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Development Overview
Official Aid Production

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Aid in the USAMGIK period

Aid in the USAMGIK Period (1945 to 1948)
 
International aid began to flow into Korea under the United States Army Military Government in Korea (USAMGIK), which came into being after Korea’s liberation from Japanese colonial rule. As a provisional government set up for the purpose of, according to the Cairo Declaration, ensuring Korea’s autonomy “in due course,” the USAMGIK began to provide aid to meet the pressing need for economic and social stability in the country it governed.[1]

Much of the aid provided by the USAMGIK under Government Appropriations for Relief in Occupied Areas (GARIOA) was intended for Korea’s economic growth. This type of aid also extended to include loans from the Office of the Foreign Liquidation Commissioner (OFLC) after the USAMGIK period.

GARIOA aid, the first-ever type of foreign aid Korea received, sought to provide emergency relief[2] for occupied areas plagued with food shortages, epidemics etc. in the forms of goods and resources. The goods provided as part of aid commonly included food, clothing, medicines, fuels, and other petrochemical products. Economic Rehabilitation in Occupied Areas (EROA) aid, on the other hand, mainly focused on providing the raw materials—such as iron ores, crude oil, cotton, building materials, and chemicals—that were needed to expedite the economic rehabilitation of a given occupied area.[3]

Between 1945 and 1948, Korea received GARIOA and EROA aid worth USD 409.4 million in total, USD 170 million or so of which was provided in the form of grains and other types of food. Almost 44 percent of all grains consumed in Korea in 1947 were grains provided as aid. Considering that another USD 92.7 million was provided in GARIOA aid in 1949 even after the USAMGIK period ended, Korea received GARIOA aid worth USD 502.1 million in total.

The OFLC loan refers to the long-term and low-interest loan (at 2.5 percent per annum, to be repaid in installments over 20 years) provided for Korea in February 1947 for the purchase of left-over facilities, marine machinery and equipment, clothing, automotive parts, medicines, and other goods previously owned by the US Navy—a USD 24.9 million or so value. It was the first public loan Korea ever took out. Because there was no independent Korean government at the time the loan was granted, the USAMGIK received the loan first and then transferred it to the Korean government later.
 
<American Aid in the USAMGIK Period>
(Unit: USD 1,000,000
 

  GARIOA-EROA OFLC Total
  1945 1946 1947 1948 Subtotal    
Food 3.6 21.6 77.6 67.7 170.5 (41.6) 0.1 170.6 (39.3)
Agricultural goods - 7 31.4 38.69 77.0 (18.8) - 77.0 (17.7)
Clothing - 1.7 25.8 14.1 41.6 (10.2) 2.6 44.2 (10.2)
Solid fuels 1.3 7.7 9 15.3 33.3 (8.1) - 33.3 (7.7)
Petrochemicals - 4.5 5.2 10.2 19.9 (4.9) 0.4 20.3 (4.7)
Railway equipment - 1.6 10.5 0.8 13.0 (3.2) 0.2 13.2 (3.0)
Communications equipment - 0.3 2.2 4.5 7.0 (1.7) 0.9 7.9 (1.8)
Building materials - 0.4 2.9 3.3 6.6 (1.6) 1.1 7.7 (1.8)
Medicines - 0.1 2.1 3.3 5.5 (1.4) 2.1 7.6 (1.8)
Automotive parts - 2.3 0.6 2.6 5.4 (1.3) 3.1 8.5 (2.0)
Raw materials - 0.1 3.8 8.1 12.0 (2.9) 0.1 12.1 (2.8)
Other - 2.2 4.3 11.1 17.6 (4.3) 14.3 31.9 (7.4)
Total 4.9 49.5 175.4 179.6 409.4 (100) 24.9 434.3 (100)

Note: Figures in parentheses represent the respective shares (%).
Source: Hong Seongyu, Korean Economy and American Aid, 1961, p. 49.
 
The newly created Korean government repaid the principal and interest of this loan not in cash, but by giving the United States the buildings and land in Korea that its army required.[4] The left-over goods, worth USD 116 million at the time, that the US Army left behind free of charge for Korea when it returned home in June 1946 also count as part of the American aid that Korea received during this period.[5] Including this form of aid as well, the total value of aid that Korea received in the USAMGIK period, from 1945 to 1948, amounts to USD 550.3 million.

Although the United Nations Relief and Reconstruction Agency (UNRRA) was set up and began to provide Korea with emergency relief and support for economic rehabilitation around this time, there are no extant records on the UNRRA aid provided during this period.[6]
 

 
[1] Lee Daegeun, Korean Economy in the 1950s after Liberation, SERI, May 2002, p. 68.
[2] Gu Yongseo, “ICA Aid and the Korean Economy,” Journal of Local Public Administration, vol. 6, no. 8, 1957, p. 50.
[3] Lee, 2002, p. 69.
[4] The Shiksan Bank Monthly Review, Investigation Department, Korea Shiksan Bank, vol. 8, no. 1, 1953, p. 14.
[5] Lee, 2002, p. 70.
[6] Seo Namwon, “Managing Foreign Aid for Korea,” ASEAN Studies, vol. 6, no. 2, Asiatic Research Institute, Korea University, 1963, p. 31.

Source: Korea International Cooperation Agency. 2004. Study on Development Aid and Cooperation for South Korea: Size, Scope and Exemplary Effects. Seoul.