Korea's Economic Miracle: The Crucial Role of Japan

Castley, Robert. Korea's Economic Miracle: The Crucial Role of Japan. London: MacMillan Press, Ltd., 1997. 396 pp.

Korea's economic success in recent decades is well known and requires no introduction. Instead, what the world should learn more about is how this economic dynamo came into being and how it operates. For some Third World countries, South Korea represents a potential model to emulate. Emerging out of a colonial backwater and a devastating war, the new Korean republic rebuilt itself. After decades of hard work, South Korea emerged by the 1980s as a developed country. If South Korea can accomplish this, perhaps languishing nations such as Burma or Tanzania could do the same in the next century. South Koreans take justifiable pride in their nation's achievement, but not all of Korea's economic miracle is indigenous in origin as much of its technology and capital originated from abroad. While American influences in Korea's postwar development are deep and well known, Japan's role is obscured but still important.

Robert Castley's Korea's Economic Miracle: The Role of Japan is a detailed account of the Korean-Japanese economic relationship. Castley, who is a British economist, has produced a wealth of data on the subject. KoreanJapanese relations are tempestuous and have long been a sensitive issue between the two nations, more particularly Korea. Throughout its history, Japan has invaded Korea periodically and retained it as a colony from 1910 to 1945. During that time, the Japanese attempted to wipe out the Korean language and culture, thereby creating a vast reservoir of hatred and hostility. Nonetheless, Japan's size and proximity to Korea ensured that elements of the relationship would continue after 1945. Korea was thoroughly exploited by Japan and not left in good economic health. Further complicating matters was the postwar division of the Korean peninsula which severely distorted the economy. Most economic assets were destroyed during the Korean War (1950-1953). Afterwards, Korea required capital from somewhere and as Japan's own economy revived, it was able to fill a large portion of that need.

South Korea possesses a triangular relationship with Japan and the United States. American interest in Korea stems mainly from the Korean War and is predominantly geopolitical and military. Americans want a secure Korea to contain Communism and protect Japan. The Americans disarmed the Japanese and diverted them to peaceful pursuits. As a consequence, Japanese capital was freed from massive military expenditures and it reentered South Korea. Over time, the Japanese came to dominate certain industries such as textiles. Initially, the Japanese perceived South Korea as a colonial asset providing raw materials, but once South Korean manufactured goods began to appear on the international market, there was some surprise in Tokyo. The former colonial subjects revealed they possessed their own industry.

For Korean nationalists, the fact Japan played a major role in creating their economic miracle might be difficult and painful to handle. Korea's colonial era is still within living memory and Koreans continue to chafe at Japanese mistreatment of the prewar era as well as discrimination against their countrymen living in Japan. Tokyo's reluctance to admit past wrongs until very recently has further aggravated the situation. Nonetheless, if Japan has played a major role in Korea's postwar economic development, that must be recognized and studied. Korea and Japan potentially form an economic unit due to geography and shared cultural heritage. Since they are both developed countries, in a union of equals, Korea and Japan could be rather formidable. Korea now produces much of its own technology and a combination of Korean and Japanese technological establishments could place the two countries in a commanding position.

As Korea developed, her market base steadily expanded. No longer primarily concerned with Japan and the United States, Koreans sought customers in Europe and other parts of Asia. Indeed, Korean products became serious competitors to their Japanese counterparts throughout the world. But in fairness, some of Korea's industry was more recent than Japan's. There might come a day when another country with more up-to-date industry slices into South Korea's business.

This book was evidently written before the worst parts of the Asian economic crisis struck South Korea and Japan. Growing unemployment, failing companies, the erosion of lifetime employment and general insecurity regarding the future cloud Korea's achievements. While there has been hope for South Korea, Japan remains almost hopelessly enmeshed in recession. South Koreans have examined their economic problems and developed some solutions for them. Japan, on the other hand, has not learned very much from its mistakes and is increasingly under the thumb of American corporations. Perhaps in the Twenty First Century, Korea will teach the Japanese how to develop and modernize their economy.