The World Bank In Republic of Korea

Summary

The Republic of Korea has achieved remarkable success in recent decades in combining rapid economic growth with significant poverty reduction, with real gross domestic product (GDP) growing on average by 5.7% annually between 1980 and 2023. Korea’s gross national income (GNI) per capita increased rapidly from US$67 in the early 1950s to US$33,745 in 2023. Korea was the first former aid recipient to become a member of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) in 2010,

Korea is a key development partner of the World Bank Group (WBG) and an important contributor (since 1977) to the International Development Association (IDA), the World Bank’s fund that supports the world’s poorest countries. Today Korea’s experience offers lessons for developing countries in sustainable development, provision of infrastructure and better services to improve the lives of the people, and how to transition to a dynamic knowledge economy.

In line with its enhanced international role, the Korean government entered into a co-financing framework agreement with the World Bank and created multiple trust funds. The World Bank Group Korea Office was established in 2013 and is currently in its third Phase (FY22-24) under the banner of a global center for innovation and technology for sustainable development. The World Bank Group Korea office partnered with the Korea Development Institute on a flagship report to analyze how Korea was able to achieve sustained growth and a successful transition from a middle-to a high-income economy by leveraging innovation and technology for development. 

Last updated: April 2024

World Bank Governor

Each member country is represented by a Board of Governors, who are the ultimate policymakers at the World Bank. Generally, the governors are member countries' ministers of finance, the governor of its central bank, or a senior official of similar rank. The governor for Korea is Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance.

World Bank Executive Director

The governor delegates responsibility for overseeing the day-to-day business of Korea’s interests at the World Bank to the Executive Director (ED) for Australia, Cambodia, Kiribati, Republic of Korea, Republic of Marshall Islands, Federated State of Micronesia, Mongolia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tuvalu, and Vanuatu.

Il Young Park is the ED. Kerstin Wijeyewardene is the Alternate ED.

Last updated: April 2024

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 World 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 World 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 128 credit or loan projects in Korea, disbursing funds totaling US$15 billion.

The World 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), 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 shifted to human capital 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 the 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 joint efforts and projects with Korean partners that aim to help developing countries enhance financial sector management; promote investment in green growth; share expertise 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.

In December 2013, the World Bank Group opened an office in Songdo, Incheon, and a liaison office in Seoul. The current vision is to establish the WBG Korea Office as a global center for innovation and technology for sustainable development.

This global center is organized into two pillars.

1. Digital innovation, which aims to assist developing countries in areas such as promotion of innovative policies, data governance, digital finance, cybersecurity readiness within the financial sector, emerging technologies such as AI, blockchain, and edge computing, and digital solutions in education and health.
2. Innovative green growth, expanding programs in renewable green energy transition, marine plastics, smart cities, and carbon pricing. The Korea Office 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.

Finally, mobilizing private sector investment and supporting Korean investors to address green transition and digitalization is a major focus for the Bank Group’s International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

Last updated: April 2024