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, rivalling 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.

JEL Codes: D24, E32, L11, O47

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

26 August 2026     Paper Number POIDWP149

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