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

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 1973 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.