Korean reunification selected the 38th parallel as a dividing line. Japanese troops to the North of this line were to surrender to the Soviet Union and troops to the South of this line would surrender to the United States. This was not originally intended to result in a long-lasting partition, but Cold War politics resulted in the establishment of two separate governments in the two zones in 1948 and rising tensions prevented cooperation. The desire of many Koreans for a peaceful unification was dashed when the Korean War broke out in 1950. In June 1950, troops from North Korea invaded South Korea.
Impact of the Korean War on the economy of the United States Impact of the Korean War on the economy of the United States The impact of the Korean War on the Economy of the United States refers to the ways in which the American economy was affected by the Korean experience from 1950 to 1953. While the cost of the Korean War was less significant than that of World War II, it still changed the structure of the American growth as a result of its financing. The Korean War boosted GDP growth through government spending, which in turn constrained investment and consumption. While taxes were raised significantly to finance the war,