Postwar Japan and Korea

Korea and Japan relied on state-led industrialization to achieve economic development in the past. Industrialization helped economic development by creating jobs and facilitating the delivery of products and services (Akyüz, HaJoon, and Richard 6-8). The policy also entrenched and reinforced East Asia's socioeconomic hierarchy, reducing social cohesion. It also sparked the East Asian war. Although industrialisation aided economic growth, significant policies in both countries included private sector dynamism, sound economic development plans, and favorable external variables.

A good generational economic policy boosts structural development and attracts direct investment. However, the policy might encourage activities such as restriction of importation and exportation through taxes. On the other hand, the use of private sector policies promotes investment in the industry and creates employment opportunities. Nonetheless, this policy hinders domestic investment especially in the public industries. On the other hand, favorable external context facilitated technology and labor development and improve importation and exportation of products and services. The shortcoming of this policy is difficult for the countries to correct balance-of-payment. Therefore, despite the fact that industrialization enhanced economic growth, the primary determinants of economic growth in both countries include dynamism of the private sector, economic development policies, and favorable external factors.

State-Led Industrialization

The Pros of State-Led Industrialization

Industrialization is one of the strategies used in the development of East Asia. It helped to build many linkages between many countries. This is practical with the example of the steel industry that helped Japan to develop the shipping and automobile companies. Akyüz, Ha‐Joon, and Richard assert that East Asia even exported the “surplus from their production to earn their countries income” (6). The steel manufacturers subsequently facilitated other related industries that manufacture its related products.

The industries also created a lot of higher value-added employment. The workers in Japan and Korea were able to earn physical capital as their employers got quality profits from industrialization, which helped in raising the per capita income of the countries. According to Lee, Japan’s GDP increases subsequently “due to state-led industrialization” (5). This implies that the country was able to improve the social welfare of its people.

The Cons of State-Led Industrialization

The industrialization reinforced and strengthened the social hierarchy in the East Asia communities such as Japan and Korea. In most cases, the steel companies favored men compared to women. For example, the men earned higher wages compared to women. According to Hood, the men got the supervisory roles since the “managers believed they were always superior” to women (860). The powerful families like the Zaibatsu got an active control over the economy thanks to industrialization. They used the obedience of the low earners in the society to make more profit as they remained impoverished. In the end, the government incentivized to concentrate the wealth in the hands of few rich.

As industrialization grew, and the demand was not increasing at the same rate, they had to embark on conquests. They applied an offensive technique to improve their demand ratio. Military and economic expansion became co-related in that there was “military aggression to stay influential” in the region (Hood 861). Also, the bombing of Pearl Harbor in addition to the Hiroshima and Nagasaki affected people’s organization. Lee argued that life loss was not necessary as long as “they continued to make a profit” (76). The Russo-Japanese war is among the best illustrations of the way countries fought during the industrial period to gain dominance.

State-led industrialization failed to ensure that Japan and Korea achieved its economic development due to trade restriction and introduction of social strata.

Sound Generation Economic Policies

The Pros of Sound Generation Economic Policies

The sound generation economic policies helped both Korea and Japan to improve their structural developments. The effective policies that assisted the countries in achieving economic development was the one which directly influences the supply and cost of an investment fund (Lee 7-8). The system enabled the countries to improve trade policies, introducing subsidies, and procurement. Lee asserts that supply and cost of investment fund, well-managed competition policies, and “regulatory involvement contributed to economic growth” (7). As such, the countries were capable of controlling business activities within their territories and international market.

Korea and Japan also attracted investment, which enabled them to produce adequate resources to satisfy the ever increasing people’s demand. Carnoy and Derek provide that economic policies enabled the “government to boost and regulate” industrial power for high quality production (56). In other words, the economic policies helped in the balancing of investing companies and restricting production level as a control measure. The government had the power to initiate every investment and adopt the regulation strategy to ensure the public receive adequate goods and resources. Any shortage in the economy would affect the propensity to save since people use their money to buy goods and services. The supply investment economic policy enabled the countries to produce quality outputs (Carnoy and Derek 36). The country achieves high output by mobilization of resources from different places within the country. For example, in South Korea, the government used technology to mobilize, process, and distribute resources to people at the right time.

The Cons of Sound Generation Economic Policies

On the contrary, some economic policies have improper restrictive aspects like inspections and regulations of investments. The policies usually advocate for public investments due to political involvement and infringe the private sector. Through this, the economic policies and the benefits associated with them are limited to few investors. As such, private investors are reluctant to invest in the home country. Akyüz, Ha‐Joon, and Richard assert that restrictive economic policies “slowdown innovative developments” since people lack the freedom to implement their ideas (12).

Economic policy controls the aspects of production. That is, it sometimes involves rigorous selection processes with the upper level of bureaucrats. When a more power is centralized and more scrutiny attach to it, “it reduces the aggregate production due to fear of most investors” (Campbell 18). The investment processes follow complicated steps and often costly. Overall, sound generation of economic development enabled Japan and Korea to achieve progress since it promoted direct investment and distribute resources to people.

Dynamism in Private Sector

The Pros of Dynamism in Private Sector

The economies of East Asia enjoy enthusiastic support, which accompanies increased investment rates of the private sector. This resulted from the emphasis they employed on promoting private companies investments as an engine for growth. The governments of Korea, for example, give opportunities to both small and large scale investors and help them grow through joint ventures (Evans, Haggard, and Kaufman 391). The impact on more investment is evident as they pull the economy forward. They encourage investments through direct subsidies and preferential allocation of credit to promote the private investors. Evans, Haggard, and Kaufman further provide that the industry also improves quality since they “want to attract more customers” (392). This is because of increased competition and tendency of the private sector to employ highly specialized personnel since they are not socially oriented as the public. Although political interference reduces the effects, the industry cooperates with government, the cooperation between the government and them to reduce the impacts.

The private provide employment opportunities in East Asia, which leads to improved human capital resources. The private investors provide both direct and indirect employment to the East Asia countries. Johnson noted that private sector “tends to offer higher salaries” compared to what the public offer (35). In Japan, they practice lifetime employment involving advocating for corporate reliance on strictly internal labor. The system opposes outside hiring and any weak market development for midcareer job was changing. This type of employment policy ensures security for the citizens working as blue-collars and the managerial statutes. As a result, there is an increase in the nation’s Gross Domestic Product. Apart from paying better salaries, the private investors pay “massive taxes cumulatively” to the government (Lee 6). The taxes help the government to complete projects such as roads and power supply to the people.

The Con of Dynamism in Private Sector

On the contrary, private investments in East Asia hinder the domestic investment. Private investors tend to scoop the available opportunities in most countries. In some instances, they can “lead to inflation when they monopolize” a certain sector and gain full control (Eads and Kozo 428). This can even shift demand; result in a decline in production, and final sales of public enterprises, as most consumers believe they produce high quality. Some even repatriate revenues to their mother countries depriving their hosts of profits. Ideally, the dynamism of private sector was a crucial in achieving economic development in both Japan and Korea since it increased employment level and increase investment though it discouraged growth in public sector.

Favorable External Context

The Pros of Favorable External Context

Korea has benefited from the assistance of its neighbors like Turkey in different ways. They were able to import both labor and technology to aid their development. From the early 1960s, Korea was outsourcing “both specialized and non-specialized human capital” from Turkey (Matthews and John 80). During those years, the primary exports were the initial source of foreign exchange in Korea. The development was in motion even long before, they became independent. On the technology sector, they equally imported Turkey-base. They even sent their citizens overseas to learn to engineer in an effort to ease technological use. This process allows them to import capital and intermediate goods. Matthews and John also noted that East Asia countries do not have a “large quantity of natural resources” which might help them develop their industrial capacity (91). Therefore, they rely on other countries for imports of capital and agricultural goods. The growth of investment will be faster if the imports of such goods increase equally.

Both Korea and Japan have experienced economic growth due to “exportation and importation of products and services” from the international market (Eads and Kozo 432). This reveals that having external markets increases the aggregate demand resulting in a fast economic growth. Nonetheless, there is an addition to an increase in quality in the technologically based sector where they specialize. The availability of international market forces the country to specialize in some areas to export quality products.

The Con of Favorable External Context

However, Korea and Japan have a challenge of overcoming the balance-of-payments constraint due to international participation. Exports are never sufficient since in most cases, the earning from import and exports are never equal. As such, Korea and Japan owe other countries such as USA making it difficult to complete their projects in time. Akyüz, Ha‐Joon and Richard noted that the earnings from exports are not “a direct reflection of the investment and growth” of a country (8). In other words, there are economic factors, which affect the GDP of a country. By and large, favorable external context promotes economic development since it promotes the movement of goods and services and importation of technology. However, it increases debt level due to borrowing.

Question 2

During the postwar in Japan and Korea, the countries did not follow the primary developmental model. That is, they followed different political and economical to achieve economic development. They differed concerning government administrative and production. The pros of political economic development are that it promotes economic development through laws and protection of domestic agricultural sector. The con of the policy is that it slows down the implementation of regulations due to long procedures in the government. The pros of the economic development model are that it promotes expansion of production and specialization. The con of economic model is that it results to brain drain due to importation of human capital.

The Pros and Cons of Political Development Model

The Korean system of government comprises of a strong presidency, who they elect for one five-year-term by direct popular vote. This was effective from 1988 when they achieved independence. Their national assembly comprises of 224 elected members and 75 other appointed members totaling it to 299 candidates who rules for a four-year term. The national assembly in Japan makes laws such as the development of liberal capitalistic policies (Lee 78). This helps the country to achieve economic growth since the government promotes hard work. On the foreign affairs sector, the political system of Korea supports direct external investment, which promotes international investments.

The president chooses a minister who is responsible for trade. In fact, the president does not interfere with the operation of ministries. Evans, Haggard, and Kaufman assert that the trade minister protects their agricultural sectors making them one of the “largest fishing countries with 15% contribution to GDP” (410). This contributes to the economic development since protection of domestic industries increases employment and eliminates unfair competition. On the other hand, the political system of Japan does not promote presidency system rather the government is in the form of parliament. The parliament is with an “emperor as the symbol of state” (Johnson 14). Their legislature is divided into two; the House of Councilors and the House of Representatives both elected by a two-branched legislature called National Diet. Despite the complex system of government, they are members of various international organizations, both business and political. Also, the House of Representative ensures that industries implement government policies within a given time frame to facilitate quick economic development.

The Pros and Con of Economic Development Model

The Koreans had made an incredible economic growth by the end of 1953 wars since they based their production on specialization. Specialization enabled people to be efficient. Carnoy and Derek argue that although the GDP was low in the 1950s, they made “fast progress to match the standards” of other developed countries (61).The total export averaged at 144 billion dollars in 1999. The government promoted specialization through the provision of direct credit, import restricts sponsorship of primary industries, and a specific and active labor market to help improve their production index. Some of the Korean export includes steel, ship building, and clothing as they import textiles and grains.

On the other hand, Japan has its production based on a “hard work ethic making them the second most powerful technological country” worldwide (Campbell 50). They had a guarantee of lifetime employment to their laborers, which helped maximize their produce and maintain their workforce. They protect their agricultural sector by subsidizing production and ensuring the farmers receive high prices for their products. Despite the 1997-1998 financial crises, they had “exported goods worth 413 billion dollars” since people worked hard and embraced technology (Campbell 52). Some of their greatest destinations are USA, Taiwan, China, and Hong Kong. Therefore, Japan and Korea followed different development strategies to achieve economic growth.

Economic development model encourages importation and exportation of human capital between Korea, Japan, and USA. Although it promotes economic development by “importing new ideas or collaborating with other countries” to initiate projects, it results to brain drain in the long-run (Johnson 16). That is, importation of human capital from one country to another leave one country with shortage of talented employees. As such, the country cannot support its human resource demand in future.

Despite the differences, both countries produce electronic products, machinery and equipment production, automobile, textile, and office equipment. They helped each other to train youths to specialize in areas such as technology. Also, both the countries promote industrialization, which improves their technological sectors and increases their exports proportionately to production.


Although state-led industrialization brought economic development such increase in employment in Korea and Japan, it was short-term. The long-term determinants of economic growth in both countries include dynamism of the private sector, economic development policies, and favorable external factors. For example, economic policies enabled both countries to control business activities within their territories and international market. Also, economic policies enabled the states to control production. The countries encouraged investments through direct subsidies and preferential allocation of credit to promote the private investors.

The industry and states aimed at creating more employment and increase the country’s GDP. Therefore, they required uniting with other nations to realize greater economic development. The countries adopted different primary developmental to achieve economic development unlike what people believed. The political and economic strategies were different. The national assembly in Japan makes laws such as the development of liberal capitalistic policies whereas Korea has the ministers to facilitate decision making. Nonetheless, the countries specialize in different capital goods. However, they share technology between them, which promote human development.

Works Cited

Akyüz, Yilmaz, Ha‐Joon Chang, & Richard Kozul‐Wright."New Perspectives on East Asian Development." The Journal of Development Studies vol.34 no. 6 (1998): pp. 4-36.Print.

Campbell, Joel. "Building an IT Economy: South Korean Science and Technology Policy." Issues in Technology Innovation, Washington, DC: Brookings (2012). Print.

Carnoy, Martin, & Derek Shearer.Economic Democracy: The Challenge of the 1980s. New York: Routledge, 2016. Print.

Eads, C. George, & Kozo Yamamura."The Future of Industrial Policy." The Political Economy of Japan vol.1 (1987): pp. 423-468. Print.

Evans, S. Peter, & Haggard R. Kaufman. "The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change." The State: Critical Concepts (London and New York: Routledge) (1993): pp. 386-423. Print.

Hood, J. Steven. "The Myth of Asian-Style Democracy." Asian Survey vol.38 no. 9 (1998): pp. 853-866.

Johnson, Chalmers. "Political Institutions and Economic Performance: The Government-Business Relationship in Japan, South Korea, and Taiwan." The political economy of the new Asian industrialism, vol.136 (1987). Print.

Lee, Keun. "How Can Korea Be A Role Model for Catch-Up Development? A ‘capability-based’ view." Achieving Development Success: Strategies and Lessons from the Developing World, vol. 25 (2013). Print.

Lee, Sophia Seung-Yoon. "Institutional Legacy of State Corporatism in De-Industrial Labour Markets: A Comparative Study of Japan, South Korea and Taiwan." Socio-Economic Reviewvol.14 no.1 (2016): pp. 73-95. Print.

Matthews, Trevor, & John Ravenhill. Strategic Trade Policy: The East Asian Experience. Dept. of International Relations, Research School of Pacific Studies, Australian National University, 1993. Print.

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