In 1955, The Republic of Korea became a member of the International Bank for Reconstruction and Development (IBRD), the part of the World Bank that lends to governments of middle-income and creditworthy low-income countries. In 1961, Korea joined the International Development Association (IDA), the Bank’s arm to assist the poorest countries.
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.
Over the years, from IDA and IBRD, the Bank completed 133 credit or loan projects in Korea, disbursing funds totaling US$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 on human capital accumulation 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, and sewerage – and its environmental impact became a high priority as the country’s industrial sector and its energy and transportation infrastructure 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 through a series of adjustment loans, worth a total of US$7 billion. These programs ranged from financial sector restructuring to reforms in corporate sector and labor market reforms as well as in social safety nets. The reforms helped make the country’s economic model more sustainable and resilient to economic downturns.
Currently, the World Bank Group hosts a range of partnerships and joint projects with Korean partners to help developing countries enhance financial sector management; promote investment in green growth innovation – in energy, the environment, and urban development/land management; share know-how in information communication technology; and assist fragile and conflict-affected states.
For example, the Korea-World Bank Partnership Facility, launched in 2012, provides US$90 million over three years and a replenishment of US$140 million from FY20 through FY23 to finance global and regional projects that 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.
In December 2013, the World Bank Group opened a new main office in Songdo, Incheon and a liaison office in Seoul. From 2014 to 2018, the offices supported a broad range of development partnership opportunities with a focus on promoting best practices. This was achieved by leveraging the Bank Group’s knowledge and convening power as well as Korea’s expertise in areas such as green growth, financial innovation, private sector development, and technology and innovation.
The Korea office has continued to expand, with a greater emphasis on supporting the operational work across sectors. For example, the green growth innovation program, jointly with the Korea Green Growth Trust Fund (KGGTF), built an operational and analytical program to support the green growth agenda in developing countries.
In April 2018, the World Bank and the government of Korea agreed to a three-year extension of the World Bank Group Korea Office Trust Fund Agreement. While continuing to solidify the knowledge partnership, the Korea office has expanded its operational support on innovation and technology and aimed to broaden and strengthen partnerships with the Korean partners. A focus on mobilizing private sector investment will also be pursued through the Bank Group’s International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
With continued progress, the World Bank Group Korea office will play a bridging role in facilitating the partnership between Korea and the World Bank Group as well as partners around the world.
Last Updated: May 29, 2020