Scholars are deeply concerned about the apparent growth in the economies of many East Asian nations over the previous 30 years. Many research have been conducted to determine how countries such as Japan and South Korea have been able to advance economically at such a rapid pace.As Morley (2015) presents, since 1960, Asia has grown economically faster compared to any other continent in the world (p.42). While the developments have not occurred uniformly across Asia, many countries within the continent have demonstrated the significant power of progress. Eastern Asia, for example, has realized a faster rate of development compared to their western counterparts with China and Japan realizing more growth (Beeson 2014, p. 573). Such developments have called for more studies on the factors that influenced the growth of East Asia and a comparison of the growth experience of different countries. This aim of this paper is to compare and examine development of the East Asian economies of Japan and South Korea during the 1990s. To bring out the subject further, a comparison and a contrast in the development of Japan and South Korea will be evaluated.
Similarities between South Korea’s and Japan’s Development Strategy
Japan and South Korea share a vast historical, political and economic ties. According to Aoki (2013), a consideration of Japan’s and South Korea’s development experiences brings up three important characteristics that stand out for the two nations (p.653). One important characteristic presented is the role played by the state with regards to the establishment of a vibrant economy. As presented by Jamali, Karam, and Blowfield a development-oriented state is characterized by three important features (2015, p.32). The state must first prioritize the concept of economic development as its priority agenda. Such a conviction ensures that the authority is able to navigate the competitive market in search of adequate resources for its people. Commitment to private property and market is also another key aspect of a dedicated state. The fact that the market is controlled by state managers who develop policies that govern the sale of goods calls for the need of a development-oriented force. Third, a development-oriented state enhances coordination amongst its diverse departments in order to ensure that they are all goal oriented. The presented model according to Raymo et al. is the East Asian development model and forms that core reasons behind the development of Japan and South Korea (2015, p.480).
Growth for both Japan and Korea was informed through a rapidly sustained initiative between 1960 and 1990. While the initiative is not common in many developing countries, the two nations recognized the need to balance between income and growth (Van Mook 2015, p.65). According to Lockwood (2015) the success by Japan and South Korea was informed by their urge to get things right (p.87). Such included the formulation of strong policies that touched on every sector that needed improvement. The programs entailed guidelines to increase transparency in the banking sector, improvements in the education system in order to ensure adequate skilled labor and agricultural policies that stressed change in productivity mechanisms. Through the policies, Japan and Korea increased physical and human capital per worker thus ensuring sufficient allocation. Provision of a stable macroeconomic environment ensured that both countries promoted global competition. Such a move championed for investors to get a platform to operate in the countries. By controlling the banking systems, the nations were able to take charge of their financing capability in order to keep the deficits within the limits dictated by their ability to finance them without affecting the nation’s macroeconomy. The high growth amongst the nations especially Japan, however, made the financing limits quite high. South Korea, on the other hand, was able to curb the growth in the financing limits because of high demand for the financial assets. By ensuring that the public deficits are in line with the measures of prudent financing, the countries were able to avoid inflation that would have afflicted their economies.
Many countries as presented by Hall and Henry (2014) are bound to experience macroeconomic shock (p.543). South Korea and Japan, however, have over time been able to maintain their microeconomic stability through various measures such as tight fiscal policy. Public investment in education during the growth of Japan and South Korea also received a lot of support. Through the allocation of immense resources in schools, East Asia’s economic powerhouses had an enrollment of more than 70% in the high school. According to Gereffi and Wyman (2014) many East Asian countries to a large extent have opted for sector-specific industrial guidelines (p.854). The best example is Japan’s heavy industry promotion regulations that later got adopted in South Korea. The regulation is composed of policies that include subsidies for capital and import protection measures. As Schaefer, A., Pardo, and Roloff (2014) argue, the market policies in East Asia’s countries emphasized on the competitive determination of wages and flexibility (p.651). Governments specifically for Japan and South Korea altered the industrial infrastructure in order to ensure that they accelerated change in productivity.
Contrast between South Korea’s and Japan’s Development Strategy
South Korea’s strong economic sustainability plan can be dated back to 1961. After an attempted coup d’etat, President Park Chung took a stand to establish a self-reliant economy in South Korea (Ahn, Woo and Lee 2015, p. 78). While he was prepared to continue with an old economic plan that the country had adopted, Park also recognized the need to adopt the Japanese model as Japan had made much progress compared to them (p.85). The Japanese developmental model unlike South Korea’s basically entailed the state utilizing and directing all the enterprises in order to serve the national economic plans. Japan’s economic growth was larger compared to South Korea basically because of its size, natural resources, and population. Technology for Japan also comprised a bigger part of their economic development. Currently, it is considered the second most powerful nation in the world technologically (Yamada and Kawakami 2014, p. 98). Through their Keiretsu economy, Japan emphasized the coordination amongst the suppliers, distributors and the manufacturers. Using the recovery plan that had been developed by the United States, Japan also restricted imports and provided soft loans to the people. Their economic decisions were thus shaped by the need to ensure that the citizens were provided with the power to economically develop themselves. With security support from Washington, Japan received an environment that was quite conducive for economic development. As Danninger and Steinberg (2015) presents, Japan’s growth was realized in three stages (p.91). The initial stage was controlled by the need for priority in the production sector. Such stressed the importance of increasing the output of steel and coal. The second stage dealt the production of consumer products for sale to the external markets.
During its initial development, Japan largely relied on copying the American products. Their talent for inventing things, however, intensified their economic status due to inventions of systems such as the transistor radio. Besides their aggressive economic plan, Japan suffered a setback in 1974 after an oil embargo. The war amongst the Arabs in the Middle East led to lack of supplies to the countries that were seen to be supporting Israel. Japan however through their strong economic policies navigated the problems and sustained their programs during the 1970s (Dent 2013, p.87).
While the development initiatives amongst Japan and South Korea during their initial stages were basically financed by the United States, there were significant differences in the economic plans of the two East Asia’s giants. Unlike Japan, South Korea largely relied on the export-led industrialization. The people were thus encouraged to make shoes and garments that were later exported. Loan provision was however directed to the developing industries and thus the people rarely received monetary support from the government unlike their Japanese counterparts did. While Japan had highly advanced technologically, South Korea lacked sufficient expertise to drive their country with regard to the technological perspective. Japan thus moved in as partners and enabled them to improve in the sector.
Analysis of Growth in Japan and South Korea
According to Thomas and Postlethwaite (2014), a study on East Asia’s success has demonstrated immense difficulties across countries and time (p.900). While countries such as Japan and South Korea experienced political difficulties, they were able to develop at a very high rate. The secret to success for the countries, therefore, did not entirely rely on the policies they adopted but in the determination to join the regional economy. International integration through investment and trade formed the bigger picture in the adoption and initiation of development especially for Japan. The social, political and economic model presented by East Asia thus serves an important role if it were to be implemented by the developing countries. Despite the challenges that faced the East Asian countries, their success was largely attributed the adoption of an authoritarian industrial concept that championed against economic instability and poverty. Technology plays a crucial role in the development of any nation. Through the adoption of a strong technological plan, Japan realized immense growth technologically. This later informed their need to aid South Korea in coming up with programs that would advance their technological status.
Conclusion
In conclusion, the East Asian countries have made significant economic development over years. Despite the fact that such an achievement have been regularly described as a miracle, it is a fact that it has come through sufficient planning. While the development experience of Japan and South Korea differ, it has been presented that there is a significant relationship between the two countries. The growth of any nation relies on the initiation of an appropriate plan that does not only focus on improving the infrastructure of a nation but the economic status of the citizens as well. Such can be evident through Japan’s business model that promoted the need for the need for innovation and business engagements amongst its people. As presented in the discussion above, a partnership amongst nations is crucial in the establishment of a strong economy. Without the support by the United States, South Korea, and Japan might not have realized much success.
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