The Economic Aspect of Japanese Colonialism in Korea
Introduction
Since ancient times, no other country enjoyed more intimate exchanges with Japan than Korea. While much has been done to normalize the Japanese-Korean relations, a lot still remain to be done. According to Mcormak and Haruki (2005), while Japan normalized relations with the Republic of Korea (ROK or South Korea) in 1965, it has not yet formally recognized the Democratic People’s Republic of Korea (DPRK or North Korea). This asymmetry is a major obstacle not only to repairing Japanese-Korean relations overall, but ending the Cold War in Asia. Although Japanese Prime Minister Koizumi Junichiro made two diplomatic visits to North Korea in the last four years, raising prospects of a breakthrough in Japan-North Korea relations, progress on normalization remains stalled.
In the beginning
Less than two decades after having being opened, Japan first made its ambitions about Korea known by forcing the country open to trade in 1876 (Cha, 2004) . Defeating Russia in the war of 1905, Japan virtually annexed Korea, which was made official five years later. What replaced the feeble and predatory bureaucracy of the Choson dynasty was a developmental state. Drawing on the Meiji government’s experience, the colonial state introduced a set of expensive policy measures to modernize Korea.
According to Cha, one important project was to improve infrastructure: railway lines were extended, and roads and harbors and communication networks were improved, which rapidly integrated goods and factor markets both nationally and internationally. Another project was a vigorous health campaign: the colonial government improved public hygiene, introduced modern medicine, and built hospitals, significantly accelerating the mortality decline set in motion around 1890, apparently by the introduction of the smallpox vaccination. The mortality transition resulted in a population expanding 1.4% per year during the colonial period. The third project was to revamp education. As modern teaching institutions quickly replaced traditional schools teaching Chinese classics, primary school enrollment ration rose from 1 percent in 1910 to 47 percent in 1943.
Finally, Cha detailed that the cadastral survey (1910-18) modernized and legalized property rights to land, which boosted not only the efficiency in land use, but also tax revenue from landowners. These modernization efforts generated sizable public deficits, which the colonial government could finance partly by floating bonds in Japan and partly by unilateral transfers from the Japanese government.
Industrial policies
Furthermore, the colonial government implemented industrial policy as well. Cha reported that the Rice Production Development Program (1920-1933), a policy response to the Rice Riots in Japan in 1918, was aimed at increasing rice supply within the Japanese empire. In colonial Korea, the program placed particular emphasis upon reversing the decay in water control. The colonial government provided subsidies for irrigation projects, and set up institutions to lower information, negotiation, and enforcement costs in building new waterways and reservoirs. Improved irrigation made it possible for peasants to grow high yielding rice seed varieties. Completion of a chemical fertilizer factory in 1927 increased the use of fertilizer, further boosting the yields from the new type of rice seeds. Rice prices fell rapidly in the late 1920s and early 1930s in the wake of the world agricultural depression, leading to the suspension of the program in 1933.
Furthermore, according to Haggard et. al (1991), despite the Rice Program, the structure of the colonial economy has been shifting away from agriculture towards manufacturing ever since the beginning of the colonial rule at a consistent pace. From 1911-40 the share of manufacturing in GDP increased from 6 percent to 28 percent, and the share of agriculture fell from 76 percent to 41 percent. Major causes of the structural change included diffusion of modern manufacturing technology, the world agricultural depression shifting the terms of trade in favor of manufacturing, and Japan’s early recovery from the Great Depression generating an investment boom in the colony. Also Korea’s cheap labor and natural resources and the introduction of controls on output and investment in Japan to mitigate the impact of the Depression helped attract direct investment in the colony. Finally, subjugating party politicians and pushing Japan into the Second World War with the invasion of China in 1937, the Japanese military began to develop northern parts of Korea peninsula as an industrial base producing munitions.
Many academics and historians alike agree that the institutional modernization, technological diffusion, and the inflow of Japanese capital put an end to the Malthusian degeneration and pushed Korea onto the path of modern economic growth. Both rents and wages stopped falling and started to rise from the early twentieth century. As the population explosion made labor increasingly abundant vis-a-vis land, rents increased more rapidly than wages, suggesting that income distribution became less equal during the colonial period. Per capita output rose faster than one percent per year from 1911-38.
The role of the South Korean government in its economic development
Haggard et. all (1997) said that after the Second World War in 1945, South Korean policymakers set upon stimulating economic growth by promoting indigenous industrial firms, following the example of many other post-World War II developing countries. The government selected firms in targeted industries and gave them privileges to buy foreign currencies and to borrow funds from banks at preferential rates. It also erected tariff barriers and imposed a prohibition on manufacturing imports, hoping that the protection would give domestic firms a chance to improve productivity through learning-by-doing and importing advanced technologies (Cha, 2004).
Finally, experts agreed that South Korea’s high growth was also aided by accumulation of human capital, which started with the introduction of modern education under the Japanese rule. The South Korean developmental state, as symbolized by Park Chung Hee, a former officer of the Japanese Imperial army serving in wartime Manchuria, was closely modeled upon the colonial system of government. In short, South Korea grew on the shoulders of the colonial achievement, rather than emerging out of the ashes left by the Korean War, as is sometimes asserted (Cha, 2004).
References
Cha, Myung. “The Economic History of Korea”. EH.Net Encyclopedia, edited by Robert Whaples. June 21, 2004.
Haggard, Stephan, D. Kang and C. Moon. “Japanese Colonialism and Korean Development: A Critique.” World Development 25 (1997): 867-81.
Haggard, Stephan, Byung-kook Kim and Chung-in Moon. “The Transition to Export-led Growth in South Korea: 1954-1966.” Journal of Asian Studies 50, no. 4 (1991): 850-73.
______, 1988, ‘The Distinctive Features of South Korea’s Development’. In Peter Berger and Hsin-Huang Micael Hsiao, eds., In Search of An East Asian Development Model. Oxford: Transaction Books.
