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

Philipp Barteska, Oliver Kim, Nathan Lane and Seung Joo Lee

No 12926, CESifo Working Paper Series from CESifo

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.

Keywords: export promotion; firm development; East Asian Miracle; procurement; geoeconomics (search for similar items in EconPapers)
JEL-codes: F14 F35 H56 N45 O14 O25 (search for similar items in EconPapers)
Date: 2026
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