The South Korea Story: From War-Torn State to Strong American Partner

October 6, 2011 By Mark Green

Development assistance to South Korea has transformed the country from a shattered, war-torn country into an economic powerhouse and crucial friend for the United States. In the wake of World War II and the Korean War, South Korea was a devastated country with uncertain prospects for economic advancement. With development assistance led by the U.S., South Korea has become a model for development, one of America’s most important trade partners, and a crucial national security ally.


Just five decades ago, South Korea had roughly the same GDP as Ghana. However, in the 20-year period from 1953 to 1973, the U.S. provided $6 billion in loans and assistance to South Korea that revitalized its economy. With America as the single largest donor until 1965, South Korea embraced a Western-style economic approach that reflected the influence of U.S. leadership. Its economy flourished. By the early 1970s, South Korea no longer needed any assistance. Then by 1977, South Korea began contributing the World Bank’s International Development Association. Today, it has already repaid 98% of its World Bank loans. Interestingly, South Korea has in turn begun to help other developing countries rise as it did.

Bottom Line: Development Assistance Produced a Great Economic Partner

South Korea has the world’s 13th largest economy and is the 7th largest trading partner for the United States. Agricultural goods, manufactured goods, and technology are among the most popular goods traded between the two countries. U.S. exports to South Korea have doubled since 1990 to nearly $39 billion in 2010. With two-way trade equaling $65.7 billion annually, South Korea will continue to be a booming market for American goods. When the KORUS Free Trade Agreement is finally ratified U.S. exports will grow even larger and countless American jobs will be created.

Bottom Line: Development Assistance Produced a Great Strategic Ally

U.S. engagement with South Korea is a vital part of our national security. While U.S. civilian leadership supported South Korea’s transformation into a prosperous, democratic partner, the U.S. military helped keep South Korea and the rest of the world safe. South Korea is one of the United States’ closest military allies with whom the U.S. military trains and coordinates to maintain preparedness on issues of global security. The insecurity of South Korea’s northern neighbor threatens global security and both the United States and South Korea benefit from the relationship between the U.S. and South Korean military cooperation.

Such assistance is not only the right thing to do; it’s also the smart thing to do. Done right, development assistance not only helps developing countries rise, but forges friendships that help America continue to lead.

South Korea’s GDP: 1960-2009

South Korea’s GDP: 1960-2009

*Sources include The World Bank, U.S. State Department, USAID, CIA World Factbook