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Korean Economic Development

Korea's recovery from the war in the 1950s and its economic growth in the 1960s came largely from foreign economic assistance. Such aid saved Seoul from having to devote scarce foreign exchange to the import of food and other necessary goods, such as cement. This aid also freed South Korea from the burden of heavy international debts during the initial phase of growth, enabling the government to allocate credit in accordance with planning goals. From 1953 to 1974, when grant assistance dwindled until it was negligible, South Korea received some $4 billion in grant aid, with about $3 billion received before 1968, forming an average of 60 percent of all investment in South Korea. The dependence on foreign aid was reduced with the institution of new policies. Between 1966 and 1974, foreign assistance constituted about 4.5 percent of GNP and less than 20 percent of all investment. The United States was the largest single aid contributor before 1965, but after that it was Japan and other international sponsors that played a larger role. Other forms of aid were also offered, as in the form of loans at concessionary rates of interest. In the mid-1960s, the economy grew so rapidly that the U.S. decided to phase out its aid program. South Korea then became increasingly integrated into the international capital market (Savada and Shaw, 1990, 183-184).

South Korea made itself so dependent on foreign trade that it was


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Korean Economic Development. (1969, December 31). In Retrieved 11:25, October 24, 2014, from
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