International Political Economy of East Asia

International Political Economy of East Asia


Academics who analyze the economic success that Japan and Korea saw in the decades after World War II have a tendency to place an excessive amount of emphasis on the role that state-led industrialization played in these economies, specifically the influence that industrial policies had.

Indeed, industrial strategy can, in fact, account for their remarkable rate of economic growth. Some scholars put forward that factors, such as the sound general economic policies both governments implemented, the dynamic of each country’s respective private sector, and the favorable external context that both countries enjoyed, can be used to explain the rapid growth that both nations have experienced in recent years.


However, this section disagrees with this position, supporting evidence that Japan and Korea are where they are today largely due to government and state-led initiatives relating to industrialization, partnerships with the US, and other forms of strategies that support the growth of industries in the two nations. 


The political framework that is in place at the beginning of the development phase has a significant influence on the growth strategy that is ultimately selected. Because South Korea had just recently emerged from a long period of Japanese occupation (1910-1948), which culminated in a war that severed the country’s link with North Korea, the leadership and public of the country aspired to achieve economic self-sufficiency as well as increased political autonomy (Seth, 2013). As a consequence of this, South Korea started its economy after the Korean War with the intention of implementing import substitution, focusing on local markets that developed daily as North Korean refugees flooded into the nation (Haggard, Kim, & Moon, 1991). Following the defeat of their country in World War II, the Japanese people were given the opportunity to initiate an entirely new economic system from the ground up. The fact that the war destroyed all the Japanese had constructed over the course of the years made this possibility a reality. During the time that the United States was occupying Japan, a number of different reform efforts were carried out in order to repair and recover the destroyed country. These reforms paved the way for Japan to eventually have the chance to become an economic powerhouse. The American occupation forces in Japan were responsible for the implementation of three primary reform policies: the democratization of labor, the reform of land ownership, and the elimination of zaibatsu. These reform efforts had a significant influence on the democracy and modernisation of the nation, as well as its capacity to make economic growth. The execution of the Dodge Plan and the subsequent effects it had from the beginning of the Korean War made it possible for Japan’s economy to begin to recover. The end of the Korean War paved the way for this recovery to become a possibility. As a result of the so-called “Korean War boom,” the economy was able to observe a significant boost in output, which marked the beginning of the nation’s economic miracle.


Scholars studying Japan’s and Korea’s economic success in the decades after WWII have a tendency to overemphasize the importance that state-led industrialisation had in both countries, notably the effect that industrial policies had.

Indeed, industrial strategy may explain for their extraordinary pace of economic expansion. Some scholars argue that factors such as the sound general economic policies implemented by both governments, the dynamic of each country’s respective private sector, and the favorable external context enjoyed by both countries can be used to explain the rapid growth experienced by both nations in recent years.


The section agrees with this position, supporting evidence that the high-speed growth of Japan and Korea can be explained b factors including the sound general economic policies both governments followed, the dynamism of their respective private sectors, and the favorable external context that both enjoyed.


The massive increase in Japan’s per capita income between the years 1880 and 1970 was largely attributed to the industrialization process that Sugihara (2004) believes to have been initiated by the government. It is uncommon for a business to be able to boost sales simply increasing the volume of goods it produces. Western Europe, Canada, Australia, and the United States were all able to achieve high levels of per capita income by shifting away from agricultural production and toward industrial and technologically advanced service sector activities. Moving away from agriculture production helped achieve this. Due to the nation’s high agricultural productivity, Japan had a robust craft (or proto-industrial) sector that thrived in both rural and urban regions before the country made the shift to an industrial economy (Moriguchi & Saez, 2008). Both rural and urban regions may do this. The bulk of Japan’s output growth may be explained by an increase in domestic investments made in the country’s increasing industrial sector and infrastructure. Private businesses and governmental institutions worked together to build the country’s infrastructure. Japan’s labor and capital markets started to take on much more diverse forms throughout the 1910s (Van de Kaa, 2002). The capital-intensive industry paid higher salaries whereas the labor-intensive sector paid lower salaries. This was a result of the high capital-to-labor ratios in the capital-intensive industry. Dualistic economic systems made income gaps worse, which led to domestic social unrest. Following the Second World War, Japan adopted a series of legislative changes that reduced inequality and ended the majority of the communal hostility that had previously ruled the nation as a result of dualism. Japan was in a stronger position to meet the challenge offered by the West as a consequence of these wins at home led by the government (Honda, 1997). It originally gave a lot of weight to coal and other fossil fuels as steam sources in order to accomplish this. It had a highly educated populace and an early form of industrial distribution networks, which were both utilized to mimic Western management and energy production methods. The Japanese were well-equipped to master inorganic production when the Americans’ Black Ships forced Japan to give up its long-standing autarky because of their significant development of the organic economy, which depended on natural energy flows like wind, water, and fire. This happened as a result of Japan being forced to give up its long-standing autarky by American Black Ships. They were able to develop procedures for the production of inorganic materials as a direct consequence of this.

Personal Position and Opinion:

In summary, both Japan and South Korea had to carry out significant state-led initiatives in order to ensure that the two nations retained their accelerated growth towards industrialization and economic progress. While South Korea was slow to start, its partnership with the American government led to recovery in areas of education, finance, and economics. Entrepreneurship expanded in South Korea leading to a state-led economic transformation. To begin its reforms after the war, the Japanese nobility was stripped of its land, wealth, and rank in conformity with the standards outlined in the postwar constitution. The wealthy landowners were forced to sell their property to the tenants who worked on it for much less than market value. Japan instituted a new economic policy based on social capitalism and embracing a unique economic model that led to success.


Haggard, S., Kim, B. K., & Moon, C. I. (1991). The transition to export-led growth in South Korea: 1954–1966. The Journal of Asian Studies, 50(4), 850-873.

Hanashima, M., & Tomobe, K. I. (2012). Urbanization, industrialization, and mortality in modern Japan: A spatio-temporal perspective. Annals of GIS, 18(1), 57-70.

Honda, G. (1997). Differential structure, differential health: industrialization in Japan, 1868-1940. In Health and welfare during industrialization (pp. 251-284). University of Chicago Press.

Moriguchi, C., & Saez, E. (2008). The evolution of income concentration in Japan, 1886–2005: evidence from income tax statistics. The Review of Economics and Statistics, 90(4), 713-734.

Seth, M. J. (2013). An Unpromising Recovery: South Korea’s Post-Korean War Economic Development: 1953-1961. Education About Asia, 18(3), 42.

Sugihara, K. (2004). The East Asian path of economic development: a long-term perspective. In The Resurgence of East Asia (pp. 92-137). Routledge.

Van de Kaa, D. J. (2002). The idea of a second demographic transition in industrialized countries. Birth, 35, 45.

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