcwcost-housing, key money (selling price) is usually
900.000 won (U.S. $2.250) or more; people move in with a down payment of about 23% or 207.000 won
(U.S. $505). The least expensive rented roam requires a down-payment of roughly 50.000 wan; a large roam or one centrally located costs much more. Therefore, self-built squatter housing offers more and better housing than an equivalent amount of money can purchase otherwise. As an added advantage, expenditures can be made gradually, as fund are available to purchase more cement blocks or better roofing, rather than having to borrow a large amount for a down payment at high interest rates.
3 3
From the canparative costs of these two housing activities one may indeed conclude that dwelling environments made without control over and responsibility of the users for key decisions in the housing process may became a barrier to personal fulfillment and a burden on the ecanany. The initial capital
3 3elson, "New Policies Toward Squatter Settlements:
Legalization Versus Planner' s Standards."

Year
A) Initial Capital
Outlay
B) Revenue
48
TABLE 111-3
CASH FZI~ ANALYSIS
CF GOVENThT INVFS2Tf
APARINTr PROGAM
ON CITIZEN'S
0
9415
1 2 3 4 5
( In Million
6 7 8
797
9 10
767 739 710 681 651 623 594 565 536
Subsidies
Amrtizaticn
Interest
Total Costs
!et Cash Flow
D) Present Value @14%
Net Present Value
1.151
470
188
1.809
-1.012
887
-962
470 470 470 470 470 470 470 470 470
179 169 160 151 141 131 122 113 103
649 639 639L 621 611 601 592 583 573
-37 118 100 80 59 41 22 -2 -18
90 67 47 31 19 9 -1 -5 -10
A) Total amunt of Housing investment made by the City governrient is reported to be W 9.415 million. See Table 111-2
B) City governrent has given loan at the total anunt W200.000 to
the qualified householdsl7.452 to rnve in the citizens apartnent
with annual interest rate 8 percent for 15 years arortization.
c) The city governmnt secured the housirc fund fram the central bank,
Bank of Korea at 2 % annual interest rate for 20 years. City government subsidized W 60.000 to each households who have moved into the citizens apartlaT~t.
D) The net present value of a capital investment is the excess ( or deficiency in this case) of the expected present value of ti-e the stream of net cash benefits prcmised by the investrent over the present value of cash cutlays rcauired by its undertaking.
Both the annual net cash benefits and the cash outlays should te

(Cash Analysis Continued
11
Initial Capital
Outlay
Revenue 507
Costs
Subisidies
Amortization 470
Interest 94
Total Costs 564
Net Cash Flow .- 57
Present Value -13
12
478
13
449
14
420 391
470
84
470
75
554 545
470 470
66 53
536 523
-76 -96 -116 -132
-15 -17 -19 -19
15 16 17 18 19 20
470 470 470' 470 470
47 38 28 19 9
517 508 488 489 479
-517 -508 -488 -489 -479
-63 -55 -47 -40 -34 discounted at the opportunity cost, r.
been set as the official interest rate prevailed in 1972. ( See Appendix D value is:
)
In this case, 14 % has on the ccamercial loans
In syrbols the net present
NPV n
= ;_i At ( l + r )
- c where A is annuity, r is interest rate charged on normal canrercial loans, and c is the cost outlays.

50 outlay made by the Seoul city government was reported to be W 9.415 millions (U.S. $23.5 millions). This expenditure was for the massive squatter removal and citizens apartment programs. (See Table 111-2.) On a cash flow basis, internal rate of return fram this city government's expenditure has turned out to be a negative return over twenty years because excessive costs involved with clearing slums and rehabilitating the squatter camunity with a large lump sun of subsidies.
(See Table III-3.) This means that present value at the discounted rate 14% of total net cash flow during 20 years has total amount net loss W 962 million (U.S. $2.3 million).
Despite this great financial costs to the city, the individual households in the squatter communities affected by these city programs must assume excessive financial burdens. For instance, the cost imposed by moving into the citizen's apartment averages W 510.000 (U.S. $1.275) initially and in the long run totals an average of W 870.000 (U.S. $2.250).
The cost differential between self help housing and the citizen's apartment program is enormous. The savings of the individual squatter households participating in a selfhelp housing program can be calculated to average W 670.000 per individual household and W 11.692.840 (670.000 X 17.452) for the city econcmy.
Table III-4
.
This calculation

51
TABLE 111-4
AGGREGATE FINANCIAL BURDEN INCLUDING THE HCSING SPONSORS
AND USERS BY SEOUL CITY GOVEPHI' FOUSIG PROGPAM
''otal
fousing thits
cs sr iousing Unit
-
Total Costs
Total Ibusingz Costs of Construztio-n &
Mortgate Payrents
17.452 a W 870.000
( U.S. $ 2.175
W 15.183 Hillion
) ( U.S. $ 37.9 Million )
Relocation Program and Musing Costs
22.722 b W 375.160
U.S. $ 937
W 85.252 Million
( U.S. $ 213 Million
Total 40.174 .W 100.436 Million
( U.S. $ 251 illion )
Source: Seoul City Goverrnn, Clarin 9-r or Ile i Euildi-re 1972
Note: a) -ortfate payrments and actual ccastructicn costs in the ccnletion of citizen's apart:it's incerioz strucue. ( w 110.000 first don payrmnt + ; 360.C00 wich is princital plus capital costs for W 200.000 durinp 15 years at 8 Der cent interest rate +
W 400.000 additional costs to couplete the apartment.
b) Since city government intended to pay only subsidy covering land.
Therefore, individual scuacters tust assume their own cost of housing cnstructicn W 200.000. There, aggreated financial burden including the housing s-cnsor and the user in the relocated place is W375.160
(175.000 + 200.000 ).
is based on the maximum cost of W 200.000 (U.S. $500) per housing unit estimated by Joan Nelson's observation on comparative housing costs of the government housing program and self-help housing. However, in some case W 200.000 will

52 not be necessary since new housing need not be constructed because of the existing squatter housing facilities. In this case the financial savings to the city's econcmy amounts to
W 100. 436 million (U.S. $ 251 million ).
So far fram this general outlook of costs that incurred to both the city government and the effected households, and even to the whole city econany, it can be readily pointed out that the significant amount of cost differentials between the city government and the households could be made by allowing the degree of freedom fram tight control of housing programs initiated by the city government to rely on the individual initiatives to improve their housing situations.
For instance, the Seoul city government's squatter relocation program, affecting 22,722 households, 16.7 percentage of all squatter households has caused great repercussions on urban land use patterns and the interaction between poverty and the housing market in such a way that low priced housing beccm more scarce and labor costs have likely sored in the urban cottage industries. In this case, the costs incurred to the city government can be greatly diverted to more individual households' initiatives on housing improvement
by giving its special resource allocation for the loan on the self-help housing activities, which results great savings to

53 both parties. The potential saving that can be made by the city government housing loan program to the self help housing activities instead the citizen's apartment program is about
W 779 million (U.S. $1.9 million) since cost of self-help housing activities incurred to the city government is W 183 million (U.S. $446,341) while the cost of implementing citizen's apartment program is W 962 million (U.S. $2.3 million).
Table I1I-5
.
This calculation validates the fact that public housing activities alike the citizen's apartment program is extrenely uneconomical both to the users and the government
TABLE 111-5
COMPARATIVE EccSIG CoSTS TO CITY CiEM ' AN TO
INDIVIDUAL ECUSEECLDS EY TFE GCVEFRTNT HOUSING LOAN
PROGRAMS TO THE CITIZEN'S APARIT & SELF-HELP HOUSING
Citizens Apartirent
Program
Costs to the City
Governrent
W 962 Million
Average am-ount of Yonthly payment by the households
W 2.835 (
Self-help Housing
Activities
W 183 million W 1.821 ( U.S.$ 4.44 )
Source: TABLE 111-3 and TABLE 111-6 in APPENDIX-1

54 sponsor. This is particularly true in case when the household is paying a disproportionately high price as well as an exceptionally high proportion of their income in his subsistence level of living standard to obtain a housing unit in the citizen's apartment by paying monthly W 2,835 (U.S. $6.91) instead of W 1,821 (U.S. $4.4) in which the actual proportion of the former in the median inccme level is 10.1% and the latter is 6.5%.
Undercharged Social Costs
The public sector's role in housing has, so far, been to formulate housing development programs, but not to measure their results. From both a short and long term perspective, the major thrust of the Seoul city government's housing activities has nothing to do with low inccme people who are, in theory, the major beneficiaries. This is epitanized by the citizen's apartments which were designed for middle class standards and caused cultural dislocation and hopelessness in squatters who were relocated in the apartment.
In the citizen's apartment, on the other hand, where cellers are immediately placed in an essentially middle class environment in terms of physical and behavioral standards, they lack the campetance and

55 the confidenco to participate in the new alien milieu.
The new environment is "unnatural" to them because they are unable to conprehend the new life style into which they have been thrust, and they have not gone through the necessary acculturation and economic transformations necessary for them to appreciate and maintain thenselves according to the new standards.
Hence, "the coal in the bathtub" syndrame or the raising of livestock in the living rocm, throwing trash and dirty water out of fifth floor windows, defecatian in the hallways and all the other marks of an incipient "vertical slum"-it is overly precipitous junp fram a lower class to middle class environement that the former squatter dweller finds himself confused, bewildered and as a consequence somietimes belligerent.--That he has already moved fran his former contacts and primary group relationships only excerbates the problem further and has the potential of leading to final anamie or hopelessness. The point is that rising expectations have no relevance unless a persan is in a position to appreciate and at least a minimum degree satisfy them. Where this capacity is cut off frustration and rejection occur, defeating the whole purpose of development.
3 4
This abnormal situation has meant that only 25% of the apartments original residents have remained in the building.
According to Yonsei's IUSD survey conducted on 403 families in the citizen's apartments, this program has helped to house families in the middle incame bracket that emerged as a pressure group against the city government. And also, the social costs of relocating the squatter communities displaced
by the citizen's apartment construction outside the city' s built up area were largely underestimated. This relocation
341
Institute of Urban Studies and Development, Yonsei
University, A Proposal for a Pilot Research and Development
Program for Urban Self-help Community Center.

56 renoved the squatters fram their basic sources of income and simultaneously displaced a large part of the city's low cost labor pool. Two and a half million people, roughly equivalent to the population of Busan, the second largest city in Korea live in the squatter communities in Seoul. Relocating this population could have a detrimental impact upon the urban econcmy and result in soicial instability. Lewis Mumford deplore a similar situation in commnting on the urban renewal program in New York city.
Even in municipal projects designed to rehouse the displaced slum dwellers or people of equivalent low income, the physical improvements have been only partial and the social conditions of the inhabitants have been worsened through further social stratification-segregation, actually--of people by their income levels.
3 5
Lewis Munford, The Urban Prospect (New York: Harcourt,
Brace & World, Inc., 1968) p. 182.

57
CHAPTER IV
INDUSTRTAL HOUSING SYSTEM AND PR)BLEM
Physical Description of Industrial
Housing System
While the primary purpose of the Seoul city government's large scale of housing program was to place squatter settlement patterns with more orderly urban development, the central government simultaneously sought to develop mechanism which would enable the rapid upgrading of the housing of a large proportion of the nation's population. Specifically, the needs to supply a large nunber of houses in a short time has encouraged the government to import housing technology which can produce a fully industrialized prefabricated modular housing unit.
An increasing fascination with the potential rapid mass production of housing units has encouraged the developnent of major government sponsored housing industries.
These industries centralized housing production facilities such as building cranes, bulldozers, concrete mixers, batcher plants and power tools of every sort. This advanced housing technology was used for the construction of 8,000 housing units during

58
1972 and 1973 under the auspice of the central government with a $9,000,000 U.S. development loan. This project was designed for the fully industrialized construction of high rise apartments and detached houses which are available to the public with a W 530.000 (U.S. $1.293) down-payment and a
15 year mrtgage at 4%. The government claims that 60% of each units cost is covered by the foreign loan fund and 40% from local funds in a series of monthly payments of W 5.646
(U.S. $13.80). This industrialized housing project has turned out to be one of the nost lucrative public enterprises of which internal rate of return is excessively high in ccmnparison to the other public housing projects. To the public entrepreneural point of views, and especially to the efficiency oriented public decision makers, the industrialized housing program has a special appeal especially when the public project is to maximize its internal rate of return. However, there should be clear distinction between subsidized rate of return and social rate of return per se in which the formal ane is usually based on the viability test fram the camercial appraisals and the latter one is from the social appraisal point of view. In the case of public projects, the subsidized rate of return refers to the time value of net cash benefits fran the project on the subsidized interest rate of housing

59 fund in which the government secured its funds fran the central bank at annual interest 2% for 20 years instead nonnal market rate of interest rate on the loan 17%. On these bases of financial arrangement by the government, the industrialized housing project in building 8,000 units has yield total
W 2.070 million (U.S. $5 million) of net present value at 14% discount rate during 20 years. (See Table IV-1 in Appendix I.)
Nevertheless, to the planners' point of view, the social rate of return instead 'subsidized rate of return' is the major criteria to the process of planning the public program an housing. More specifically, the critical criteria in deciding the housing projects for the low income households is to find the maximum feasible alternative outlets in providing nost extensive housing improvement effects with least amount of public expenditure. In other words, to what extent the government housing project will effect upon the lives of the
low incomve households in improving their housing situations is the most crucial guiding principle of the decision making process. With this respect, the social rate of return fran the project is more significant benchmark for the public policy maker and planners to judge the viability of the public projects in caparison to other conflicting programs. For instance, the public housing project to build industrialized

60 housing units has resulted in the high rate of subsidized return, but it has high rate of social cost in camparison to other housing projects affecting only very snall segment of the middle incame households.
Apart fran controversy of providing benefits to a certain incone sector, the most valid reasons for adopting such foreign technology with a high cost of foreign capital are speculation that this technology will expedite projected housing construction and prcote the developmnt of more sophisticated housing production organization and quality control.
The most appealing improvemnt that can be made by the government support to the industrialized housing project is the potential speed of construction which reduce construction tim 40 to 50 percent for individual units by 25 to 40 per cent for multi-storey flats. The saving of tine allows for quicker turnover of capital invested in housing and lower interest
36 costs. Quality control for housing production process is carried out within the factory. Productivity can be raised
by a sequence of specialized operations while risk of accident is less since most of work is done in the factory. Since the men do not work in exposed situations, housing production
U.S. Dept. of Housing & Urban Development, Office of
International Affairs Industrialized Housing. The Opportunity and the Problem in Developing Peas. by Ian D. Terner et al.,
PB 206 851 (Washington, D.C.: Dept. of Housing & Urban
Developrent, 1972) p. 11-8.

61 will not be hampered by inclement weather to the usual extent.
These factors of the industrialized housing systems will all increase the speed and efficiency of housing production.
Within this framework of production organization, the fully industrialized housing system has special appeal for the public policy makers who prefers to yield return early rather than late from the project. This is particularly true when importation of the highest possible housing technology for the construction of "standard units of mass housing" to reduce the national housing deficit within the shortest time period. However, the problem is that if a big amount of durable industrial housing is built based on economic plan and physical building designs, then the total environment created may turn out to be rather inhuman "dormitory city."
Already, in many countries in Europe and Latin America, big industrialized prefabricated housing projects, which were built only a few years ago, have been called a "technically high class future slum." By this term is indicated, that just as the rather solidly built housing from the first industrialization era (about 1880) quickly turned into slum, then also the technologically sophisticated housing produced today may turn into slum if it creates inhuman environment. This prcblem has been already felt in Seoul, quite simply because

62 housing projects in Seoul nowadays are very big comprising several thousand units. For instance, eight thousand housing units which are planned to construct by the government's subsidies are the fully industrialized and prefabricated housing products which will became a heavy burden and a problem
by creating an inhuman environment to the urban society. This inhuman environments in the long run mean dissatisfied citizens, and low productivity. In Latin Amrica the kettle is already boiling over, and the bad effects of mediocre housing is heavily felt, so that the most of the citizens became indifferent to their urban neighborhood and the city becomes more demanding for the public services that necessitates extra expenses.
Evaluation of Industrial Housing System
With Alterative Housing Systems
From all aspects, industrialization of housing production system in Korea deserves to be reconsidered in the process of application and general effects on socio-econcmic development. Specific problems of application of the industrial housing system on a large scale lie in its intrinsic bottlenecks in terms of Korean economic structure and furthermore its difficulties in solving problems of existing low income housing such as rehabilitation of the urban slum and squatter

63 settlemients. Korea is a newly industrializing country with a dualistic structure of econamy which lacks a skilled industrial labor force and available investment capital.
The most crucial problem of application of a fully industrialized housing system is that such a program is likely to widen the gap between the rich and the poor in the Korean society.
This widening income gap occurs in the process of both housing
producticn and ccnsumption. In the process of housing activities, industrialized housing projects employ less unskilled labor force and more skilled labor force as labor ccmponent of costs in producing a housing unit is decreasing as higher level of industrial housing production. (See Table IV-3.)
TABLE IV-3
CCMPAPATIVE BUIIDING COSTS BY TRADITIONAL AND INDUSIALIZED
HOJSING SYSTEMS
Traditicnal Methods
Prefabricated thod
(Industrialized)
Material Costs Labor Costs Other Costs
60.
45-557
307.
20%
10
25-35%
"Muce: Qho .1 7773 0: Zcz' s r:rZtE. Sf,
(H10using, Chu-ai' crea Ve2smt CCopera::.cn ) 2.i
Note: This table does not include the the cost incurred to purchase.
the pland for the building site.

64
Furthernore, steady expansion of the industrialized housing system will result in contracting housing opportunities for the low income households. There are two basic reasons for this. One is that the industrial housing system is basically capital intensive and labor saving so that production of the housing camponents in this way will result in cutbacks in the semi-skilled low income construction labor force.
For example, labor costs make up 30 percent of traditional constructicn expenses while labor costs are reduce to 20 percent building by the industrial housing system as the
Table IV-3 demonstrates. Secondly, the reduction of employment opportunities for the marginal labor force will also reduce the possibility of income distribution to the poor cammunities where the most acute housing problem lie. In this aspect, decreased earnings will reduce the purchasing power of the majority of urban poor and consequently reduce funds available for aspect, decreased earnings will reduce the purchasing power of the majority of urban poor and consequently reduce funds available for housing because of the low incame and reduced purchasing power. Therefore, consequence of steady expansion of industrialized housing system will result in contracting housing opportunities for the urban poor from which most of unskilled construction labor force

65 oames to the most of urban housing labor market.
Nevertheless, above of all, most industrial housing products are sin-ply too expensive for the urban slum residents and squatters who in theory are the target population for such mass produced industrialized housing. In part, the housing products ,of industrialized systems are too expensive because the cansumptian of industrial housing products had been far below the efficient miniu-n level of production in spite of heavy initial capital outlays. Beside this financial burden, there are technical difficulties in adapting such a highly industrialized housing system to the areas of greatest housing need in Korea. Most of industrialized prefabricated housing products can be most effectively used in flat areas because large building machinery such as cranes must be used in the construction process. However, the slun and squatter ccMnunities are situated on precipitous slopes scattered around the city. Moreover, the cost of moving such heavy machinery will increase because of the unpaved roads in the lagging comnunities in the cities.
In.summary, the fully industrialized housing system applied in Korea is only valid for middle or upper income housing, but it loses its viability for low incame families for three reasons as Professor Terner expounds.

66
First, a packaged or unitized housing module is by its very nature large and heavy, which inherently adds on extra costs for special handling and transportation. Often, extrenely costly high-capacity cranes and trucks must be utilized in noving the modules to the site and into place: whereas smaller unassembled camponents can often avoid most of this type of cost.
Second, in purchasing roam or house-sized packages, the buyer needs a relatively large bundle of savings, or at least access to credit so that his payments may be made in relatively small increments over an extended time period. When purchasing small-scale components, savings and credit are certainly helpful, but without them the process does not stop-as is shown throughout the developing world where traditionally built houses incrementally develop on a "pay-as-you-go" basis using conventional ccmponents over the course of decades and generations.
Third, and perhaps most important disadvantage of a packaged as opposed to ccmponent housing strategy in developing areas is that package are by nature predetermined and inclusive. The decisions that directly affect the living environment are often made by designers, engineers, entrepreneurs, and public officials with great social and economic distance between themselves and the lives ultimately affected by their decisions.37
The critical point of Terner's assertion is that the housing process itself is more important than the final products of the process. Moreover, housing should be understood as a holistic process rather than a sectoral vehicle to fullfill natianal- house needs. In other words, housing is a long run dynamic process, not a short run static product.
Corollary to these three considerations is the fact a critical performance requirement for low-inome housing is the ability to easily accammodate and adjust
3 7
Ibid., p. IV-17.

67 to change. In most situations it is clear that the initial house, which often barely fullfills the most urgent, imediate needs, can hardly be counted upon to fill future needs as well. Hence the houses must be based on change, and an industrialized process which is to serve the needs of low incame families in developing regions must be at least as receptive to change as conventional construction, which is continuously expanded and upgraded by families.
Thus the industrialized process must be able to provide an initially austere house yet one that can grow and improve over tim. 38
The most disputed question among the housing technicians and planners in adopting any system of housing policy in Korea has been what kind of housing process is most suitable for building large quantities of housing products in the shortest possible time. This is related to the problem of technology necessary to combine the manufactured housing products with actual construction of housing on site.
Housing experts classify different levels of manufactured housing, depending on. the scale and types of housing products. The most complete level of industrialized housing system is the mechanization of production of the full housing package with all necessary hardware, electric power and transportation facilities. The second most corplete level of industrial housing system refers to the production of housing cells such as the bathroans and kitchen units, etc.
There is little technological difference between the first
38Ibid. , p. IV-17.

68 and second level of industrial housing except the difference in the degree of mechanization. The third level of industrialized housing refers to labor specialization, producing specific housing components such as wells, floors and roofs, and later assembly at the construction site where 20-30% of housing works is done. The lowest level of industrialization refers to the standardized production of housing materials which requires traditional construction skills for the completion of housing unit.
Partially industrialized intermediate housing technology refers .to the last two levels of industrialized housing which emphasize labor specialization and material standardization.
This form of technology is appropriate to the countries where owner directed self-help housing is the predominant housing type. In this situation, "the United Nations recornends strongly that public policy be directed toward preserving and improving self-help housing technology.",
3 9
In this respect, partially industrialized intermediate technology aims to bring out direct impact upon the housing structure of developing low income countries by introducing a specific appropriate technology which can be readily utilized
by self-help builders.
39Ibid. , p. IV-16.

69
As a matter of fact, the citizens apartment project is indeed a prototype of housing project that partially industrialized intermediate housing technology has put into effect. The public fund was anly covered building the structural shell whose internal walls, finished floors, heating systems, sanitary fittings and cupboards were to be completed by the residents of the apartment.
Frcm this aspect of housing analogy, different order of housing development process frcm industrial to partially industrial to self-help housing shows differ ent magnitude of costs requirement to both the government housing agency and the beneficiary individual households. (See Table IV-4.)
As Table IV-4 demonstrates, capital outlay requirement to both government agency and individual households is significantly vary with the degree of industrialization and freedcr of housing process. Accordingly, the ccmparative costs of government capital outlays in the different level of industrialization of housing products shows that there could be a great saving in each level of housing products. Cash flow analysis of comparative subsidized rate of return and social rate of return the governient's housing investment in building 8.000 housing units both by application of a fully industrialized housing system and by a partially

70
I
TABLE Iv-4
Carnparative Cost Fffectivoness of Housing Construction
(In 1.000 Won
)
44
Building a) Ccrnlete dwelling for one faily with decreasing b) measure of completion on occupancy
Pough core c) Land plus
( Capable of finishing and subsequent extension) facilities
( Sites and services )
266 175
d) Contractor builds 770
530
-
( )
1,300 e) Occupant builds
( aided self-help)
634 1,164
1,030
900 (')
945
809
.j) Occupants build together
( Mutual aid )
200 730 466 375
(C)
Source: J.S. Park, "Necessity and Economy of Establishing AparTents"
Municipal Problems August 1969 Volume IV No.8 )
( Thee
Proposed Housing Construction Project Under A.I.D DevelopIent loan
Fund, inistry of Construction 1972
A S of Urban Studies and Development, Yonsei University, Seoul, Korea

71
Notes for Table IV-4
Type
A) A crnplet dwelling unit built by contractor has sale price that has been estimated by the Ministry of Construction in following cost component'of industrialized housing product.
CONSTRUTION COST PER UNIT OF IDUSTRIAL7ZD HOUSING
Sale -Price
Loan krount
( Foreign Fund)
Down Payrent
( Local Fund) lonthly
Repayment
13 pyogg
(43 M')
W 1.300.000 W 770.000 W 530.000 W 5.646
(U.S. $ 3.171 ) (U.S. $ 1.878 ) (U.S. $ 1.293 ) ( U.S.$ 13.8 )
Source: Uinistry or Ccnstructicn, Proposed iousing Ccnstruction Project
Under A.I.D. Develormt
Note.: U.S $ 1 : W 410
Fund
B) Cost of building a partially industrialized housing systen has been estimated W 900.000 (U.S.$ 2.195 ) including the down payment
266.000 won at interest rate 8 percent for 15 years and 634.000
won that requires to complete the interior structure. ( See
Chapter III and Table 111-3 ) Source: J.S.Park," Necessity and
Economy of Establishing Apartments" ( The Municipal Problems August
1969 Volume IV No.8 )
C) Cost of building a self-help housing unit is estimated about W375.000
including the cost of site and services rendered by City governmnet which is per W 175.000 ( See Table 111-2 ) and Maximum cost of self-help housina unit W 200.000 per household. Source: Joan Nelson,
"New Policy toward squatter settlement: Legalization Versus Planners'
Standard, Woodrow, g) Long term payment to the government at the subsidized interest rate for 15 years.
h) Total arount of payment required by the occupancy to have the housing unit at the different level of housing activities.

72 industrialized housing system has an inverse relation in its outcxme. For instance, subsidized rate of return fram industrialized housing system is higher than goverment investment' s investment on the partially industrialized housing system due to the fact the government housing agency charges higher amount of down payment and premium required to the industrialized housing product than to the partially industrialized housing product. And also, social cost of capital incurred by the government investment on partially industrialized housing product is much greater than the government housing investment for self-help housing activities on site legalization scheme.
The major contributing factor that causes lss social cost of capital incurred by the government investment on partially industrialized housing is that the partially industrialized intermediate technology requires less foreign exchange, since the most of partially industrialized housing method uses predominantly dcmestic materials, and reduce the need for heavy construction equipment or the types of apparatus used to produce and errect prefabricated housing. Furthermore, the partially industrialized housing methods which use housing components rather than prefabricated units has more price stabilizing power for the general econamy since these housing

73 activities have less need of foreign inport of housing materials. The market for workers in skilled building trades is also stabilized and expanded, and the opportunities to learn these skills are broadened. Despite these social benefits from the government investment in partially industrialized housing system is great, there is an intrinsic problem of technical adjustment in the inplemeantatian of the large scale of housing based on the partially industrialized intermediate technology exemplified by Seoul
Citizens Apartment project which ended in a such.holocaust
collapse. Apart fram this grave problem of technical adjustment, the costs incurred to the lcw inomie households in the process of obtaining a housing unit built by the partially industrialized intennediate technology is too high for most of the low inccm households in Korea. Considering the fact that housing costs requirement for self help housing system is far less than fully and partially industrialized housing system, the government investment in making the extensive loans to the self help housing activities will not cnly significantly reduced to the feasible level of the financial capability that the government housing agency can afford to handle with the nation's low income housing situations but also reduced substantial amount of financial burden to the low inaom households.

74
TABLE IV-7
CPAPAATIVE CAPITAL OUTALY PMCUIP T BY THE GVMET AM
XDNTHLY PAMMT PEQUIPE-ET BY ALTENATIVE HOUSING ACTIVITIES
IN BUILDING 8,000 DTLTNG UNITS
Total Capital Outlay required by the Gov't
Fully Industrialized
Housing Activities W 10,625 Million
( U.S. $ 25.9 Million
Partially Industrialized W 7.200 Million
Housing Activities
)
( U.S. $ 17.5 Million)
Monthly Repayment reouirement by Occupant
W 5,646
( U.S.$ 13.80
W 2,418
( U.S $ 5.80
)
Self Help Housing
Activities
W 3,169 Million
( U.S. $ 7.7 Million)
7 1,816
( U.S.$ 4.40 )
Source: TABLE IV-1, IV-5 & IV-8 in APPEDIX-1
It is also important to note that social cost of capital incurred by the government investment on making the financial loan to self-help housing activities is lcwest in compariscn with other government housing investment activities such as
fully and partially industrialized housing constructions.
This implies very important fact that government has paid very significant amount of subsidies to the fully and partially industrialized housing activities which in fact benefited only small segment of the upper incame households while the self-help housing activities would have been leastly

-75subsidized by affecting greater amount of the low income households. For instance, social return from the government funding for self help housing activities on site legalization is the positive social gain at the amount of W 122 million
(U.S. $0.2 million ) while the government financial investment to self help housing housing activities by off site relocation program** turn out to be loss at the gross amount W 1,385 million ( U.S. $3.4 million
Important notice that should be made here is that negative subsidy- is accrued to the self help housing activities on site legalization at the amount
W15,250 ( U.S. $37,00 )per unit of household while correspondingly positive ( real ) subsidy at the amount of W 121,375 ( U.S.
$296 ) per unit of household which is participating the selfhelp housing activities by off site relocation program. More interestingly, the government funding for fully and partially industrialized housing activities ccms out to be also loss fran financial perspective of social return analysis.
* Self-help housing activities on site legalization procedure has been assumed in this case as a housing process in which a squatter household is given a land title in the established urban settlement at the market price of medium level of the residential canmunity in Sungdong-gu. ( See TABLEIV-ll in
APPENDIX I )
**The case study of "Sung-narn City" is made as the example of off-site legalization process for housing settlement.

TABLE IV-12
COMPARATIVE CAPITAL RETURN ANALYSIS F1M ALTER10ATIVE GOVERNMENT INVESTMENT ON
DIFFERENT HOUSING ACTIVITIES IN BUILDING 8,000 UNITS
Initial Capital
Outlay Required
by the Government for the programs
In Million )
Comparative Capital
Returns ubsidized Social a) Return -b) Returnr c)Percentae of Subsidized d)
Return Compared with Total Capital
Requirement
Allocation of
Subsidies per household
Fully Industrialized
Housing Activities 10,625
(U.S.$ 25.9)
Partially Industrialized
Housing Activities 7,200
(U.S.$ 17.5)
Self Help Housing Activities on Site Legalization 3,169
(U.S.$ 7.7)
Self Help Housing Activities
Off Site Relocation Scheme 3,169
(U.S.$ 7.7)
2,070
(U.S.$ 5.0) (U.S$ 8.9)
672
(U.S.$ 1.6) (U.S$2.0)
1,254
(U.S.$ 3.0) (U.S$0.2)
160
-3,663
830
122
-1,385
(U.S.$ 0.3) (U.S. $3.4)
19.5%
9.4%
39.6%
5.0%
457,875
(U.S.$1,116)
103,750
(U.S.$ 253)
15,250
(U.S.$ 37)
173,125
(U.S. $422)
Source: TABLE IV-I & IV-2, TABLE IV-5 & IV-6, Table IV-8 & IV-9 and Table
IV-10 & IV-l in
APPEN)IX I.
Note: a) Subsidized return means the present value of total cash flow between the housing users and sponsor at the subsidized interest rates. (TABLE IV-1, IV-5
, IV-8,IV-10 & IV-l in APPENDIX I)
b) Social Return means the present value of total cash flow between the housing users and housing sponsor at the parket rate of interest. (TABTIE TV-2,IV-6,IV-9 & IV-1l in APPENDIX I) c) Percentage of subsidized return from initial capital outlay requirement is cciputed by dividing such a way as Subsidized Return X 100/ Initial Capital Outlay Requirement Amount.
d) Anount of subsidies is- derived frcm social rate of return divided by .8,000 housing units to be built in each housing activities.

77
As the TABLE IV-12 demonstrates, social return fron government funding for fully and partially industrialized housing activities are respectively turned out to be loss at arount W 3,663 million
( U.S. $8.9 million ) and W 830 million ( U.S. $2.0 million ) which means the subsidies per unit of household participating
'Y the fully and partially industrialized housing activities at the respective aroun W 457,875 ( U.S. $1,116 ) and W 103,750
( U.S. $253 ). This means that fran social point of view, the government funding for self-help housing activities on site legalization ( not off-site relocation program ) can perform to maximize the housing benefits with the lowest amount of capital outlay regirement especially in case that the government housing programs are launched fron canpeting fund within the limited housing resources. Jbre specifically, the major reason why the government loan to self-help housing activities can maximize the benefits to the poor is that the housing opportunity generated
by the government loan to self-help housing activities for the low incame households can be resulted within minimum financial burden to the people and at the same tine lowest amount of public fund required by the project. This conclusion is based on the calculation of the camparative capital returns fram the social point of financial perspectives on the fully to

78 partially to self-help housing activities in which two level of former housing activities act as "a barrier to personal fulfillment or as a burden on society as a whole" [Turner] because the costs of housing activities except the self-help housing activities incurred to the houseless families are too much to cope with and the government needs excessive capital outlay to implement such highly controlled housing activities which in fact provide too little chance of touching most of the nation's houseless low incane families who are in most desperate need of improved dwellings.

79
CHAPTER V
C)NCLUSION: TWARD A NEW PUBLIC POLICY FOR HOUSING
Projection of Future Housing
Needs in Korea
So far, the efforts of the government to expand the nation's housing policy have not been sufficient to halt nation's growing housing deficit. The primary focus of government reasures has been to allow "nothing worse than the present housing situation."
Estimating the future national housing shortage by a regressicn projection based on the past and present governnent housing policy reveals that a national housingighortage averaging 21 percent will persist. This shortage will continue in spite of government plans for a 14 percent annual increase in the housing stocks as indicated in Tables V-1 and V-2. The Ministry of Construction has reported that
917.900 new housing units are expected to be constructed with its direct and indirect support. However, this nunber of housing units planned by the Ministry of Construction is far below the nation's aggregated housing needs, estimated primarily by socially determined standards which were established

R
80
by the government. However, if the nation's housing shortage is viewed only in term of a quantitative deficit of modern standard dwellings, then obviously the government is faced with an insurmountable task in trying to solve the housing problem in traditionally accepted ways.
Year
1972
1973
1974
1975
1976
TABLE V-I
STATUS OF NATIONAL JCUSING DURIN THE THIRD FIVE YEARS
ECONC1IC DETLCD:T PLAN ( 1972-1976 )
NLrbcr of Total
Nunber of Total
Households (1.000)
5.814
5.934
6.069
6.207
6.349
Total Eousing Total Housing to
Total H1ousinz ,
Stocks (1.000)
Total Housing, to be built (1.000)
4.540
4.646
150.8
165
4.764
4.892
5.033
197.8
194.7
209.6
The iation's
Housing
Shortage
Percentage
Shortage
1.274
1.288
1.305
1;315
1.316
21.9
21.7
21.5
21.1
20.7
Source: Ministry of Constructicn, "Pro-osed Housin Construction Project Under A.I.D.
Developmnt Loan Fu.d" ?epubiic oz rorea
A regression analysis has been used to forecast the future housing shortage beyond the present five year period

81 between 1977 and 1981, assuning there is no significant change in its present housing policy. The regression equation
Y=5.051 + 9.985t was used where Y is the expected number of households each year and the regression equation Y=3. 958 +
9.946 t where Y is the expected total housing stock each year and t is the time series between 1977 and 1981. The canputer output for the estimated numerical values of each forecasted years is shown in Table V-2.
Year
1977
1978
1979
1980
1981
TABLE V-2
PIJECTED NTICNL HOUSINTG STATUS DUPJ.NG THE FOURH FIVE YEAR ECONMIC
DEVEIDPET PLAN ( 1977-1981 )
Number of Total Total Housing
The nation's Housing
Total Housing to Housing Shortage
Households (1,000) Stock (1,000) be built. (1,000) Shortage (1,000) Percentage.
6,465 5,081 48' 1,384 21.4
6,593 5,183 102 1,405 21.3
6,722 5,285 102 1,437 21.4
6,850 21.3
6,979
5,388
5,490
103
102
1,462
1,489 21.3
Source: Projected by the author ( See Corputer Output in APPE:IIX II )

82
The calculations for estimating the nation's housing shortage from 1977 to 1981 was based on the straight extrapolation from the previous ten years. This calculation included an annual increase in the housing stock automatically added either by government action or the initiative of the private sector during the second and third Five Year Economic
Development Plan Periods (1967-1971 and 1972-1976). The estimated total national housing needs, 1.946.000 units during the years between 1977-1981 has been derived by adding the 457.000* assumed new units to the total estimated housing shortage, 1.489.000 housing units. The specific graphic expression of estimating total nation's housing to be built to eliminate housing shortage is presented in the following
FIFURE V-l and IV-II
2,000
FIGURE V-I
FST.TATED 'ICTAL NATICN'S 1O"-Sr.O FFEDS DUPING THE 4TH
ECCNCtC DV PLAN PEPIOD
( 1977 -1981
-1,500 1.405
-1,1 4-21
1,437 1462
.25
1,489
127
1,00 C
1977 1978 1979
Source: Table V-2, and Figure V-2
1980 1981
* This number is assumed to have resulted from automatic increase on the basis of ever'y year incro of housing stock during the five years ( 1972-76 ). ( See Figure IV-II

9 w V IV
9 1 9
FIGURE V-2
ESTIMATED NATIONAL HOUSING SHORTAGE BY REGRESSION ANALYSIS
8.000
7.000
6.000
5. 0 0 0
4. 000
Expected Number of Households
Y : 5.051 + 9.985 t
Expected Number of Housing Stock
Y : 3.958 + 9.946 t
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981
Source: Projected by the author with basic data provided by the
Ministry of Construction, Republic of Korea. ( See also
Computer output in Appendix A )
0 0
1'489,000
457,000
1,946 P00
00 wA

84
Forecasting Nation's Economic Growth and Housing -Resources
In the midst of the national housing shortage outlined in the previous section, the greatest constraints to inplementing effective housing programs of the government in Korea has been limited to the scope of the nation's housing resouce available and at the same time scale of the economic capability of the low incame households who need desperately the dwelling improvement. However, the scope of expanding the nation's resources for housing sector and enhancing the purchasing power of the low inccme household to generate more effective demand for housing development are all depending upon the nation's future economic state. GNP projected by regression analysis on the basis of last 24 years economic perfermonce fram 1953 to 1976 including Third Five Year Economic Planning Period shows a picture of the nation's econcmy in which Korea will make great strides toward economic self-sufficiency by achieving 11 percent of annual economic growth rate t=rough the Third Five Years Economic teveloprent Period (1972-1976) to the Fourth Economic Developnent period ( 1977-1981 ). Ccmputer output for estimated GNP on the basis of the GNP growth during 24 years by achieving 11 percent

85 annual ecorxnic growth is as follows in TABLE V-3.
TABLE V-3
Year
PHUJECTED GNP DURING 1977-81
In billions of won at constant 1965 market price)
G N P
1977
1978
1979
1980
1981
4,272,7
4,769,5
5,324,1
5,943,2
6,634,2
Source: Input data for regression output is frcm Econcmic Statistics Yearbook
1969, and Third Five Economi.ic Plan.
( Bank of Korea, Econcmic Planning
Board, Republic of Korea )
In this .fast growing national economy, the basic question arises how much the nation's resource will be available for housing sector. As the experience of Japapenese econcmic growth during 1960's demonstrates, allocation of funds for housing is very limited in the midst of excessive demand for capital by the export sector. The government's economic blueprints,

86 which envision the nation's economy at the level of $1.000 per capita GTP (which was the Japanese econcmic level in 1965) suggest unbalanced economic growth that will discourage the development of a welfare economy. Japan now suffers greatly fram unbalanced economic growth between its econamic sectors and its regions. Even though Japan has achieved prosperity through economic grcwth, political discontent and demagogues flourish among the people who are extremely skeptical of their nation's economic growth and development.
This prevailing skepticism is rooted in the failure to achieve the nation's welfare objective. This is manifested in the nation's housing situation which is poor in spite of the impressive national econamic grcwth and prosperity.
The conditions under which the Korean economy now is operating are similar to those under which the Japanese econamy has been operated. With respect to over-emphasis of nation's economic growth over "development." In this very important and similar respect, it seems likely to lead
Korea to a distorted economic state by emphasizing efforts to promote the capital intensive export industries which provide less employment and income earning opportunities for the abundant labor force. In other words, the present economic development plan outlined by the government continues

87 to emphasize 'efficiency' over 'equity' measures in determining the criteria for success and failure of the natin's development program.
Within this kind of economic strategy for nation's development, the most serious economic problem that can be anticipated is the widening gap between the rich and poor and secondly the increasing dependence of the nation's econcmy o an increasing volume of international trade. This raises a basic question how the government is going to implement a national welfare economic program to increase incame and savings, and narrowing the gap between the rich and poor while at the same time promoting capital intensive export industries. The government economic development program which envisioned the nation's welfare econcmy to less extent must also disclose who will pay for the costs of building welfare econcmy in conjunction with saving requirement that the country needs at the twice faster rate of expected GNP growth. Under these circumstances, attracting more funds to housing investment is very difficult particularly since housing -investment is regarded as consumpticn rather than a productive investment.
Nevertheless, assuming that the government is determined to resolve the nation's acute housing shortage during the 4th

88 econcnic development planning period 1977-1981, total breakdowns of housing fund requirements have been made in
Table V-4. These figures have been based on the existing policy framework; current per unit costs of different variables of housing have been made by an analysis of the financial matrix Table V-4. This matrix horizontally shows the targets of meeting national housing deficiencies by
20, 40, 60, 80 or 100 per cent and vertically lists the cost per housing unit of different variable components such as land, site and services, credit and housing construction.
The total amount required to meet the nation's housing needs
W 1,031,386 million (U.S. $2.515 million) is too much for
Korea to meet if the allocation of national resources for housing continues at the same level as the last decade as is anticipated. For instance, if only two percent of GNP is allocated for the nation's housing activities in the coming decade, then the question is how the nation can confront with the problem of great housing shortage especially for the low incame households. More specifically, the strategic point is whether the nation will be able to catch up with the growing deficit of its housing supply if only two percent of GNP is allocated for housing resources. Examination of
Table V-5 reveals that limited alternatives exists for

89
ANNUAL FINANCIAL PESCCF REfUITNr FOR MEETING DIMTPRN.T LEVEL OF
HOUSING NEDS BY DIFERE7N HOUSING SERVICES
Kinds of Level of housing 20% housing services
(in 1.000 won )
(a) Sites & Services
(b) Self Help Housing
Needs (e) 389.
175. 68.075
200. 77.800
40%
778.
( in Million won ) in 1,000 Housing Units )
60% 80%
1.168. 1.557.
100%
1.946.
136.150 204.400 272.474
155.600 233.600 317.400
340.550
389.200
(c) Partially Industralized Housing
266. 103.474
207.214 310.688 414.162 517.636
(d) Fully Industrialized 530. 206.170
Housing
TABLE V-4
412.340 619.040 825.210
1.031.386
Source: Table IV-4
(a) Cost of land plus other urban facilities per displaced squatter household has been estimated by Seoul city government budget requirement is about W 175.000 (See
Table 111-2 )
(b) Maxium cost of self-help house has been estimated to be about W 200,000. See Chapter III ( Source: New Policy toward squatter settlement: Legalization Versus Planner's Standard,
Woodrow Wilsor. Center, Smithsonian Institution, July 25,
1972. By Joan M Nelson
(c) Cost per rough core housing unit has been estimated about
W 266,000 by Seoul City Gverrmnt. ( Source: J.S. Park,
"Necessity and Economy of Fsta-blishing Apartnents," ( The
Minicipal Problems, August 1969 Volume IV No.8 )
(d) Cost of a comlete dwgllina unit per one family at the size of 23 pyong (43 M-) recuired by the local fund ( Government fund ) is W ( See Table IV. Source:inistry of Construction,
Republic of Korea, Proposed Housing Construction Project under
A.I.D. Developnent Loan Fund 1972 ).
(e) Rcm e is the percentage number of the nation's housing shortage at each percentage level of the housing shortage, 20,40 60,80
100 percent.

90 planning for increasing the supply of housing with annual resources of W 107,7 million which is 2% of estimated
GNP during 1977-1981. However, the financial resource matrix for housing in Table V-4 shows that the nation with limited fund available can effectively deal with housing fund requirement for self-help housing activities.
However, the nation's housing shortage problem can not be solved merely by securing adequate resources for housing at the same way estimation of housing resource shown in Table V-4. Next important step to approach the housing problan is then to make the level of housing resource requirement balanced with the estimated total housing purchasing power (or the level of effective demand for housing). For instance, it is very difficult for low income houseless families to afford the high price of housing under the government's housing investment for industrialized and partially industrialized housing activities.
In other words, most families needing housing have income too low to meet the enormous housing costs that have been imposed by the government housing activities. For instance, assuming that a median income of the houseless family is reported to be W 28,000 (U.S. $68) in 1972 and a maximum of 20 percent of household incane is available for

91
Indicators
G N P
Total Government
Expenditure
Total Housing
Investment
Public
Private
Nation's Annual
Housing resource
TABLE V-5
ESTIWATED T1%TICEA-L PESOUFCES AVAILABLE FOR HOUSING
DURING WE PERIODS 1972-1976 & 1977-1981
1972-1976
In 100 million
Estimated
Percentage of 1977 -1981 Annual EPousing
G N P Resources
18,201,6 100 % 26,943,7
4,581
383
44
339
76.6
25 %
2.1%
0.2%
1.9%
6,735
566
54
511
113
113,2
10,8
102,2
Source: Except for the total housing investinent for 1972-1976, the figures have been projected by the author.
Note: a. GNP in each year between 1977-1981 has been projected with the regression equation log Y = 5.61 + .11 t ( Y = a bt ).
Input data for cccruter has been based on data fram 1953 to the projected year 1976 by the Econric Planning Board.
( Source: David C Cole & Princeton N Lyman, Korean Development
The Interplay of Politics and Econcranics. Fconomic Planning
Board, " Third Five Years Fconoric Plan: 1972-1976 )
b. 25 % of G? as total novernrcnt exoenditure has been used to proect future gover. nt expenditure during 1977-1981 with the assu-rtion that 25 7* of JI-P will be taken by the govern-mnt e-nnditure in future.
c. Total housin,; investmnt during 1972-1976 has been renorted
by Economic Plarnin- 2oard on the :pvernement Publication of 'iird Five Years £cormic Development Plan. Total housing investnont durir 1977-1931 ( Fourth Five Years Econic
Planningy Period ) has been estirnted by assionennt the same proportion of (-,? as for the period between 1972-1976.
d. The nation's annual resources have been derived fran dividing total housina investryent for the period by five. ( 383/5=76.6, 566/5=113,2

92 investmnnt in housing improvements and other related housing expenditures, income available to a houseless family for housing is estimated to be W 5,600 (U.S. $13.60).40
Therefore, the aggregate annual effective demand for housing in the nation can be projected to be W 88,435 million
(U.S. $208 million) assuming there is not increase of the median inoane during the Fourth Five Years Econamic Development
Plan period (1977-1981). Then, the most striking point in this calculatian is the wide gap between 2.1% of GNP available for the natian's annual housing resource W 102,20041 purchasing power of the houseless families W 88,435 million
(U.S. $215 million). In this critical point, the governnent's national housing policy must focus on narrowing the gap between the naticn's housing resources and the housing demand capacity of the nation's houseless families. This
does not indicate a reduction in the percentage of GNP allocated to housing investment. Instead it means an increase in household income so that people can afford housing and to provide housing on a subsidized basis. In other words,
4This annunt of housing consumption allocation by the family which earns W 28,000 per nonth is very high with the consideration that the level of nedian income households is at the subsistence level.
4 Tis arount is derived from the calculation of yearly income available for housing by houseless family times
by the number of estimated nation's housing needs. (88,435 million = 5,600 X 12 X 1,316,000)

93 the nation's resource allocation for housing must be effectively used as a channel for income distribution through equitable government housing policy. For this purpose, the government must generate easier access to the increasing housing supply for low incame people and at the same time increasing the effective demand for housing by the low income households. Eventually, "easier access to homeownership will work toward a more equal distribution of wealth, and the government would appear to profit in no small measure by avoiding the epithet of 'landlord' in addition to that of 'tax collector.'
42
Solving the Nation's Housing Shortage Problems
Within Indigenious Constraining Factors
Housing policies undertaken by the Korean government in the past have concentrated almost exclusively on short-term projects which enphasized external improvements of urban neighborhood rather than improving the housing and living conditions of lcw income households. Discord of the government housing policy and the target of households where the nost of them are, in the slum and squatter communities is greatly entangled because the basic desire of the houseless low income families is not reflected in public housing programs. The
John E. Sloboda, "Housing, Land, and Socio-Econcmic
Integration" (Department of City Planning, Harvard University,
August 23, 1972) p. 30.

94 squatter families want, first of all, to have a place to acocamodate their family, a shelter regardless of its fonn or aesthetic attractions, then they seek a tenure grant or right to settle and build their houses campatible with their incme and later improve their houses as their income allows at each stage in which the pattern of the low income households' expenditures reflects their priorities for other expenses such as food and education. However, so far, the government housing policy in Korea has reversed the basic priorities of the targe population by their programs. The major cost differential between the public housing programs and the preference of households' consumption patterns occurs in this different ordering of priorities between the government housing policy and the target population.
Considering the fact that so far a few of the large scaled housing construction scheme funded heavily by the government has not helped a bit in reducing the nation's housing shortage and perhaps the continuation of such programs will worsen the nation's housing situation by making the distinction of housing opportunity between the rich and the poor. The government task force in improving the nation's housing situations is then to find maximun means of policy alternatives that can meet the objectives of fullfilling the

95 naticn's housing development problems if they are the nation's consensus goal. For this purpose, the government needs a more dynamic approach that requires reformation of Government attitude towards the urban slum and squatter communities that have been mostly regarded as the detrimental to the sanguine developnent of the urban society. Basic refonn program in this aspect is to seek the developmental aspects of so called, dilapidated and blight areas by providing a new outlet for more equitable housing opportunity to low income households in the squatter and slum conmunities as the government initiated in early 1972 vigorous New Community
Movement which is to upgrade a living environment and generate self-help movement for the cammunity in which most of the
low incom households reside. The more pervasive application of this kind of New Cammunity Movement can be effectively stimulated in the urban slum and squatter communities by promoting the maximun participation of housing activities that is to be spurred by legalization of the public land granting the land tenure for the low income households.
The Institute of Urban Studies and Development of the Yansei University has found that the squatter and slun dwbllers put considerable investment in their cwellings. This is particularly true when the squatters are assured sam

96 security of tenure, even if this does not nean the actual granting of a title to the land. With easier access to the use of the public land by the lo income houseless households will improve the housing conditions by providing motivation for the population needing to be housed, and consequently increasing the general level of housing supply as well as the social welfare of the lo income people in the urban camunities.
Hoever, legalization of public land which put into effect by the government so far has limited impact upon stimulating the initiative of the most of squatter households to improve their housing conditions because of requirement of its legalization process and provision of criteria is too selective and inflexible by its substance. For instance, Joan
Nelson specifically observed the limited effects of Korean legalization process to the squatter households in the following way.
-the requirements that settlemnts be in clusters of at least thirty houses, and lie below 100 meters in altitude, sharply restrict the potential scope of the program of legalization. The requirements of minimum house and lot size will force out large nunbers of residents from ccmunities being legalized, greatly increase the costs of legalization for those who remain, and substantially add to the administrative and political burdens of implementing the program. Nor do these requirements appear to serve

97 public purposes which justify their costs. -- Many of the settlenents, including most of the best developed and the most proising, are located on the steep hillsides. Many of these lie over 100 meters above sea level. The Yonsei Institute study estimates that roughly 30% of squatter units are scattered through the city single or in small clusters. At least this proportion, and probably more, therefore are ruled ineligible for legalization under the "thirty house" criteria are to make ineligible for legalization most of the squatter units in Seoul. The Seoul Government itself estimate that only 30% of all units satisfy its criteria.
4 3
Therefore, the implication of this strict and inflexible legalization criteria will be forcing the most of the squatter residents to leave to sarewhere else. The net effect is then to shift the location but not dimension of the squatter problems. Furthennore, this limited scope of the legalization process will undoubtly subdue the will of the squatter households to inprove themselves for the better housing by inducing more government spending for the squatter households.
Most of those forced out by legalization -cumtransformation probably would crowd into other settlements not yet being legalized. Crowding in the remaining settlements will increase, and the eventual process of legalization or eradication in those settlements will be made difficult. Alternatively, the government may seriously attempt to provide displayed squatters with subsidized lots in out-lying districts. Such a program would indirectly shift to the government much of the cost of reduced density and increased size of lots and house in legalized settlements. It seems doubtful that these
4 3
Nelson, "New Policies Toward Squatter Settlements:
Legalization Versus Planners' Standards."

98 achievements are worth the costs, particularly since funds are urgently needed for other important public uses.
4 4
In spite of these odd consequences of the tight control of the squatter ccmunities in the public land, the government reserves the most of the squatter sites for future use of public land and thereby increasing contingency of enhancing valu of the public land which is particularly sensitive to inflation. This public of the most of the squatter sites is limiting the supply of residential area and consequently causes to spur constant increase of land price. During the last three years, land price has risen- at an average rate
25% annually, exceeding the annual rate of increase in the prices of other cornodities (7. 8%). Land prices on the outskirts of Seoul have risen anywhere from 40% to 100% especially in the period since 1967. 45 An enforcement of the anti-speculation law for real estate passed in 1968 slcwed the rise of land prices. Hcwever, land prices remain extremely high which is a key factor in the nation's housing problems.
The high price of land limits the expansion of the nation's housing supplies at a price within reach of the houseless families in Korea. Under this conditions, there is no choice
4 4
Ibid.
45
Jae-Hyun Kim, Housing and Urban Development in Korea
(Seoul, Korea: Chu-taik (Housing) October 1972) p. 32.

99
for low incame people but to squat on the public land and to stretch their meager inccmes by constructing and living in squatter shacks. Therefore, the rapidly rising phenomenon of land prices must be counteracted by government release of the public land and even by government purchase of residential land under eminent domain at low prices and redistribute it to the houseless families at a subsidized price. This sort of "campulsory purchase has been taken for granted in the United States and England.
4 6
As discussed in the Chapter III, the Seoul City government has exercised its power of eminent domain to a limited extent, but this has for the most part not been for the benefit of the poor. The Seoul city government could have charged much less for land either to the squatters who intended to improve their houses on the condition that their illegally occupied land will be granted for tenure use or to the relocated squatter households on the outskirts of
Seoul. Fbr example, the Seoul city government estimated a budget requirement of W 175.000 (U.S. $438) per displaced squatter family for their land grant tenure in the newly settled place. Squatters who were forced to evacuate incurred not anly moving costs, but also the costs of housing at a minimum amount of W 200.000 (U.S. $500), which is exorbitant
World.
46
Abrams, Man's Struggle for Shelter in an Urbanizing

100 in relatian to the purchasing power of the average squatter family.
Instead of financially overburdened with the costs involved with the providing the housing site for the squatter families which is usually out of range of the families needing housing and the government budget constraints, the government should find a more effective policy of providing the public land at a subsidized cost. This would assist the government in eliminating the national housing shortage within a shorter time period than anticipated through present policy.
Besides these land issues to more residential use for the low income households, there is also issue of the making extensive financial loan that could be developed by the government for its useful strategy to help solve the housing shortage problem. As discussed in Chapter IV, the government has made the extensive loan to the households who makes a housing settlement under the large scale industrialized and partially industrialized housing projects which in turn benefited cnly small segment of the middle class households.
"The Ministry of Construction has reported that 87 percent of houseless families in Korea have income less than $28,000
(U.S. $68) a month, and average housing costs are 18.5% of

101 total disposal incane for urban families or less than 5,600 won per month (U.S. $13.60). On the other hand, the cost of units of 33 square meters to 66 square meters
(330-660 square feet) in floor space ranges frcm W 1,300,000
(U.S. $3.170) to W 1,700,000 (U.S. $4.146), while loans advanced by the banks covers only 30% of the construction costs."
4 7
Under this situation increasing the available loan amount will simply raise another problem for low and middle income groups are concerned allowing households to assure unmanageable debts. The present monthly payment amounting to average W 5,646 (U.S. $13.70) means an excessive burden on mortgagers especially for those whose monthly income falls under W 28,000 (U.S. $68). However, the fact that 87 percent of houseless families in Korea have incomes of less than W 28,000 (U.S. $68) should make the govemment propell the financial loans to the low income households who build their own houses on a self-help basis with a grant of title to public land for their residential use. If the government is willing to provide optimun benefits to the low income group, for instance, those below W 28,000 a month
(U.S. $68), the government could consider to provide the financial loans to self-help builders at least W 200,000 p. 32.
47
J.H. Kim, Housing and Urban Development in Korea,

102
(U.S. $487) which is the maximum cost of self-help unit at a subsidized interest rate 8% instead of 17% for regular interest charged for housing debenture and 12% charged by regular housing saving time deposit in order that most of low incame families can afford to finance building their own house with monthly payment W 2, 399 (U.S. $5.85), which is
8.5% of W 28,000 (U.S. $68), for 10 years. This kind of public financial arrangement is particularly useful to the owner building by stages who needs financing to help him caplete his building. This kind of installment building practice is the most ccmn pattern of housing construction in Korea and deserves financial assistance for the many installment builders who can complete their houses with small loans at a subsidized interest rate.
This kind of government finance assistance to self-help housing builder or the installment housing builders will result in significant national impact in reducing the housing shortage within the nation's resource available for housing.
Ibre specifically, if full capacity of the nation's housing resources which are fully utilized by arranging the financial fhis figure is a bit higher amount of monthly payment requirement by self-help housing activities in comparison to Table IV-7. Anount of difference is W 583 (U.S. $1.40) is due to the different financial arrangement conditions in such way that Table IV-7 is made for 15 years repayment loan wiile this figure arrived fran Table V-9 which is made for
10 years repayment period to reduce the financial burden to both Government Housing Agency and individual households.

103 loans to the self-help and installment builders, then the nation can eventually solved out its housing shortage within five years by making the government financial loans to
20 percent of the nation's houseless family by every year.
Cash flow analysis of the government investment for housing loan to self-help housing activities shows the possibility of fullfilling the preoposition that the natian is indeed capable of solving its own housing shortage problem within its limited housing resources. (See Table V-6.)
A basic justification for the financial loan to selfhelp housing activities is the economic benefits that will accrue to both the government housing agency and the low incoe households who are motivated to build their houses on the self-help basis. More specifically, as the Table V-6 demonstrates, the government is earning W 370 million
(U.S. $902.439) during the ten year financial loan arrangenent by selling the housing site at the subsidized level
W 100,000 (U.S. $243) per a household unit and by making the financial loan arrangement to the low income households for the maximum amount W 200,000 (U.S. $487) at the annual interest rate 8 percent during 20 years in dealing with 20 percent of the nation's houseless family. And also, this kind of government provision of the financial loans to self

104
CASH FLWO ANALYSIS OF GCVETM
?'-
HCUSING LOAN PROGRAM TO SFLF-HELP
HICUSING ACTIVITIES IN EIG A:AILY 20% OF TH NATION'S
HOUSING SHORTAGE
(In 5illion won )
Year 0 1 2 3 4 5 6 7 8 9 10
A) Initial Capital
Investment
Site & Services
Housing Loan
10,799
77,800
Total
B) Revenue
Fund Fran Cent'l -
-88,599
Bank +88,599
Sale of Housing Site
Anortization
Interest Earning
Total Revenue
38,900
7,780
6,224
52,904
7,780
5,602
13382
7,780
4,979
12759
7,780
4,357
12137
7,780
3,734
11514
7,780 7,780
3,112 2,489
10892 10269
7,780 7,780
1,867 1,244
9,647 9,024
7,780
622
8,402
C)ost
Site & Services
Anortization
Interest Payments
Total Costs
10,799
7,780
L3,226
31,806
7,780
11903
19683
7,780
10580
18360
7,780
9,258
17038
7,780
7,935
16493
7,780 7,780
6,613 5,290
14393 13070
7,780 7,780
3,967 2,645
11747 10,425
7,780
1,322
9,102
Net Cash Flow
D) @14%
Net Present Value
21,098 -6501 -5601 -5171 -4979 -3501 -2801 -2100 -1401 -700
18,502 -4845 -3780 -3061 -2584 -1582 983 737 431 -189
18,502 18,192 = 370
Source: Table V-5
Note: A) As Table V-6 shows, the covernment budget annualy allocated for nation's housing is limited $ 10,800 million won, therefore W 27,763 per household can be allocated for basic site and services by the government budcret in meeting 20% of the nation's housing shortage which amounts
( 27,763 = 10,800,000/389,000 ) W 77,800 million
389,O00 unitg.
is the total-oniOuZT of government loan to self-help housing activities for 389,000 household units with maxinum principle loan a.-ounting W 200,000 per a household unit.
B) Revenue from sale of housing site including site and services charge amounting
W 100,000 per a houschold unit to 389,000 household units. Interest rate charged to a household is annualy 8 percent for 10 years instead 15 years.
C) Cost of providing sites and services is assumed by the government .at the amount of W 27,763 per a hcusehold and thereby total cost for 389,000 household units
is W 10,799 million. The government housing agency secures housing finance resources from sale of the housinq debenture at the interest rate 17'3.
D) Present value at 14 ; has been used to calculate annual cash value of net flow.

105 help housing activities requires significantly less anount of monthly payment requirement by the lcw income households to a level at which the most of low income houseless families can manage within their own incane capacity. For instance, the government financial loan to self-help housing activities requires W2,399 (U.S. $5.80) instead W 5,646
(U.S. $13. 80) imposed by the government financial loan programs operated for the industrialized housing activities.
As Table IV-4 shows, reduction of building cost is closely related to decreasing the measure of completion on occupancy while increasing the degree of self-help housing activities with owner's initiatives. With this aspect, the promotion of self-help programs raises the chances of a successful government housing program affecting the most needy population.
These programs place subsidies where they are most campelling and where self-helpers are willing to invest their labor and time and reap rewards towards commensurate with their efforts. This kind of self-help program can be reinforced
by organizing mutual aid projects. John Turner has suggested:
In an econamy of scarcity, the mass of the cormon people, though poor, posses the bulk of the nation' s hunan and material resources for housing. Their collective small savings capacity and their collective entrepreneurial and manual skills (and spare time) far surpass the financial and administrative capacity

106 of even the most highly planned and centralized institutional system, whether dcminated by the state or by private capitalist corporations.
4 9
In conclusion, financial loan provision to self-help housing activities by the government housing agency is a means to achieve the maximum participation of the nation's housing activities by supporting the low inccme residents and at the same time meeting suitable responsive to the needs and capacity of most of the nation's houseless families. More specifically, public assistance to self-help builders by relaxing tight control of public lands, supplying easily accessible financial loans to the squatter families, and providing realistic building code standards adjusted to the level at which the low incame houseless family can manage will then act as a great vehicle for socio-economic development in the process of modernizatian of Korea.
4 9
Turner, Freedom to Build pp. 170-171.

107
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108
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The Supports and the People.
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Kim, Woo-Sung. "Urban Housing and Physical Prototypes for the
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Kim, Young-Mb. A Study on Socio-Fcological Aspects of
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Kindleberger, Charles. *Economic 'Develoiarnt. New York:
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Koth, Marcia N. Housing in Latin America. Cambridge: The
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Laquian, Aprodicio A. Slums are for People. Local Governnent Center, College of Public Administration, University of the Philippines, Manila, 1969.
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Lee, Dong-Hun. "The Stock Demand Elasticities of Non Farm
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McFarland, Carter M. and Vivrett, Walter,K. Residential
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Nelson, Joan M. " New Policies Toward Squatter Settlements:
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110
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Rein, Martin. Welfare and Housing. Working Paper No. 4,
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Renaud, Bertrand. "Conflict between National Growth and Regional
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M.I.T. Press, 1953.
Slcboda, John E. "Housing, Land, and Socio-Econcmic
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Solcmon, Arthur P. The Cost Effectiveness of Subsidized
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111
Solonon, Arthur Housing and Public Policy Analysis.
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112
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113
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APPENDIX I
CASH FLW ANALYSIS OF GOVlMENP INVESTMENI' FOR HOUSING DEVELOPMENI'
IN
THlE REPUBLIC OF KOPFA

114
APPENDIX I
A) Initial Capital
Outlay
0 1
-6,075-4,550
TABLE IV-1
CASH FIW-C ANALYSIS OF GOVTEF V
CIVITIES
?7T ON INDUSTRIALIZED
( SUBSIDIZED IN4TERNIAL PEURN ANALYSIS
In Million won)
2 3 4 5 6 7 8 9 10
B) Revenue
Central Bank Loan
Fousing Sale Reveiue
Interest revenue
Amortization Peceipt
+6,075
6,160
169
284
6,613
C)Cost
Interest Costs
A.I.D Loan
Gov't
.LoaLn
Amortization
A.I.D. Fund
Gov't rund.
Total Cost
73
48
119
240
Net Cash Flow
D)Present Value @14%
Total Net Present Value
1,823
1,598
2,070
158 147 135 124 114 101 90 78 67
284 284 284 284 284 284 284 284 284
442 431 419 408 398 385 379 361 351
73
45
73 73 73
42 40 38
119 119 119 119
23 23 232 230
205 197 187 178
157 133 110 92
73
35
73
33
73
31
73
29
119 119 119 119
227 225 223 221
171 160 156 140
78 64 54 43
73
26
119
218
133
36
A) Tbtal initial government investm-ent on industrialized housing activities is W 10.625 rillion ( U.S. $ 25.9 million ) including first year's fund frcm Foreign lcan -;-ounting
$ 9 million ( W
3,690 ) and local fund(W 2,385 million ) and second year housing investrent W 4,550.
First year
Second Year
Total
Houses to construct
4,5C0 housing units
3,500 housing units
Capital Need
6,075
4,550
10,625

115
A)
(TABLE IV-1 continued
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
B)
C)
56 45 33 21
284 284 284 284
T44O ~2_9 317 T55
110 107 103 99
23 21 19 16
123 123 123 123
119 119 119 119
753' T ~31564 377
10
284
294
95
14
123
119
35T
92 88
12 9
123 123
119 119
84
7
123
119
T46 33-9 333
81
3
123
119
3i26
77
2
123
119
32T1
73
123
-9
70
123
-9
66
123 i-
62 59
123
-8
123
172
-35 -41 -47 -52 -57 -346 -339 -333
D) -8
8 -8 -8 -8 -42 -36 -31
-326 -321 -196 -193
-27 -23 -13 -11
-189 -185 -172
-9 -8 -7
B) Revenue during 20 years includes sale of cormleted house at W
1,300,000 ( U.S.8 3.171 ) rer unit, arong which the lurp suml
W 770,000 ( U.S.$ 1.878 ) should be paid at the tire of entering the corpleted buildinc with with a down payrent amount I 530,000
( U.S.$ 1.293 ) at arnual interest rate f
.
for 15 years by 8.000 individual hous&olds.
Type Sale.-Price pal-rceein und
(Foreign Fm-d )
(oc Fynd
(Local Fund ) n nv
Repaarit
( 43 M')
W 1.300.000
( U.S. $ 3.171
W 770.000
) ( U.S. $ 1.878 )
W 530.000
( U.S. $ 1.293 )
W 5.646
( U.S.$ 13.8 )
Mource:
Undr A.I.D. D:rn
-Nte: U.S S 1 : W 410
: e
, n o::.
Find mesm ea:.ca Urojcct

116
A)
I TMTF T17-1 r-ntined )
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
B)
C)
55
123
I7a
51
123 m7
47 49 40. 37 33
123 123 123 123 123
29 25 22 18
123 123 123 123
14
123
137
11 7
123 123 123
3- 13- 126
3
D) -6 -5 -4 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -2 -1
C) Cost of the capital by the operation and maintainance
Corernrmnt housing project includes costs, labor and land cost, etc.
Terrns and conditions of A.I.D. loan for the project is 30 years repayient with 3% per annum interest rate after grace period
10 years with 2 % per annun interest rate. Iousing Fund from the Central Bank, The Lank of Korea will be repaid ccmpletely during 20 years with 2 ? er annum interest rate. Considering the terns and conditions for borrow;ina the housing fund fran
A.I.D and the Central Bank, the project year is 40 years.
D) Net Present Value of total net cash flowr between the government and inrii.vidual hcuschclds by the project during 40 years has been irade based en 14 ?, discount rate.

117 I
-9.
TABLE IV-2
CASH FLUM ANALYSIS OF GOVTEN INVESTM ?7I' ON INDUSTRIALIZED HCJSING
ACTIVITIES ( SOCIAL RETURN ANALYSIS )
Year
A) Initial Capital
Outlay
0
-- 6,075 -4,550
B) Revenue
Central Bank Lcan +6,075
Housing Sale Revenue
Interest Revenue
Amortizaticn Receipt
Total Revenue
1 2
3,465' 2,695
169 158
284 284
,r9i8 T,,iT~7'
C1, Cost
Interest Costs
A.I.D. Loan
Gov't Loan
Amortization
A. I.D. Fund
Govt rund
Total Cost
Net Cash Flow
D) Present Value @14%
Total Net Present Value
3
( In Million Wbn )
4 5 6 7 8 9 10
147 135 124
284 284 284
431 419 408
113 101 90
284 284 284
397 385 3 7-4
78
284
362
185 185
119E 119
1,~410 1,35~0
185
119
17,-299
185'
119
1~24~T
185
119
T18-9
185
119
1134
185 185 185
119 119 119
T 5- 0
-67
284
3-51
701 661 631 396 .561 526 491 437 402 367
405 385 364 344 324 304 284 264 246 223
185
119
9iU4
, 2,042 1,787 -868 -825 -781-737 -694 -631-588 -553
-1,790 1,374 -585 -484 -405-336 -277 -221-181 -149
-1,790-+ 1,374 3,247 = -3,663
AY, Initial Capital outlay allocation is same as the TABLE IV-1.
B) Housing sale revenue in the first year is W 3,465 million ( 4,500 units
X 770,000 ) in the seccnd year is W 2,695 ( 3,500 X 770,000 ). Rest of unit cost W 530,000 is assumed by each household ( 8,000 units ) at the interest charge 4 % during the period of 20 years. The calculation is made exactly same way as TABLE IV-1 in the Appendix I.

118
(TABIE IV-2 continued )
11
Initial Capital
Outlay
Revenue
12 13 14 15 16 17 18 19 20
Interest Revenue 56
Amtortization Receipt 284
Total Revenue 340
Costs
Interest Costs
A.I.D. loan
Gov't loan
Amortization
A.I.D. Fund
Gov't Fund
Total Cost
332
203
184
119
838
Net Cash Flow 497
Present Value @ 14% -117
45
329
33
3T7
22
306
10
284 284 284 284
-294
297
183
262
163
227
142
193
122
157 122
102 81
87
62
53
41
17
21
184 184 184 184 184 184 184 184 184
119 119 119 119 119 119 119 119 119
783 728 I 674~1 5 di17
454 411
-94 -74
366
-58
324
-45
-562 -506
-69 -54
-452
-42
-397
-32
-341
-24
C)) Cost account is made by camuting the social cost of capital at the
so percent per annum interest cost to A.I.D. loan and 17 percent
per annum interest cost to the Central Bank for the principle arount of the rmoney borrowed. The project is in this case evaluated for the period of twenty years for sake of making convienience.
D) Net present value of total annual net cash flow between the government
and individual households by the project during 20 years has been
made based on 14 % discount rate.

119
APPENDIX 1
TABLE IV-5
CASH FLW ANALYSIS OF GCVE.RM'T INVESTT: ON PARTILLY INDUSTPLALIZED
HOUSING ACTIVITIES ( SUBSIDIZED INTERNAL RETURN ANALYSIS )
In Million Won )
0 1 -2 3 4 5 6 7 8 9 10
A) Initial Capital
Outlay -7,200
B) Revenue
Central Bank Loan +7,200
Housing Sale Revenue
Interest Pevenue
Amortization
Total Revenue
C) Cost
Debts Payment
Amortization
Interest Cost
Total Cost
Net Cash Flow
D) Present Value @14%
5,072
170 158 147 136 125 113 102 90 79 68
142 142 142 142 142 142 142 142 142 142'
5,384 00~ 8 9 278 27 255 244 232 221 210
5,072
106 106 106 106 106 106 106 106 106 106
42 41 39 36 34 32 30 27 26 24
5,220 147 145 142 140 138 136 33 32 130
164 153 144 136 127 117 108 99 89 80
144 117 97 80 65 53 43 34 27 22
Total Net Present Value -679
A) Total amrount of fund needed by the covernrent housing agency to build 8.000 dwelling units is W 7,200 nillion ( U.S.$ 17.5 million ) which com from the cost of building the partially industrialized housing W 900,000 per unit. ( 900,000 X 8,000
7,200,000,000 ) ( See Table IV-4 on page 70
B) Revenue to the government housing agency is made basically by the housincr sale to the public at the amunt of W 900,000 among which W 266,000 is paid by the dow.'n payment arrangement at the annual interest rate 8 percent for 15 years and the rest of them paid.with cash amount W 634,000 when the housing purchaser gets into the housing unit. Therefore, revenue frcm housing sale at the first year is total W 5,072 million ( 634,000 X 8,000,) and subsequent 15 years arnual interest charge at 8 percent to
I

120
(Table IV-5 Continued )
A) Initial Capital Outlay
11 12 13 14 15 16 17 18 19 20
B) Revenue
Central Bank Loan
.Housing Sale Revenue
Interest Revenue
Amrtization
Total Revenue
C) Cost
Przortization
Interest Cost
Total Cost
Net Cash Flow
D) Present Value @14%
56 45 33 22 9
142 142 142 142 142
198 Y1-7 P5 164 151
106 106 106 106 106 . 106 106 106
22 19 17
1121- 2-5 123
15
121
13
1l1i
11
117
8
114
6
~112
70
16
62
13
52
10
43
7
32
5
106
4
Ild'
106
2
T1li
-117 -114 -112 -110 -108
-14 -12 -10 -9 8
I the households and amortization for the
( 266,000 X 8,000 ) amount of W 2,128
C) Costs to the government housing agency for the project is camposed of the first year's revenue from the housing sale arounting total
W 5,072 million ( 634,000 X 8,000 ) to pay back to the central bank for the original housing fund total W 7,200 million and remaing fund
W 2,128 million ( 7,200 million 5,072 million ) is paid with annual
D) Net Present Value of total net cash flo~r between the aovernment housing agency and individual households by the project during 20 years has been made based on 14 % discount rate.
f

121
APPENDIX I
TABLE IV-6
CASH FIDW ANALYSIS OF C==Rn.- INVESiT"E' ON PARTIALLY INDUSTRIALIZED
HOUSING ACTIVITIES ( SCCIAL RETURN ANALYSIS )
Year
A) Initial Capital
Outlay
B) Revenue
.Central Bank Loan
Housing Sale Revenue
Interest Revenue
Amortization
Total Revenue
C) Costs
Debt Payment
Interest Cost
Amortization
Total Costs
Net Cash Flow
D) Present Value @14%
Total Net Present Value
0
-7,200
1
+7,200
5,072
170
142
159
142
3T
5,072
361 343
106 106
:57 .f ~449
2 3
( In Million Wbn )
4 5 6 7 8 9 10
147 136 124' 113
142 142 142 142
28-9 7 T66 25
102 91 79 68
142 142 142 142
244 23T T|E1 210
325 307 289
106 106 106
43- 41i 395
271
106
TI-I7
253 235 217 199
106 106 106 106
359 3T T23
,, -155 -148 -142 -135 -129 -122 -115 -108 -102 -95
-135 -113 -95 -79 -66 -55 -46 -37 ~-31 -25
-830
A) Irfitial Capital
APPENDIX I.
Outlay aroun is same as the TABLE IV-5 in
B) Annual revenue to the goverrment housing agency is coaputed fron the first year's housing sale to 8,COO household unitsSO
?
at the price W 634,000 per unit. ( 634,000 X 8,000 = q2Mmillion ) and interest revenue accrued for the principle anount W 2,128 millinn ( 266,000 X 8,000 T 2,128 million ) at the annual interest rate 8 % during the period of 15 years.

122
(TABLE IV-6 Continued)
11
Revenue
Interest Revenue
Anrization
Total Revenue
Costs
Interest Cost
Amortization
Total Costs
Net Cash Flow
Present Value @14%
12 13 14 15 16 17 18 19 20
56 45 34 23 11
142 142 142
I 1~7 179'
142
1~6i5
142
157
181 163 145 127
106 106 106 106
287 269~ 251 T3 3
89
-21
82
-17
75
-13
68
-10
109 91' 73 55
106 106 106 106
37
106
19
106
2 15 197 17-9 16il 14 125
62 197 179 161 143 125
-8 -24 -19 -15 -12 -9
C) Costs to the government housing agency that has been incurred
by the project is camuted by social cost of capital arount for W 2,128 million with the annual interest chargg 17% for the period of 20 years.
D) Net Present Value of total net cash flow between the governt housing agency and individual households by the project during
20 years has been based on 14 % discount rate.

123
APPENDIX 1
TABLE IV-8
C&SH FIl ALYSIS
ACIVITIES ON SITE LEaLIZATICN SCEM(
RMURN AVLYSIS )
TO SELF-HELP HOUSING
SUBSIDIZED
Year 0 1 2 3 4 5
( In Million on )
6 7 8 9 10
A) Initial Capital Outlay -3,169
B) Revenue
Fund From Central Bank
Revenue from Housing Site Sale
Interest Revenue
Amortization
Total Revenue
2,647
128 119
106 106
2,881 2Z5
C) Costs
Sites and Services
Interest Cost
Amortization
Total Costs
-1,569
32 30
80 80
117 11~6
111
106
T17
28
80
10~8
102 94
27 25
80 80
=-d'I 5
Net Cash Flow.
2,769
D) Present Value @ 14%
2,428
Total Net Present Value -1,569 -2,428 + 436 -41 = 1,254
85 77 68 60 52
106 106 106 106 106~ 106 106
~2dl 7O~0 19T 1E3 17-4 16~6 158
24 22 20 19 17
80 80 80 80 80
~ T.. TU6 ~,9 -97
A) Total arount of initial capital outlay requirement to build 8,000 dwelling units by the ccverrxment loan program to self-help housing activities on site legalization scheire is estimated total W 3,169 million including self-help loan W 200,000 per unit to 8,000 household units ( W 200,000 X 8,000 = 1,600,000,000 ) and W 1,569 million won . for site and services develotrent procrars. The estimated cost amunt for site and services procram has been derived fran the article written
by the city covernent official on calculation of basic threshold level of reeting 450,000 annual increase of city population. Specific breakdown of cost estimation excluding electic installment cost is
made as follcw.
Thtal Cost Per unit Cost
Water Supply
900,000,000 2,000 (900,000,000/450,000)
Roads ( PavEi-ent )14,152,500,000 31,450
5.798
(14,152,500,000/450,000)
Water Scwage
2,609,100,000 (2,609,100,000/450,000)
39,248
Source: Son, J.M. Potential and Liitation of Urban Develcprnent
'The Mn'icipal Prcblcs(Septe-ber 1971, volumeVi !;o.9,
Seoul, Yorea~ ) u-.1
6

124
1~
( TABLE IV-8 Continued )
1 12 13 14 -15 16 17 18 19 20
Revenue
Interest Revenue
Azmortization
'Dbtal Revenue
Costs
Interst Costs
.Ortization
43
106
Net Cash Flow
Present Value @14%
16
00
~9i!I
53
12
35
106
~T
26
106
13
17
106
T
106
115
9
14
80
~YT
47
10
12 11
80
92 ~~T
80
40
7
32
5
9
80
8
8
80
^8
26 -88
3 -1
80
6
8~6
-86
-9
4 3 2
80 80 -80
~8 ~3 ~2
-84 -83 -82
-8. -7 -6
,
'Ihe develorent cost per unit of household is estimhated total
W 196,240 ( 39,248 X 5 = 196,240 ) assuming that oneh household consisted of 5 persons. Consequently total develorent cost of site and services excluding electricity is about W 1,569 million
( 196,240 X 8,000 = 1,569 million ).
B) Revenue amunt W 2,647 million cares from the sale of 20 pyong
of the public land at the market price W 16,544 per pyong to
8,000 hQusehold units. (2,647 million = 16,544 X 20 X 8,000
Land price W 16,544 per pyong is derived from " Survey on Current
Land Prices" by Korean Board of Land Appraisal as of pril, 1971.
This particular land price is the average land price of medium residential areas in Sunadonggu in the inner city of Seoul where most of the households are built on the legalization prodedure.

125
Interest and amrtizaticn revenue account is made by loan repayment fro 8,000 household units for principle loan amount W 1,600 ri1lion ( 200,000 X 8,000 = 1,600 million ) at the annual interest rate 8 % for the period of 15 years.
C) Developrent cost of site and services to the city goverrment for the 8,000 hcusing sites is estirrated abcut W 1,569 million, which is the ar-cunt estimated by the official in planning board
of Seoul City. (
No.9 Seouj. Korea ) Since the goverrment in ass-umed to make theloan arrancerent to self-help housing activities for 8,000 units, total W 1,600 rillion secured from the central bank must
be repaid at annual interest rate 2% during the period of 20 years.
TABLE IV-9
CASH FIN ANALYSIS
ACTIVITIES ON
OF GC?=' LOAN PROGRAM
SITE LEGALIZATICN SCHEME
PEIURN ANALYSIS )
(
TO SELF-HELP HOUSING
SOCIAL
Year 0 1 2 3 4 5 6
( In Million Won )
7 8 9 10
A) Initial Capital Cutlay -3,169
*)
Revenue
Fund Fra Central Bank+3,169
Revenue fran Housing Site Sale 2,647
Interest Revenue
Amortization
Total Revenue
128 119
106 106
2,881 2I
111 102 94
106 106 106
17 Ol 82~0U
86 77
106 106 lI-i lii3
68 60
106 106 i~74 6T~6
C) costs
Sites and Services
Interest Cost
Amortization
Total Costs
-1,569
272 258
80 80
~352f n-8
244 231 217
80 80 80
T2T 31T
297
204 190 176 163
80 80 80 80
T8~4 TWI 56 243
Net Cash Flow
D) Present Value
2,529-113 -107-103 -97 -92 -87
2,217 -87 -72 -60 -50 -41 -34
Total Net Present Value -1,569 + 2,217 -526 = 122
0
-82 -77
-29 -23
52
106
151
149
80
29'
-71
-19

126
( TABLE IV-9 )
11 12 13 14 15 16 17 18 19 20
Bevenue
Interest Revenue
Anortization
Total Revenue
Costs
Interest Costs
Atortization
'Ibtal Cost
Net Cash Flow
Present Value @14%
43
106
149
34
106
36
106
17
106
9
106
140 13-2 !23 II5
136
80
21I
122 108 95 81 68
80 80 80 80 80
202 188 175 1T -145~
54
80
-134~
67 62
-16 .
-12
56
-10
52 46 -148 -134
8 -6 -18 -14
40.
80
27
80
-107~
13
80
~93~
-120 -107 -93
-11 -9 -7
A) Tbtal amount of
in APPENDIX 1. initial capital outaly is same as TABLE IV-8
B) Revenue account is made exactly same as TABLE IV-8 in APPENDIX 1.
'C) Development cost of site and services to the city governrent for
8,000 housing units is estirated about W 1,569 million as disclosed in TABLE IV-8 in APPEDDIX I explaination ( c ) . Hwever, the major difference in accounting for social return analysis is the interest rate difference between the subsidized interest rate 2 % and normal market interest rate 17 % for the principle loan amunt fram the central bank during the project years. In this case, 17 % of annual interest rate has been applied to calculate the social return fran
the government housing lcan activities against 2 % annual interest rate charged by the central bank.
D) Net present value of annual cash flow to the government housing agency
has been camputed by applying 14% of discount rate.

127
APPENDIX I
TABLE IV-10
CASH FIW ANALYSIS OF GOVfMNI' WAN POGRAM 1TO SELF-HELP HCUSING
ACTIVITIES TFROUGH LEGALIZATICN SCEIE BY RELOCTION
(SUBSIDIZED FIE7 2ADLYSIS )
( In Million Won
4 5 6 7 8 9. 10 Year
A) Initial Capital Outlay
0. ~1 2 3
-3,169
B) Revenue
Fund Fran Central Bank +3,169
Revenue fran Housing Site Sale
Interest Revenue
Amortization Revenue
Total Revenue
1,400
128
106
1,634
C) Costs
Sites and Services
Interest Cost
Amotization Payment
Total Cost
-1,569
32
80
119 111
106 106
225 I7
102 94 85
106 106 106
2018 200 9
77 68 60 52
106 106 106 106
183 174 - 166 158
30 28
80 80
110 -1II
27.
80
107
25 24
80 80
105 10~-4
22 20:
80 80
10_IOU~0
19
80
9ili
17
80
97I~
Net Cash Flow
Present Value @14%-
Total Net Present Value
1,522 115 109 101 95 87 81 74
1,334 88 73 63 49 39 32 25
-1,569+1,344 +436 -41 = 160
67 61
20 10
A) Total arount of initial capital outlay requirement to build
8,000 dwelling units by the government loan program to self
help housing activities by relocation schere is assumed to be same as on site legalization scheme.
B) Revenue amount W 1,400 million in the first year is derived fram the assTmotion that the aovenment is going to sell out
the public land to 8,000 household units at W 175,000 per unit.
Therefore, total revenue in the first year is W 1,400 mpillion,
( ). Besides revenue frcm housing site sale, the goverrent hcusirg agency is expocted to receive interest revenue and arrrtization frcm 8,000 households units which borrow-ed total principle loan amount W 1,600 million ( 200,000
X 8,000 ) at annual interest rate 8 % during the period of
20.years.

128 a.
( TABLE IV-10 continued )
11
A) Initial Capital
Outlay
B) Reirenue
12 '13 14 15 16 17 18 19 20
Interest Revenue
Amortization
Total Revenue
43 35 26 17 9
106 106 106 106 106
149 iT 132 2~3 115
C)Cost
Interst Cost
Amortization
Total Cost
Net Cash Flow
16
80
~96I
53
D) Present Value @14% 12
14
80
94
12
80
11
80
91
80
89
9 8
80 li8~
6
80 liii
4
80 li4
3
80 li3
47 40 32 26 -88 -86 -84 -83 -82
10 7 5 3 -11 .- 9 -8 -7 -6
2
80
82i
C) Develorent cost of site and services to the city governrent for the 8,000 housing sites is estirrated about W 1,569 million, which is the arcunt esti-ated by an official survey made by director of planning cordir.ation ccirittee in Seoul City goverrr-ent. ( Municinal Affairs, Septerber 1971 Volurn VI,
No.9 Secul, Korea ) Since the governrrent is assumed to make the financial loan arrangerent to self-help housing activities for 8,000 housing units, total W 1,600 million secured fron the central bank must be repaid at annual interest rate 2% during
the period of 20 years.
DI Net present value of annual cash flow to the goverrzrent housing agency has been ccaeuted by applying 14% of discount rate.

129
APPENDIX I
TABLE V- 11
CASH FI1 ANLSSIS OF GCZER2T LOAN PROGPAM TO SELF-HELP
ACI'IVITIES 'IEROUGH LEGALIZATION SCED: BY PELCATION
(SOCIAL PZ4IN ANALYSIS )
HCUSING
Year 0
A) Initial Capital Outlay -3,169
1 2
( In Million Won )
3 4 5 6 7 8 9 10
B) Revenue
Fund Frcm Central Eank +3,169
Revenue fro.
Ecusing Site Sale
Interest Revene
Arortizaticn Revenue
Total Revenue
1,400
128
106
1,634
119 111
106 106
25 217
102 94 86 77 68
106 106 106 106 106
2 202 192 T T
60
106
16T6
52
106
C) Costs
Sites ard Services
Interest Cost
Amortizaticn Paent
Tota' Cost
-1,569
272 258 244
80 80 80
3752 338 324
231 217 204 190 176 163
80 80 80 80 80 80
311297 28' 270 256 243
1,282-113-107 -103 -97 -92 -87 -82 -77
Net Cash Flow
D) Present Value ?14%
Total Net Present Value
1,124
-1,569 +1,124 940 = 1,385
149
80
229
-71
A) Total amunt of initial capital outlay requirerent to build
8,000 dwelling units by the government loan program to self help housinq activities by relocaticn scheme is assured to
be same as -the Ccverrment loan program to self-help housing activities on site leaalization scheme.
B) Revenue a-cun.t
W 1,400 million in the first year is derived from the assumction that the goverr.ent is going to sell out the public landi to 3,000 household units at W 175,000 per unit.
Therefore, total revenue in the first year is W 1,400 million
( 175,COO X 8,000 ). Besides revenue from housing site, the
'goverrrent agency is expected to receive interest and amrtization revenue from 8,000 household units which borrowed total principle loan arount W 1,600 rillion ( 200,000 X 8,000
at annual interest rate 8% during the period of 20 years.

130
I,
.
(TABLE IV-ll continued )
1
Initial Capital
Revenue
Interest Revenue
Amortization
Total Revenue
Costs
Interest Costs
Amortization
Tota. Cost
Net Cash Flow
Present Value 014%
43
106
149
136
80
-67
-16
12 13 14 15 16
34
106
140
26
106
1I
17 9
106 106
T 115
122
80
207
-62
-12
108
80
T
-56
-10
17 18 19 20
95
80
I'5
81 68
80 80
6T 148
-52 .6
-46 -448
-8 -6 -18
54 40'. 27 18
80 80 80 80
1T 10 10-7 93
-134 -120 -107 -93
:..-14 -11 - 9 -7
C Development cost of site and services to the city government for the 8,000 hcusing sites is estimated about W 1,569 million, which is the amount estimated by an official survey made by director of plarnir.g cordination cc.nittee in Seoul City government.
( Minicipal Affairs, Senterber 1971 Vclumn VI, No.9 Seoul, Korea).
Since the goverrnent is assur.ed to :rake the financial loan arrangement to self-help hcusing activities fcr 8,000 housing units, total W 1,6CO million secured frcm the central bank must be repaid at arnual interest rate 17 % ( normal market rate of
-the ccarmercial loan as of January, 1972 ) during the period of
20 years.
D) Net present value of annual cash flow to the government housing agency has been ccputed by applying 14% of discount rate during the project years.

131
APPENDIX I
ILr : et
'
Major Interest Rates on Loans and Discounts of the Bank of Korea
Unit, per cent per ar,-n
Effectie
- -d date
Advancos to gov't
L.:ans for:
01 -2
~ al
-.- oi-- n~j
O, er bills
IC-~ Ex.;Im- merc al pert. I
I j ports suppbers of U-S offshhre procure-
I
Expzrt prep. of ojr;. & marine .
kri AL.CI*1 o-j
Rice i
Agri.& fishery en i member
0 zij
Prime
9 t enter- Others ment prod. projects prises
Discounts for:
Prime enterp. I Others rises
1969. 6. 1
1970., 4. I
6. 18
12. 3
1971. 6. 28
1972. 1. 17
2.0
2.0
2.0
2.0
2.C
26.0 3.5 5.0
24.0 3.5 23.5
24.0 3.5
23.0 3.5
3.5
3.'
2.0
20.0- 3.5 6.5
17,Q\ 3.5 6.5
8. 3 2.0
1) 19-4
91A 4 A-ii
.
2) 1970:4 1--J 26 & 4-01 Ap
13.0 3.5 -
-r3.5
3.5
3.5
3.5
3.5
3.5
3.5
'5.0
5.0
3.5
3.5
3.5
3.5
-
4.0
4.0
4.0
4.1'
4.0
4.0
4.0
8.0
8.0
8.0
26.0
26.0
-
-
-
22.0
21.0
-
-
26.0 21.0
8.0
8.0
8.0 -
-
-
2.0
24.0
19.
-
-
-
19.0
16.0
13.0
6.0 12.0 14.0 9.0 11.0
1)
Effective fro-'Sept. 4. 1969.
2) Effective fro Jon 26. 1970.
Seeres The Sank
Korea.
I

APPENDIX II
CCMPUER PIIGPAMMES FOR ESTIMATION CF HCUSING NEEDS AND G1I0SS NATICAL PRODCTS
CCCCCCCCCC 222Z222222 2222222222 6666L66666
CCCCCCCCCCC~ 2222222222262 2222222222 -66tbtbtoo66
CC CC 22 22 22 22 64
Cc
CC
22
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66
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22 b66o6666666
11
111
1111
I1
11
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Cc
Cc cc cc cc :2
22
22
22 22
22
22
666600666t6
66
66
66
(31
11
11
11
CCCCCCCCCCCC 222722222222 2Z22222222Z2 66e66666 1111111
C-CCCCCCCCC 2222222222Z22222222222 00666666L6111111.1111
__4
44.4
4444
44 44
44 44
44
44444444444
44444444444
44
44 f.4
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8.538888888
88
8
8 S
83 as
88
8838888
88ad8_8 _
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8p zcs
88 so
83
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8ead888#848
-- FFFFtFFFFF
FtFPFFFFFFFFF
FF
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PFFFFFFF
PFPFFFF
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TTTTT TTTTTTT
TTTTTTTTTTTT
TT
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PF
FF
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3033h 3 66M66er FGfFFFFFFFFrF
0300000033 6666666066f6 FFFFFFFFFFF
00
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00 66
00 tc6
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0C, 6666tLaobooon FFFFFFFF
OC 66 66 FF
00 60 66 FF
6FF______ e-Ce55d0-66648666 ~ PF
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O030031 3300o0
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I

132 ivr
APPENDIX II: MOT=UIF PPOGRA-'TYE FOR FSTIYATICtN OF THE NATION'S HOUSINGK
NEEDS DUF..1:G FOTJIMH{ FIVI YE\PS BONMMVE
DVIOP= PLAUIG
PERIOD~ ( 1977 1981)
.qI ESLStvd _AVLySIS_ PRC:;*D-oiFLR FC~jo?'I STS. AUGUST '.1Un :3p P AGE-1 OF OUTPUT FOR TFSV..
PROGR AM. RAs't AUT-JR: WILLI4.4 J. fA.3JCHEL. nikvVA: ugNIVLKSITY RELEC.EZ VE*S1N 2.7. 22 FESKUAkY 1972.,~ P33 01360-376
___________________
ISi;66O301
____________S:i; cZ
-SO33
____SJOF
20.2O.TEST
Dt YEIRLY l~b7:
_
I - I - :CE IKE T=TI ME.
SP L I 13:;CLS 14T
I SN,. o 1 15:.3EFJN.E Tr~.PREDICTEOD;
IS'N33.3Cs
_________________iS..ooo
ISN.;CCC7
IS4e000ca-
!
END;
'L I1:L C.
11 i_15;OEFINE -N.js &
*SO!TcD p~fNr oi
_______
ESS
PRORA: PAPS
S
A- TNJ1 -v3A
FOR E
ILLIA1 .1.
TUE S
MAWWAAD~
1973. 1
AELAE
P. v.
PA GE. OUTPUT FOR TEST_
__
WTASiON 2.7, -22 FEBAUALY 1972o FOR OSI3A-7
Tiii FCLLCuzt1G LOAD 114STRUCTICNS wERE PACCESSEO IN TE UATA SECTION:
LGO 1 51 SAPPLEs
LOAD I S3 SAPPLEm
1- 10 LENGTms72
1. 10 LFN.TeZ
TN
NCH

133
YS ISPRCR
P~nr.GA143 RAPE AUYMOF:- b.ILLIA4 J5. gnADiCtEL9 H.Ab~ifAs JNLVEDLTV
:~7!12 P.- PAGE. 3 0 _.uTPijT FCG..TfST____
R.ELtASE: VEAS10N 2.7. 22 FEBRUARY 197z. FOR OS/360-37c
EQUATION I. REGRESSICh OF T
TNE HETm~oOO F ESTIMATION1 *AS OLS
WARIABLE
FOR CBSERVATIONS
COEFFICIENT
I TO
S TO.-EA.OR t0.
T
INTERCEPT. 39Ste.
102.14
STO.-EfR2~a 23.3
3.761
T-AIOw 169.598
T( 81
27.155....,00)
P-vALUE PARTIAL-R,
OE AEES OF FREEOIJAM
5u4l 2E SUIsAA'S OF QFSIDUALS. 9337.
1A CF ESTI.MAT5- I1b7.
__________________________________________
-STAa0OARD
ER.sLR nF ESTIMqATEs.?'4.16 _-
CflEFFICIENT OF 0ETFRm1'.tTI% (R-SQI=3.9893
yf
_
737..10Q P-VALU;:- 0.003,)00 _________________________________________
N4ULITiP CCRRELAIIC4 CO3EFFICIE*%? IR.o.9'946
&A;PTE%9S P-SQ=-i.qa7Z
iSTAN.DARO EksOR AS PEWCF%.f' 94
P RA -Na __0.755eS_______________________________________
Wru8lfN-%ATSON STATISTIC- 0.51
?VRI ili iic-cn-COV R i C AT P I X F TTiE EFicIENTS
9-14olS.
--0.6667E-01
-O.&6"?E-GI 0.4667
---
F-
-
_____

134
'I
.ESSIOM 'ANALYSIS PROGRA* Frp ECCN4omISTS. TUESoiY. AUGUST 14. 1973. 1:32 P.M. PAGE 4 O- OUTPUT FOR TEST
0)OGAAMi RAPE AUTWIR. .LLZAM J. RAUUCI-EL. HA.VAka ut.1VtP.ITV RELEASE: VERSiON 2.7. 22 FEB4jARY 1972. FOR S/360-370
UbSCEV-n ACT
UAL VALUE ESTATrEC VALut RTSIDUAL
YEAetq68
4193.0
VEA4969
4276.0
VEA1970
4338.0
VEAI971
YFa-1972
YEAkIT73
YEA41974
YEAA1975
TEAR1976
4428.C
4540.0
4640.0
-764.C
4892.0
5033.0
41L62.4
42t4.6
43t6.7
4468.8
4171.a
4-73.L
4775.3
'4617.4
4979.5-
2 .53e
13.44.
-23.691
-4.~30
-30.q,70
-?7.1
-11.24@
14.61Z
53.973
0iSEVE0..
.
.
.
.
.
.
.ji
MINIMUMs 4060.3
+
S.
EST£MATEO0+
MAXIMUM.
5C33.0
+
.
*.
____ __ ___ ____ __

I..
135
-ALP-55 LgfrA LY-SLS-AQGPA" FP. -ECCJ!4I STS. TUESD.1YLAU~oVST 14', 1j-3..:3-P.A~._PA & 5 OF OUTPUT-f0OtJESt
PrPn-ljFA%: RAPE AUTHORi: uILLIh'4 J. RADUCIEL, MHA.-AA utIV6'(SITY RELEaSE: VEASiO% 2.7. 22 FEBRUARY iqiz.*
FaQ. OS/360-370
EVUATEO4 2. RGESSION CF N011
Tol METhiGO 0~ SSiMATICh WAS OLS
V85.IAdLE
-Fro cisER-ATICNS
COEFFICIENT
I TO
STG.-EAftJR
10.
TI as P-VALUE PARTIAL-t
INTERCEPTS 51351. STC.-E RRCRw 1'.2 T-;AT~fl. 332.769
DEGREES OF FRESOks p
Suit CF SOtja,.ES
V~'.I*1CL OF
51-3L
433.7
140
_St.NL2AJ ELRCr. , ESTI1:4fTE. ?-
COEFFICIENd OF wErEa"I.-TL'
__
(.-OI2.5
Flk 1.
&Is1
2761.26m P-VALL~w %.CCZ:C3_-
MUL'TIPLE CU RFLAT'2N COEFFICI!:*i (Ri.O.i-i86 cooRECTE-0 :MASj otQ',7
-STA*4L:a.D EAKLM AS PeRCENT CF
CUfkBINA=TSuN STATISTIC. 1.26
MEAia0.38589-
VAR tjAP.CE- CVhRA CET mATa Ii-O -CEFFI S
-Go667E-01 0.4667
_____________ - -- - --- I

136
!6A':SSIC%
P
AFKILYStS f.,pAA4: &APE
PROGAAM Flb' ECCNO4!STS.
S 1LL14 J. RAOiU-EL*
TUESOAY* AUSUST it4VA.O
34.
U.lVE.%S1TT
1q.73. 1:32
RLtASS:
P.0.
VA
0ICe
6
2.7s
,F OUTPUT FOR TEST_
22 FEBA 'Y 1972t FOR OS/360-370 s~1R ali ACTLAU
., LUE EST IA TE0 VALUE
RESIDUAL
OSSERVED.0 ESTIMATED'.
EAS:I1967r
1EA19069
YEA31970 yEL~l9T7
YEA1q72
VyEnZ~l7
YEAA1974
YVTC1975
YEAq1976
55.
5491.0
5574.0 - 13
5690.0
5614.0
M54.,;
6C69.0
62f7.3
6349.0
517;.
53C8.1
54~6.o
-- 5565.2
5653.7
5Pf2.3
5 4' .
6079.4
62C~7.9
6 336.5
-A4-54,."2
44.364
A.61 2
-3.7272
-lb.cla
-10.3c
-0.'.CZ97
.
12.546
-
-
-
.*
C
C c
C
"--
-
-N
PECRESS12 NAALYSIS PR CRAM Eli.CCNQMIS
15.-T.LSAYzA..GUST._,L9.T3.
P43GRAM: RAPE AUTHOR! UILLIA4 J. RACuChEL. MARVAw.D j'IwVE.SITY
_:32 P.PAGE 7 .
OuTPUT.F04.-TES___
A;.iASE:
ViSIO'. 2.7. 22 FEbKUARY 1972. FDA 0S/36C-37T to r.0. 0012
Wo. 0313
.. 0014
'Q.
0015
TM
5081.66
5183.20
5265.95
53ae.0
5490.22
NON
6465 .Co
6543.54
6722 .09
6850.63
6979.18
T
11.0C00
12.0300
13.0COe
14.0300
15.0000
REGREj:SSI3N ANALYSIS PR'CPAIG FOP ECCNOMISTS.
TUESDAY. AUG~UST 19739 1:32ZP.M. PAGE a OF OUTPUT FOR TEST
P
AAMZRAP5 A
LL
0A J. AACUC.E. .
RARVAqo
ugIVESI1y iCELLASE: UERS1CN 2.7.AA2 FEBRUA'tY 1972. F:3A OS360370
$UMMA
T
Ori~E~G ss E SA FOLS C~FA
1 in ot_5 a169.6
R*2$E
0.9993
I
NCM
~
*
RO*2/SF
O5.9971
1.26
102.1
T
126.5
52.55 obfs
3958.
CCNSTANT
5061.
332.8

137
APPENDIX II: COMPUrER PROGRAMME FOR ESTIMATION OF GROSS NATIONAL
PRODUCTS DURING THE FOURTH FIVE YEARS ECONOMIC DEVELPMENT
PLANNING PERIOD ( 1977 1981 )
Y= ab t log y = log a + log b
Log y = 5.61 + .11 t
1: r. rrr
''7 rt, I* x7\;' 1.,c p.. * p A. e7' a- 1
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138
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