A commonly held view early in the COVID-19 pandemic period was that countries faced a painful but inescapable tradeoff: They could perform well on the health front—by suppressing the virus and thereby avoiding a horrific toll of hospitalizations and deaths—or they could perform well on the economic front—by keeping establishments open and thereby avoiding mass joblessness and huge reductions in output. They could not do well on both fronts—or so it was generally believed. 

The experience of South Korea suggests that it was, in fact, possible to do exceedingly well on the health front while incurring only a moderate cost on the economic front. In contrast, the experience of the United States suggests that it was possible to do poorly on the health front and yet still suffer terrible economic damage. To be sure, the natural circumstances of each country contributed to these relative outcomes, but the choices of policymakers and their respective populaces mattered, too. The stakes were enormous: South Korea performed well; the United States did not.

This Policy Brief first provides an overview of the course of the disease in each country. Section 2 reviews the health outcomes. Section 3 describes the impact of the pandemic on key economic indicators, including real GDP, employment and unemployment, and inflation. Section 4 examines the policy choices that contributed to the outcomes in each country. The key factor contributing to the success of South Korea was the effectiveness of the public health measures it implemented, including aggressive testing, contact tracing, quarantining, and graduated treatment of people with COVID-19. The last section summarizes the Policy Brief’s main findings and identifies the near-term priorities for both countries.