The Republic of Korea became a member of the International Bank for Reconstruction and Development (IBRD) in 1955 and joined the International Development Association (IDA) 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. Over the years, from IDA and IBRD, the Bank completed 118 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.
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 2013, has provided US$90 million over three years and a replenishment of US$150 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.
The WBG Korea Office is also collaborating with the Korea Development Institute (KDI) on a flagship report to analyze how Korea was able to achieve sustained growth and successfully transition from a middle to a high-income economy, by leveraging innovation and technology.
In December 2013, the World Bank Group opened a new head office in Songdo, Incheon, and a liaison office in Seoul. Phase 1 (FY15-18) of the office 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. Phase 2 (FY19-21) of the WBG Korea Office was an expansion phase that built on Phase 1 and focused on four pillars: knowledge sharing, operational support, building partnership, and mobilizing Korean investment.
Phase 3 (FY22-24) of the WBG Korea Office Trust Fund started July 1, 2021, with the vision to establish the WBG Korea office as a global center for innovation and technology for sustainable development. It will further advance the integration of operational support and knowledge and strengthen the Korea office’s role in anchoring the overall WBG-Korea relationship.
This global center is organized into two pillars.
1) Disruptive digital innovation, which aims to assist developing countries in areas such as cybersecurity, promotion of innovative policies, data governance, and digital finance, including on cybersecurity readiness within the financial sector. Digital technology is a key cross cutting issue for developing countries in IDA19 and the upcoming IDA20.
2) Innovative green growth, expanding programs in climate change, marine plastics, renewable-smart-efficient green energy transition, and smart cities. The Global Center published an interactive e-book last year on how technology and innovation are being applied in the clean, green, and blue economies in Korea. Additionally, the Center is collaborating with the Korea Green Growth Trust Fund (KGGTF) to identify and implement the most innovative, technical, and operational solutions to specific development challenges in our client countries.
Bank teams working in these two areas collaborate and draw on support from the ITS Technology and Innovation Lab (ITSTI) and the Open Learning Campus (OLC). The Lab assists teams on understanding emerging technologies and how they can be operationalized for Bank projects. The OLC team, through the Korea Program for Operational Knowledge, provides capacity building courses for Bank clients on operational knowledge directly applicable to country level projects.
Finally, 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).
Last Updated: Mar 11, 2022