The Republic of Korea became a member of the World Bank in 1955 and of the International Development Association (IDA), the Bank’s arm to assist the poorest countries, in 1961. The Bank began its operations in Korea in 1962 when it completed the first Country Economic Report and approved an IDA credit of US$17 million to expand and improve the Korean National Railroad.
By 1973, Korea’s economy had progressed sufficiently to require no further IDA assistance. The Bank then supported Korea through low interest loans, policy advice and technical assistance from IBRD, the International Bank for Reconstruction and Development.
Over the years, from IDA and IBRD, the Bank completed 133 credit or loan projects in Korea, disbursing funds totaling $15 billion.
The Bank’s work in Korea evolved to match the country’s changing needs. In the early years, the Bank focused on lending for agriculture, irrigation, rural development, small and medium industry, transportation such as roads, ports, and railways, regional and urban development, and education. Investment in agriculture increased substantially in the 1970s, and then declined in the 1980s as the economy shifted to a greater emphasis on industrial development. Priorities in educational investment evolved as the economy demanded more skilled labor and research and development (R&D) for science and technology.
Later, social infrastructure such as urban water supply, sanitation, sewerage, and environment became a high priority as the country’s industrial sector and energy and transportation infrastructures became more developed. During this period, heavy emphasis was placed on achieving greater social equity through a fair distribution of income and wealth.
During the financial crisis of the late 1990s, the World Bank supported the Government of Korea’s reform programs in financial sector restructuring, corporate sector and labor market reforms and social safety nets through a series of adjustment loans, worth a total of $7 billion.
Currently, the World Bank Group has a series of partnerships and joint projects with Korean partners designed to enhance financial sector management, promote investment in green infrastructure and renewable energy, share know-how in information communications technology and knowledge sharing, as well as assist fragile and conflict-affected states.
For example, the Korea-World Bank Partnership Facility, launched in 2012, provides $90 million over three years to finance global and regional projects to support economic development and co-financing investments at the country level. The emphasis is on generating and transferring development best practices, with low and lower middle income countries eligible for funding under the new facility.
The World Bank Group will open a new main office and a liaison office in Korea in December, 2013. The new offices will support a broad range of development partnership opportunities with a focus on promoting best practices, by leveraging the Bank Group’s knowledge and convening power and Korea’s expertise in areas such as economic development policy, information communications technology, infrastructure and the financial sector.
In addition to the World Bank’s IBRD and IDA, the new World Bank Group office will also represent the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).