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Geopolitics and Export Miracles: Firm-Level Evidence from U.S. War Procurement in Korea

Author

Listed:
  • Philipp Barteska
  • Oliver Kim
  • Nathan Lane
  • Seung Joo Lee

Abstract

How did geopolitics shape East Asia's economic development? We find that U.S. military procurement during the Vietnam War — a shock which peaked at nearly 3% of South Korean GDP, rivaling the Marshall Plan — catalyzed Korea's export-led industrialization. We construct a new firm-level dataset that matches Korean export records with U.S. procurement contracts awarded between 1965 and 1974 to estimate the causal impact of winning a contract on export performance. A firm winning its first contract raises its likelihood of exporting by 14.7 percentage points and its export value by 40%. Treated firms are more likely to expand into third-country markets and export manufacturing products — and these gains are unlikely to come from business stealing. Finally, we find that U.S. procurement and domestic industrial policy were likely complementary. Our findings reveal a neglected channel through which Cold War geopolitics shaped the East Asian economic miracle.

Suggested Citation

  • Philipp Barteska & Oliver Kim & Nathan Lane & Seung Joo Lee, 2026. "Geopolitics and Export Miracles: Firm-Level Evidence from U.S. War Procurement in Korea," CESifo Working Paper Series 12926, CESifo.
    • Handle: RePEc:ces:ceswps:_12926
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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