Economies in Japan and Korea were significantly affected by the Second World War and the Korean War. The governments had to design and implement strategies to rebuild the nations. Some scholars believe that these strategies were similar in both Japan and Korea. On the other hand, many specialists distinguish between the developmental models applied by these countries. Although certain aspects were quite similar, the countries chose different models. The main goals of this paper are to analyze the strategies and policies implemented in postwar Japan and Korea and highlight their differences.
Japan underwent several developmental stages after the war. The first stage included the postwar reconstruction. It lasted for about twenty years from 1945 to the mid-1960s. The main objectives of the major sectors were to catch up with European and North American economies (Vogel 1). The government applied a strategy that allowed coordinating collective actions. Although the strategy was very effective, there were several serious obstacles.
The major problem was the lack of savings. However, the government could establish a system that accumulated and adequately distributed funds among the main industries, which contributed to the fast development of the economy (Johnson 138). Another strategy was implemented to address microeconomic problems. The government created a new market system that was based on long-term relationships among the key economic decision-makers. These mechanisms were based on holdings that united businesses and different financial institutions (Lincoln 28). These strategies in combination with robust public policies considerably accelerated the first stage of development.
The second stage might be called the transition era. This stage lasted for about fifteen years. Japan caught up with the most developed economies in the world. However, at this stage, companies and the household sector required a new model of interaction that provided more independence. A more competitive environment was necessary to continue the economic development (Lincoln 35). Companies had to deal with their risks autonomously.
However, it was very difficult to accomplish as the previous system had become strong and inflexible. Government interventions were still too significant. This period was characterized by the lack of investment opportunities, ineffective corporate governance, and speculation. Macroeconomic strategies that were applied to handle the appreciation of the yen only worsened the situation. This process resulted in the stock and real estate markets crash in the early 1990s.
Nowadays, Japan is in the third stage. It began with struggles to cope with the negative consequences of the second stage. However, new systems of innovation became very effective and enhanced the development of science and technology. Close collaboration between businesses, universities, and research institutions was the key factor that improved technology performance (Edgington 1). Many scholars acknowledged the effectiveness of a new knowledge-based Japanese economy model. As Japan did not have many natural resources, policymakers focused on creating knowledge centers to enhance the development of the economy and society.
This period was characterized by large investments in education, communication, and transportation. Japanese professors studied the achievements of Western economies and adopted the most effective and significant ones. Subsequently, the developmental model of Japan has become more similar to models applied in Europe and North America with an emphasis on start-ups and formal licensing.
In the early 1950s, South Korea’s industrial base was destroyed. However, the country reached the industrialization peak by the 1960s, but wages and technologies were much lower than in Japan (Campbell 1). The development of the country was based on the development of a science and technology capacity. The government established and run many research institutions. The private sector also began to enhance its research capacity.
The period of the Third Republic (1963-1972) was characterized by the most significant policy decisions. The government applied a strategy that was focused on the development of educational institutions and the adoption of modern technologies. One of the first steps was establishing the Ministry of Science and Technology (MOST). The government of the United States provided an initial capital and guidance to help to create the Korean Institute of Science and Technology (KIST). By 1970, KIST began to carry out research operations.
During the period of the Fourth Republic (1972-1980), most decisions were made by the Economic Planning Board (EBP) and MOST. Although the private sector’s role became less influential, and it barely participated in decision-making processes, it began to establish its research and development organizations. Subsequently, this strategy resulted in creating several important sectors: informational and nuclear technology, biotech, and nanotech.
During the next period, the Fifth Republic (1980-1987), the country became one of the most significant players in export and technology power. The state-supported even greater funding for national research projects. The period of the Sixth Republic was marked by a transition to democracy. The government also focused on new programs aimed at reaching the level of the most developed countries by 2000. Although certain goals were accomplished, the overall results still were not satisfactory.
Therefore, Korea’s development model was mostly based on technological development. However, the country did not have enough resources, which was the main factor that determined its position on the world stage. Nonetheless, Korea is still focused on the further development of IT and biotech to create an even more viable economy.
Differences and Similarities
Some specialists insist that Japan and Korea chose similar ways of the development of their economies in a postwar period. This opinion is partially true. One of the main aspects of the development in both countries was a focus on modern technologies and science. Korean and Japanese scientists and engineers adapted Western innovations and used them to develop their technologies. In both countries, such a strategy was promoted and supported by the governments. Another similar factor was the promotion of hard work culture. People in both countries had to work for 50-60 hours a week. Finally, the development of economies in both countries was supported by the United States. These countries still have close diplomatic and economic relationships.
However, all these similarities do not prove that Korea and Japan applied the same strategies. There were certain differences in internal and external circumstances and policies that the countries used. One of the main differences was that the Korean state was authoritative during almost all stages of the development. Meanwhile, Japan started applying principles of democracy right after the end of the Second World War. The transition towards democracy in Korea took place only in the 1990s.
Another distinguishing factor is that the Japanese government created a competitive environment for business. On the other hand, Korea paid the most attention to research, science, and technology.
However, in my opinion, the most significant factor that determined the differences in the developmental models of these countries was the wars’ aftermaths. During the Second World War, many Japanese cities were devastated. The loss of human life and economical harm were great. More than 2 million people were killed, and the level of industrial production considerably decreased, by approximately 24 percent (“Research Starters”). These devastating results caused hyperinflation.
Korea was also severely damaged by the Second World War. Approximately 5.5 million Koreans worked for the Japanese military industry by the end of the war (“Korea”). During the Pacific War, Koreans fought for Japan all cross the Pacific. Except for those who worked in the military industry, all Koreans males had to enlist in the Japanese army. According to official statistics, approximately 400 thousand Koreans were killed during the war (“Research Starters”). Moreover, about 2 million Koreans lived in Japan by the end of the war. By 1946, about 1.2 million returned to Korea, but more than 500 thousand stayed in Japan (“Korea”). However, the results of the Korean War were even more devastating for the country. Almost every city was destroyed in both North and South Koreas and over a million Korean citizens were killed.
Postwar Japan and Korea went through similar stages. However, they used different strategies to accomplish their goals. The authoritative Korean government mostly focused on the development of technology and science. However, democratic Japan applied more diverse policies. Also, the different consequences of the two wars had a significant impact on the developmental models of both countries. Therefore, the idea that postwar Korea and Japan used the same policies is only partly true, and more detailed analysis shows the main distinguishing characteristics of the two models.
Campbell, Joel. “Building an IT Economy: South Korean Science and Technology Policy.” Issues in Technology Innovation, no. 19. 2012, pp. 1-9.
Edgington, David. “The Japanese Innovation System: University-Industry Linkages, Small Firms and Regional Technology Clusters.” Prometheus, vol. 26, no. 1, 2008, pp. 1-19.
Johnson, Chalmers. “Political Institutions and Economic Performance: The Government-Business Relationship in Japan, South Korea, and Taiwan.” The Political Economy of The New East Asian Industrialism, edited by Frederic Deyo, 1987, pp. 136-164.
“Korea.” World War II Database. Web.
Lincoln, Edward J. Arthritic Japan: the slow pace of economic reform. Vol. 81. Brookings Institution Press, 2004.
“Research Starters: Worldwide Deaths in World War II.” The National WWII Museum. Web.
Vogel, Ezra. The Four Little Dragons: The Spread of Industrialization in East Asia. Vol. 3. Harvard University Press, 1991.