The lecture explores the remarkable post-WWII economic growth of Japan and South Korea, contrasting their export-led industrialization strategies with import-substituting industrialization, and examining the historical, political, and societal factors that contributed to their success, as well as their inherent downsides.
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well I think that it's the case that
interes in Korean culture has boomed in
the last few years I wonder how many of
you have watched squid game or perhaps
seen the movie
parasite well you might have been
watching those on your Samsung Galaxy
tablet as you were eating your
kimchi on the other hand you might have
preferred to turn on your television to
watch an anime movie as you were eating
your sushi on the other hand you might
have decided to go to the cinema getting
into your Hundai or Toyota car well my
point is that now the manufacturing
exports and cultural exports from Korea
and Japan are all around us the growth
of these two economies since the second
world war Korea and Japan have been remarkable
remarkable
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lecture after the second world war there
was a choice I think in developing
economies to adopt one of two policies
they were both economic nationalism but
of a different
type the first was import substituting
industrialization that is replacing
imported manufacturers from the advanced industrial
industrial
economies replacing those with local
Goods produced behind tariff walls such
an approach was pursued particularly by
Latin America since the Great Depression
it was economic nationalism based upon
isolationism I'm talking about that in
my next
lecture in the lecture today I'm talking
about the other approach which was
export-led growth now this also often
went with protection of domestic markets
but it was economic naism based upon
expansionism upon
exports and that was the strategy
adopted by Japan by South Korea and the Asian
tigers this graph shows you which of
those two policies was most
successful if you look at the um Green
Line there that is Argentina import substituting
substituting
industrialization is more or less flat
if you look at the uh red line that's
Japan and the blue line that's Korea and
you see Japan slowed down from the 1890s
Korea has continued to
grow so next time I'm going to look at
why une Earth Argentina
flatlines today I want to ask why it was
that there has been that success in
Korea and Japan but also if any of you
have watched quid game or watched
parasite you will know that growth and
success also has a dark side I'll come
back to that at the
end now in order to understand what
happened after
1945 I'm a historian we need to go back
to the 19th century we need to
understand the historical background of
this which takes us back to Japan and
the mai restoration of
1868 and its annexation of Korea as part
1910 so let's go to Japan to start
with Japan was unique in Asia in that it achieved
achieved
modernization and maintained
independence by its own
efforts but that was not a foregone
conclusion it could have gone another
way Japan could have become like China
it could have
become like semic
colonized Japan had a very limited
engagement with foreign Traders until
the arrival of the so-called Black Ships
of commodore Matthew Perry of the United
States arrived in Japan in July
1953 he was sent by the United States to
establish relations with Japan now you
might wonder what was meant by
relations uh what it meant was he was
comeing there to force them to open to
American Goods the outcome was the US
Japan Treaty of Amity and Commerce in
1858 which is modeled on the on the
Chinese example of the treaty ports to
forc opening up of of China to Western
Goods it was a it was called an unequal
treaty and Japan was forced to negotiate
other unequal treaties with uh France
with Britain and so
on so the question here was how to
respond just make sure that Japan did
not go the way of China or India or
Vietnam or
wherever the
tagawa regime which dominated Japan since
since
16003 looked weak when Perry arrived and
the country it seemed could descend the
same way as China so what was the nature
of that tagawa
regime it was based upon what I would
call neoc Confucianism that is a rigid
hierarchy which limited change minimal
forign contact the idea here that uh it
was all hierarchical like a household a patriarchal
patriarchal
household the emperor of Japan was based in
in
Kyoto and his role was ceremonial he had
no military or financial
Authority the administration was in the
hands of the Shogun who was based in
Ado this tagawa Clan held it directly
about a quarter of Japan other local
Lords the Deo pledged allegiance to the
Shogun some of those Deo were hereditary
vassals of the
takagawa they participated in the
government they were
insiders others have been forced into
submission uh they were defeated they
were marginalized they were called the
tozama so got this divide within the
elite the tagara Shogun kept Authority
by requiring these Deo Lords to spend
every other year in Ado where their
wives and children were to live
permanently it was a sort of Hostage
system provided the doo when they went
back to their local area didn't threaten
the the Shogun in Ado they were given a
fair degree of autonomy so it's not a
highly centralized
system then the next group are the
samurai the military Elite who owed
Allegiance either to the Shogun if they
were part of the tagawa clan or to these individual
individual
doimo they wore swords they had Warrior
values but they didn't actually fight
because it was peace they were basically
bureaucrats they provided bureaucratic
service to the Shogun they collected
taxes and so on so that's what was
existing before the black ship
arrived but it was starting to have
difficulties even before the arrival of
the black Ship Black
Ships now what were those
difficulties well first of all the
tagara in Ado had limited finances they
had income from their own lands but the
doo in the individual territories they
collected tax themselves they didn't
give it to the central government in
Ado so there's a lack of fiscal capacity
so if you're going to stand up to the
Americans how are you going to pay to fight
fight
them in fact there was a lack of
military capacity as well the Shogun
only had his own Samurai who were armed
with swords he couldn't rely upon the
samurai of the indiv idual Lords
elsewhere and are they going to be able
to stand up to Western military
power and finally the rigid hierarchy of
society was breaking
down the Dio had started to borrow money from
from
Merchants the samurai were hard
up there's inflation after trade opened
up but the samah paid on a fixed Dien so
they're getting a little bit upset and
annoyed at their status being eroded and
those outside law the tazu they are
feeling excluded and and
alienated so Japan is highly
vulnerable so what's going to be done
about it there's a terminal crisis in
the toag gabwa
regime there's a falling out within the
tagawa themselves who's going to become
the next Shogun so they're fighting with
each other which is not very
helpful then you've got these unequal
treaties being imposed upon Japan one
response to that is to say isolationism
let's not allow these Western traders to
come in the phrase used was let us
Revere the emperor and expel The
Barbarians are you the Americans and the
British and that line was originally
taken by some of the uh the key figures
Within these uh these
Lordships particularly by akuba
toshimichi of the Satsuma and Ito
harubumi of the of the chu
Clans but they started to realize you
can't just fight The Barbarians by
staying the same you have to adapt in
order to fight and how do you
adapt well I used to teach at University
College London a great institution you
send your students to University College
London so this man Ito I just mentioned
said if we're going to beat them you've
got to join them so he went to
University College London up the road in
1863 and the other clan that chos to
said 19 students to study in British
Universities at the same time the
Imperial courtiers down in Kyoto are
start to become a center of criticism of
the uh Shogun up in up in
Ado and that links up with the
resentment by the
samurai uh who are feeling that they're
losing their status and these outside
families of the Satsuma theosu also
feeling they're being excluded so
there's an alliance between the
courtiers down in Kyoto and these uh
excluded Lords and they say what we're
going to do is we're going to reimpose
the rule of the
emperor we're going they see the palace
in Kyoto they took power in the name of
the emperor and they then imposed this
new Magi restoration the new emperor
Magi was put on the throne in
1868 it was a a combination of Court
Nobles and these excluded Dao Lords from
Southwest Japan in 1868 they signed a
charter oath which said they were going
to unite together all groups in
Justice welfare and
prosperity owning allegiance to the
Lordships in order to make sure they
didn't then follow the route of China being
being
subordinated the idea then was not to
expel The Barbarians and return to
isolationism it was to pursue rapid
modernization by adopting Western
institutions by creating a centralized
and unified nation which unlike the
tagawa would have the political power
over the whole country with the capacity
to raise
revenue The Barbarians could then be
dealt with on equal terms within a global
global
economy within great power
politics it was a policy of building
National strength through expansionist
nationalism export-led
nationalism now in order to do that
there had to be some major changes in
Japan's economy politics and
Society so let me move on to uh onto
that s going going ahead too
far first of
all after 1868 power larg you remain
with the leaders of the
restoration they did bring in retainers
of the
tagawa where administ expertise was
needed but essentially it was this small
group which took par in 1868 remains in
control they replace loyalty to the
individual domain with loyalty to
Japan the daimo the individual Lords
agreed to return lands to the emperor
and they would then be appointed El
governors of their local area under the
under the emperor they were given Noble
salary the state then took over payment
of the salaries of the Samui so their
loyalty now is also to the
emperor and in
1876 that in that annual salary was
reped by a lump sum they lost their
Warrior status and a con script Army was
created from
1872 so it all meant a major change the
creation of a nation state now as you
might imagine uh that led to um a degree
of um annoyance and and of and of upset
I think that's got like to control here
the there's a difference over how how to proceed
proceed
and one approach was of irara Tom tomomi
who was one of the
courtiers who went on a mission uh to um
to there we are to uh San Francisco and
then to to
London there he is in the middle in
traditional dress with the people from
those Clans I I I talked about there the
samurai there's the emperor magin so
they go to negotiate in Europe and
America in 1871 to try to renegotiate
unsuccessful this led him to argue then
coming back I must push forward with
domestic reform if I going to stand up
to The
Barbarians he returned to to to Tokyo in
1873 but the opposition from the is ol
aists uh still continued uh when he when
he got back there was a feeling that
identity of the Samurai was being lost
that the the Doos were losing their
their their power and you then have the
Satsuma Rebellion where disaffected
Samurai uh to Rising revolt and they're
put down by a cons the conscript Army
the the modern the modern Army so that
was in
1877 if effective end of the Samurai as
a class uh the emergency of a highly
centralized state with western style Armed
Armed
Forces so the strategy of competing with
the barbarians through reforming Japan
Society is
working you have the defeat of China in
the war of 18 94 to5 over Korea Korea
was seen as a dagger at the heart of
Japan if Korea could become dominated by
China it would not be a buffer against
the Russians so you need to fight make
sure you keep the the Russians and the
Chinese out of Korea and how do you do
that you go to Newcastle upon time and
you order a few battleships um which you
see there being launched at at um the
the Armstrong Works in in
Newcastle and you also defeat
the the Russians in the war of 1904 to 5
there's one of those ships uh that I
just showed you being built in Newcastle
defeating the uh the the the uh Russian
uh Navy and Army and this leads to the
uh taking over of the uh Korea uh
initially as a protectorate in 1905 and
then by uh fully annexed as part of the
1910 it means then that by the first
world war Japan is a great
power it becomes an ally of Britain uh
in this uh in the first world war it's
emerges a powerful economy and a player
in great power
rivalries so how is how is this
achieved it's achieved by first of all
adopting a new civil and criminal code
an educ ational system financial
institutions derived from uh the uh European
European
example in
1885 Japan has a cabinet government in
place of that post-restoration oligarchy
I talk I talked about a new constitution in
in
1889 the emperor is still there as an
appeal to tradition as sacred and
inviable the father of the people but
it's now a bureaucracy a cabinet and
Armed Forces answerable to him it draws
together this idea of an imperial past
and Divinity with modernity you can
combine change which could be upsetting and
and
destabilizing with a continuity through
this means with Japanese
values a constitution was created with
an elected assembly a diet but with a
very limited franchise of only about 1%
of the population with an upper House of
nobles but the power of that parliament
of that diet was limited because of the
powerful status of the
emperor competing Elites of the cabinet
the military the privy Council the
bureaucracy and an unconstitutional
unofficial background group of these old
oligarchs when the diet started a flex its
its
muscles the government clamped down on
mass politics it suppressed Mass
politics in the peace police law of
1900 it's all very
authoritarian it also means that the
government has taxing
Powers now the individual Lordships have
been suspended and now taxes created
nationally could fund the Army and the
Navy which I was just showing you but
the Army and Navy has considerable power
answerable only to the emperor largely
free of control by the
legislature and a bureaucracy was also
very powerful they could appeal over the
head of the people and of the parliament
to the will of the
emperor they could use that power against
against
politicians now all of this is very
important for having a strategy of
economic IC development and this is what
these people these bureaucrats Army and
the Navy embark on J Japan embarks on
industrialization let me just run
through that uh quickly where you see
the first Railway comes in Yokohama
along with a postal system education
being built up the Japanese were sent
abroad to study at at universities in in
Britain and elsewhere foreigners were
invited Japan to bring in new technology
but was always under the control of the
Japanese themselves not foreign
ownership and
control you pay for those goods that's
imported technology by exports
particularly of
silk and then of cotton
cloth but also by squeezing savings out
of the people domestically very high
level of savings taxation squeezing
domestic consumption squeezing welfare
to invest in industry
you do you ban foreign investment to
make sure it's not taken taken over of
firms within Japan instead the
government borrows money on the London
money market uh through government bonds
under its own control so you're making
sure that money is being brought in but
not leading to control by
foreigners and those funds are directed
by the bank of Japan to make sure that
it's m it going to Japanese firms not to foreign
foreign
owners the government itself directly
invested in some industry but mainly
through buying licenses from overseas
technology blueprints prototypes again
under Japanese
control and working with on the whole
private Enterprise under government
guidance and as those government
bureaucrats I mentioned and business men
coming from similar backgrounds and many
bureaucrats moving into
business and what you have happening
then is the growth of these big new business
business
conglomerates the
zatsu mitsui was one of the largest it
was a merchant family under the
tagawa they grow into mining textile
cement paper real estate trading in this
pyramid structure
with one family owner at the top holding
company with subsidiaries
below they offer lifetime employment to
workers with good conditions and
training but alongside them there's a
whole group of small firms dependent
upon them so if there is a recession you
lay off those small firms the small
firms are also supplying local markets
with traditional
Goods now by the 1930s the the power of
these zatsu such as mitsui is considered
to be getting out of
control it's a state within a state in
1932 the managing director of mitsui was
assassinated by right-wing
radical mitsui responds by trying to
work with the
military in invading
manua providing loans and goods to Japanese
Japanese
expansionism but there's still a degree
of skepticism about these These are seen
as a threat to the
state what happens is that a new group
of zatsu emerge which are more dependent
upon the
military and you've probably heard of
Nissan their big Factory now up in
Sunderland Nissan was a new zatsu which
relocated his headquarters to manure
the inaria in China invaded by the
Japanese their headquarters with manua
and Nissan held a 50% stake with the
Japanese government in The Manchurian
heavy industry Development
Corporation I'll come back to that again
in a
minute so what you're having here is
this development of heavy
industrialization through with the army
with the
bureaucracy there's there's still a
sense of
vulnerability here the the feeling that
in order to be to be successful you have
to expand Japan lacks natural resources
you have to expand in menuria you have
to expand eventually of course by uh
going to war with uh with with uh uh the
Americans the British the French uh
taking trying to invade those um those
parts of the European emper Empires in
in uh
Asia so what you have though I think in
this period of 1930s and the war is very
powerful control by the Army the
Ministers of the Army and Navy in the
cabinet were appointed by the Army and
the Navy so they had a control a veto
power over the cabinet if the Army na
refused to appoint the cabinet members
the cabinet couldn't work so they had a
veto power there's Emperor
worship sacred patriotism allied with
the militarization of society to create National
National
Unity the bureaucrats were aiming to
reduce the power of el least of the old
zatsu and control the economy for National
National
Defense now all of that of course then
leads on to the um invasion of China in
1937 the attack on Pearl Harbor in 1941
and the defeat eventually in 1945
1945
in 1945 the question was what would the
American occupiers do how do you reform this
this
system so what happens then is a process
of Reform
democratization reform of the
Constitution of 1889 which was seen as
the basis of
militarism Land Reform break up the
large land Holdings and which is seen as
a basis of militarism replace large
owners with and with a poor tenant
Farmers with owner occupying farmers who
would have a stake in
society break up the
zatsu uh which is attempted um in
legislation in 1946 and
1947 but that policy was abandoned at
the end of
1949 with the result that you have the
emergence of a new type of business
Corporation called the ketu again bitsui
instead of being hierarchical it's more
if like a
network Affiliates so it it's reshaping
it as a more decentralized system of
interlocking directors and shareholders
coordinated by a group president who has
a group of the presidents of each of
these groups have having a lot a lot of
power and that continues to WR run
alongside small firms so that's another
part of reform labor market reform trade
unions but trade unions as part of the
individual Enterprise working with the
firm rather than against the
firm and the next point I would make is
the survival of those bureaucrats that I
mentioned in manua that development I
was arguing about the mitsui heavy
Industrial Development
Corporation the man who was the head of
that was uh kishu nus
and working with the head of Nissan
akawa yoshisuke
these people after the
war move into the center of Japanese
politics their experience in
manua their long experience there their
planning of development there meant they
continue to formulate and Implement a
coherent economic
policy they had close ties with
conservative parties and
businesses they maintain controls over
trade and exchange the foreign
investment law of 1950 prevented inflows
of private Capital so that firms
American firms like Ford or General
Motors couldn't come in and buy up
Japanese businesses so these people I
call the reform bureaucrats from the
1930s kept
power so Kishi developed ideas about
control R over business from the 1930s in
in
manua where he was responsible for
industrialization there where he used
brute forced labor slave labor and he
worked there with aawa Yoshis Su of
Nissan well in 1955 Kishi was one of the
founders of the liberal Democrat Party
which has dominated Japan ever since he
was prime minister from 1957 to 1960
those two men work together in manua
they continue to work together in Japan
in the
50s the next point I would make is a
reform of public
finances what the government did after
the war was give tax breaks to savings
which went into Banks the banks then
invested in private
business High very high levels of saving
held down
inflation and let a high investment
which could be used for
exports and those savings were
deliberately encouraged by the national
salvation savings
campaign and Housewives were encouraged
to keep household accounts books and
there she says I'll keep planning our household
household
finances consumption was culturally
devalued you had to save you have to
save in order to invest in order to encourage
encourage
development and that's linked with trade policy
policy
now I said that this is economic
nationalism Japan does not open up its
economy to outside um uh investment or
to outside
Goods what it's trying to do though is to
to
export initially it had a trade deficit
covered by American
aid but you don't want to have
subordination to America you want to
make sure you escape from that
dependence to regain economic
independence you have to export but also
to keep import controls on the domestic
market and that leads to an industrial
strategy the government pushes exports
in technologically advanced sectors it
gives priority in in credit in subsidies
in tax breaks to Industries according to
potential There is close cooperation
between those bureaucrats developing
from that reforming bureaucracy of the
1930s with the ketsu through the
ministry of international trade and
Industry which is successor to the
approach of Kishi back in the
1930s in 1960 the government announces a
new policy Kishi resigned in 1960 is it
successor announced a new policy the
national income doubling plan
driven by exports and government
assistance kishi's allies at the that
Ministry I mentioned had a continuing
role working in partnership with
business through what they called administrative
administrative
guidance they relied upon business
associations the two the minister
exchanging information and the uh
business complying with that by 1968
Japan had moved to a very large Trade
Surplus but then it starts to go wrong
you have this massive surge in
residential property prices those
savings that easy credit a surge heavy
indebtedness by the ketu you get a
bubble it bursts and as you saw from the
uh chart I put up at the beginning of the
the
lecture you have the so-called lost
decade of the 1990s growth is low but it
then becomes three lost
decades Japan stops growing as rapidly
as it had in the past this is where I
turn to
Korea because Korea starts off at a much lower
lower
base but it continues to grow throughout
the '90s up to the present so let's have
Korea well Korea didn't have anything
like the ma restoration it had had a weak
weak
dynasty Korea was being already uh made
a client state of China China was being
threatened by Russia and as I mentioned
earlier on the uh Japanese take it over
as a colony in
1910 So Korea was a Japanese colony from
1910 to
1945 Korean culture was
subordinated the country was turned into
a source of food and raw mat materials
for Japan and of industrial production
to support the Japanese invasion of
China even more than in Japan the
economy of Korea was dominated by the
state and by the
Army well the Japanese of course Retreat
1945 at that point Korea is divided at
the 38th parallel between the Americans
and the South the Soviets in the
north there's also a communist threat
within the
South so you have external threat above
the the 38th parallel but also uprisings
below the 38th parallel and of course
you have the Korean War of 1950 to 53 as
well so you need to understand the
development of Korea within that context
of continued threat from
communism the Americans obviously were
very eager to
overcome South Korea's
technological uh backwardness and also
in their view cultural
backwardness the American occupiers said
the Koreans are the Irish of the Orient
they're funloving they have an
inferiority complex they love a drink
and a laugh um but they they they're
dominated they were dominated by the
Japanese and they don't have any
self-confidence in 1947 the American
occupiers tried to develop uh a program
to reform
Japan in 1948 South Korea regained self-rule
self-rule
there's General MacArthur the American
occupies with President singman
re who was an anti-communist
authoritarian the Americans continued to
give economic assistance and in 1950 and
new American dominated unit United
Nations body was set up the UN Korean
reconstruction agency but even in 1960
the United States state department
complained of a lack of leadership to
provide I quote the imagination vision
and energy to end the Korean spiritual
and social confusion and to give the
country a sense of unity Direction and
Destiny so up to 1960 there's still not
a huge level of economic growth
well let's think what was what was this
man re trying to do between 1948 and his
fall in
1960 well first of all like in Japan
there was a progress a program of land
reform an attempt to break up the the larger
larger
States but that was dangerous because
you needed the you needed the elite of
large large Alando to support the
Americans against the Communists
but what you can do of course is you can
take the former Japanese owned land and
give that to Small peasant Farmers so
you could then build up support for the
regime without alienating the
elite re embarked however also on a
program of import substituting
industrialization that was his initial
strategy and he was also highly
dependent upon investment from United
States aid about 34s of investment was
American Aid which rechanneled to a
group which were a little bit like the
zatsu they were groups of industrial
conglomerates called the
challs they were large business cor
Hyundai it was a cozy relationship of
corruption and isolation of the
economy well in
1960 he fell and was replaced by uh in May
May
1961 by Park Chung HEI who took power as
the head of a military
Hunter now park had trained as an
officer in the Japanese Army during the
war where he served in
manua after the war he joined a South
Korean army and was sentenced to death
for uh opposing re he was uh the
sentence was commuted he rejoined the
Army fought of the Korean War took over
in the military Hunter and then was
elected president in
1963 and continued to serve until he was
assassinated in
1979 so what did Park do this is where
the success really takes
off he continued some of the elements of
of re's policy but taking it in New
Direction which led to what has been
called The Miracle on the Han River Han
river is the Maj major river the miracle
there was the transformation of South
power isolationist nationalism was
strong because there was a dislike of
the Japanese who had colonized the
country there was dislike of dependence
upon the United States there was dislike
of the big conglomerates of the chai
ball so park has to take that on if he's
going to have success and Export Le
strategy he promised to end corruption
so the CH ball I'm now going to reform
I'm going to stop them being so corrupt
I'm going to stimulate National renewal
I'm going to renew Korean
culture but he also realized he couldn't
do this if he didn't have the support of
the chai ball
themselves so he pardons those who had
been ex accused of
corruption in return for which they have
to support his strategy of export-led
growth now what is he going to do then I
think he does two things one create
Japanese Korean pride in his culture
through what was called the cultural
heritage protection act of
1962 which had a committee for erecting
patriotic forefather
so you re massive statues of people who
in whom you could have pride biggest one
in the middle of of Soul was a statue of
Admiral Yi sunshi who defeated Japan in
the war of 1592 to9 now not just russan
is important but also history was be remembered
remembered
here so pride in culture but also
authoritarianism sense of the media
limit freedom of expression ression and
then turn to export-led growth as a way
of ending dependence on American Aid so
it was a combination of
repression cultural policies allowing to
turn away from nationalist economic
isolationism to nationalist
expansion now how do you do that how do
you create this policy of export-led
growth it's often said it rested upon on
Park as a military authoritarian you
wouldn't mess with him would you well I
wouldn't but it's not just that the
South Korean State under park has been
described by one leading Authority
Korean Authority as authoritarian
bureaucratic it provided effective
coordination and growth with highly
skilled technocratic uh officials who
introduced institutional reform improved
planning and followed the economic model of
of
Japan the state owns some um factories
uh steel Works itself but its major role
was to support private Enterprise the
state like in Japan providing guidance
through five-year plans starting in
1962 supporting heavy industry exports
and those plans were very close to what
Kishi had done in
manua in fact Kishi as uh as prime
minister in in in Japan was rather
embarrassed when Park turned up and they
started he started reminiscing about all
the wonderful things they had done in
manua in the 193s which is not something
that you would mention in polite company
in the
1960s but skilled bureaucrats in the
economic planning board and the ministry
of trade worked with a few of these chal
business groups such as Hundai Samsung
LG that dominated the economy and spread
risk across a wide range of Industries
through cheap loans licenses tax
benefits it was a very interconnected
group of family firms of f sorry family
members like you see there uh in the the
the Samsung uh uh chai
ball they expanded to increase Market
share they weren't necess driven by
profit but dominating the market by
borrowing success depended on their
ability to make deals with the
state the government provided support
through loans permits tax Goods
subsidies on condition that you were
successful in exports and if you were
not successful you would lose those those
those
perks it was an aim of Shifting the
industrial structure to heavy industry
Capital intensive high value added technologically
advanced and also again making sure that
export growth did not lead to foreign
involvement so during this period of
Park the chai ball became ever more
powerful they uh increased from 15% of total
total
sales uh as a percentage of GNP to 67%
by 1984 so it was a state business
Alliance in a governed Market or what is
rather more critically been called crony
capitalism now of course the danger
there is that Reliance upon
cronies uh could lead to
unpopularity so park also tried to do uh
did two other things one was to create a
coalition with the countryside and
Farmers through the new Village movement
launched in 1970 modernized the
countryside and secondly labor
repression you repress workers which
allowed him to ignore anti-japanese
views you hold down wages to allow the
the chai ball to compete on
International markets no problem with
that of course is at some point it's
going to
explode which you
did so you have going populist
opposition to corporate power favoritism
protest against low wages and
repression Park indeed was assassinated in
in
1979 the new
president also suppressed a pro
democracy Uprising in
1980 and suppression continued
alongside a new policy use popular
culture as a
distraction keep the word workers happy
this was called the policy of the three s's
s's
screen it didn't allog together work
here's the mass Uprising in
1987 led to the end of military
rule the new civilian government which
came in after that saw a potential in cultural
cultural
Industries it invested in the internet
information and in communication
technology but the government also
continu to support the chall but like in
Japan a moved now towards more uh if you
like cooperation with them trying to
make them more transparent make them
specialize rather than just have this
wide range of diverse uh
Industries uh but and now going for like
soft repression rather than hard
repression so this attempt to uh remove
uh the chai ball or reform the chall
wasn't entirely successful the continued
uh use of of the chai balls continued
crony capitalism reform their reform attempts
attempts
falters against the the entrenched power
of of these people crisis then hits in uh
uh
1997 this is partly result of the fact
that currencies in Korea and elsewhere
in in Asia were pegged to the US dollar
the US has got a lot of money to invest
if there's no exchange rate uh risk you
might as well put it into these
countries with a very high rate of
return great until the point emerges at
which there's a fear that the currency
will be devalued which it people
withdraw their
money and at that point money is
withdrawn in 189 in 1997 it exposed the
risk of this High Reliance upon loans to
large business groups over investment
the price of computer chips one of the
largest exports of Korea collapsed Banks
were left with large loans the IMF then
intervenes and orders reform of the
corporate structure uh reduce the role
of credit in the banks so then you again
you have an attempt by career to regain
its author ity regain its autonomy
people hand in their gold jewelry in
loan I think that this is um actually
very important for when the crisis hits
then in 2008 the global financial crisis
the Koreans say we are not going to put
ourselves in that same position again of
being dependent upon Outsiders the
international monetary
fund they build up a reserve they're not
hit by the global financial crisis of
2008 a lesson was
learned also there a lesson learned that
the that investment in the
internet pays off cultural Industries
expand the government aimed to quadruple
his exports in the cultural Industries
squid game is a sign of the success of
that policy growth UN likee in Japan
returns exports grow rapidly exports as
a percentage of GDP were about 26% of
GDP in
1995 56% in
2012 so research and development
investment uh was very high great
success but was
it we should also look at weaknesses
a leading Korean sociologist has
referred to South Korea as experiencing
compressed modernity very rapid very
condensed growth but he says that was
Anchored In The Family the family
dominated business welfare and education
it's what he calls family centered
modernity which overloaded the family
with too
much with providing welfare with paying for
for
education paying the savings to go into the
the
investment which led to very high levels
of suicide divorce violence low
fertility delayed marriage burden upon
women and on the Young and high pressure
on poor people with a very high level of household
household
debt let me just mention a few things
about that uh very quickly in conclusion
by looking at some table
here ker is a highly educated Society
very high proportion going into tertiary
education like in Japan but a large part
of that was paid for by individual
families large part of the cost of
Education fell on families rather than
the government and that is true of
welfare generally you should see there
in that table on the screen a low level
of government spending with a high level
welfare there's also the same domination
of the family in business in those
chall problems of
cronyism continue to exist in 2017 the
president of Korea who was Park's
daughter was outed and accused of
demanding money from the three leading
chall she was sent to prison for 20 years
years
uh was actually released in
2021 the chairman of Samsung was also
sent to prison but was pardoned in
2022 so this continued domination of
families and crony capitalism which
brings us back to squid
game squid game is I hope you've all
realized who are watching it a critique
of South Korean capitalism and in
quality for those of you who have not
watched it and you need to have quite a
strong stomach to watch all of it the
premise is that 456 players of the game
are in
debt they're playing for huge money
prize in children's game but losing the
game means you're
killed the players addressed in green
which is the uniform of the new Village
movement I talked about the park set set
up they're being watched by Red masked
guards for the gratification of Rich
foreigners H could that be the
international monetary fund I wonder the
script was written in
2009 and the author refers
to a strike at a motor plant in 2009 the
main character in the squid game the one
who wins the game refers in I think is
episode five perhaps I'm wrong uh to
losing his job and taking part in this
strike squid game is it shows the
success of the Japanese cultural exports
it also a critique of some of the
downside of
it squid game like
parasite deals with people who are
experiencing inequality and
marginalization While others
prosper so measured by growth of the
economy Japan and Korea have been
remarkably successful since
1945 not through free market capitalism
as was advocated by the United States
and the international monetary fund but
through State
Direction the contrast with Argentina
which I started is striking there the economy
economy
stagnated South Korea escaped from
underdevelopment to become a developed
economy Argentina regressed from being
one of the world's most prosperous
economies to a state of
underdevelopment although Latin America
secured political independence from
Spain and Portugal in the 1820s they
became economically subordinated to foreign
foreign
capital in a way that both Korea and
Japan avoided what went wrong in Latin
America is what I will talk about next
uh you mentioned a lot about zatu how
many of those still exist today and if
so how powerful are they um well mitsui
still exists today um uh Mitsubishi
still exists today uh so that they they
were the two biggest ones uh so they uh
they've transformed themselves from
being zatsu to these katsu so uh the
these big conglomerates are still there
uh mentioned Nissan I think there was
there was an issue um after the war that
the Americans uh didn't quite understand
the fact they if like the old zatu and
the new zatu they thought they were all
bad and supporting militarism not quite
realizing perhaps some of the uh the
ones like mitsui were a bit ambivalent
at least about relationship with the uh
with with with the military Nissan uh
was actually much more complicit
complicit very complicit um in in uh the
what one might consider to be war crimes
in in in man manua uh so um they they
they do they do still they do still
exist uh in this new form that if fact
devolved networked form uh of the
katsu um I'll I'll take one from from
slido next um the uh very interesting
question of what are the lessons for UK
government economic planets from the
experience of the economies of Asia well
that is a very very good I didn't know
we had economic Planet that's a that's a
good that's a good question
um well you might have noticed that what
I'm stressing in this is how the role of
the state is so
important um
that in in 1997 when you have the uh the
IMF coming in um they come in and they
say to say to look you you mustn't
behave like this all the state directed
stuff you know you've got to be like
America free markets and and so on and
so forth and um a leading Economist um
Whitewing Economist uh pointed out it's
not the role of the IMF to come in and
tell people what what to do and anyway
do you think there's not crony
corruption in America um so I think that
um there's an interesting if ideological
debate there about how far should you
want have state state directed um
development now I don't think one want
to have state Direction by um somebody
who is a military dictator an
authoritarian regime and I've been
pointing out some of the downsides of it
uh what I would say picking up um on
recent book by Mariana masuku is that we
tend to downplay how important the state
has been in uh both United States and
Britain in in development by providing
money for the internet which is coming
out of NASA and the um uh the American defense department and so and so forth
defense department and so and so forth so I think that um the the lesson I
so I think that um the the lesson I would take here is that that longs sited
would take here is that that longs sited State
State directed uh development can be a good
directed uh development can be a good thing but you don't need to have that
thing but you don't need to have that alongside
alongside authoritarianism and repression and I've
authoritarianism and repression and I've been pointing out that's part of the
been pointing out that's part of the problem in the in the economies here I
problem in the in the economies here I was going to ask considering that both
was going to ask considering that both China and Japan have neoc Confucian um
China and Japan have neoc Confucian um philosophy why did Japan succeed in
philosophy why did Japan succeed in becoming economically independent and
becoming economically independent and China kind of collapsed under the
China kind of collapsed under the shackles of colonialism yeah well that's
shackles of colonialism yeah well that's uh obviously I suppose you could say
uh obviously I suppose you could say what one of the issues that I've been
what one of the issues that I've been pointing to is that Japan has seen what
pointing to is that Japan has seen what had happened to China and wanted to
had happened to China and wanted to wanted to make sure that that uh didn't
wanted to make sure that that uh didn't happen to to them um I think think
happen to to them um I think think that I think it's partly a matter of of
that I think it's partly a matter of of scale perhaps it's it's it's easier
scale perhaps it's it's it's easier within within Japan uh to create this um
within within Japan uh to create this um like a modern nation state if you like
like a modern nation state if you like process that I that I was
process that I that I was outlining um I think it was very
outlining um I think it was very difficult to to do that in in in the
difficult to to do that in in in the size of China um and of course it's um
size of China um and of course it's um the it was very difficult for the
the it was very difficult for the um the dynasty there to uh to
um the dynasty there to uh to modernize uh when you have the fall of
modernize uh when you have the fall of the uh Chinese um Emperor and sunat Sen
the uh Chinese um Emperor and sunat Sen becomes the um the the the the leader uh
becomes the um the the the the leader uh in China uh and fails he goes to Japan I
in China uh and fails he goes to Japan I said is that the way we should we should
said is that the way we should we should try and proceed so I think it's
try and proceed so I think it's interesting that the Chinese were trying
interesting that the Chinese were trying to learn from Japan in in how to create
to learn from Japan in in how to create that sense of um if fact unity and
that sense of um if fact unity and modernity um I think then what sunat sen
modernity um I think then what sunat sen is is trying to do in in that is to link
is is trying to do in in that is to link a sort of new conf fusionism with um
a sort of new conf fusionism with um working with International agencies to
working with International agencies to come and BR in capital we can't get the
come and BR in capital we can't get the capital otherwise so I think the the
capital otherwise so I think the the there's an interesting interplay between
there's an interesting interplay between Japan and China
Japan and China uh
uh China you I didn't have the the lessons
China you I didn't have the the lessons in Japan until later after the incursion
in Japan until later after the incursion by the by the
by the by the Europeans um in the concessions that
Europeans um in the concessions that that were forced and then I think it's
that were forced and then I think it's also interesting that India tries to
also interesting that India tries to learn from Japan as well during the
learn from Japan as well during the second world war so I think
second world war so I think there's there's another lecture lurking
there's there's another lecture lurking there which is about what what happens
there which is about what what happens in in in India but uh yeah that's that's
in in in India but uh yeah that's that's a very good question um if I can maybe
a very good question um if I can maybe ask one final question we we were
ask one final question we we were talking before the uh before the lecture
talking before the uh before the lecture where do you see we've seen this
where do you see we've seen this incredible e export driven growth in a
incredible e export driven growth in a number of countries in Asia over the
number of countries in Asia over the last decades what's the next Tiger the
last decades what's the next Tiger the next Tiger gosh well by the way I I hope
next Tiger gosh well by the way I I hope that nobody turned up thinking this is a
that nobody turned up thinking this is a lecture about tigers um in which case
lecture about tigers um in which case you've learned something you didn't
you've learned something you didn't think you were going to learn um the
think you were going to learn um the next Tiger well I think
next Tiger well I think that obviously we've got growth in
that obviously we've got growth in Malaysia in and in Vietnam obviously
Malaysia in and in Vietnam obviously elect didn't have time to go through
elect didn't have time to go through every single country and I wouldn't have
every single country and I wouldn't have enough knowledge uh about it the the
enough knowledge uh about it the the only countries that I know in this area
only countries that I know in this area my personal experiences Japan and
my personal experiences Japan and Korea I think actually the one to watch
Korea I think actually the one to watch is India uh which is not really an Asian
is India uh which is not really an Asian tiger I I my suspicion is that that
tiger I I my suspicion is that that China has got serious problems now was
China has got serious problems now was talking last time about why did China
talking last time about why did China succeed and Russia fail in economic
succeed and Russia fail in economic modernity I think this serious issues
modernity I think this serious issues now within China with the claps Grand a
now within China with the claps Grand a property company there's the levels of
property company there's the levels of debt uh uh etc etc uh but I think India
debt uh uh etc etc uh but I think India is is growing and that's an interesting
is is growing and that's an interesting one because India after the war embarked
one because India after the war embarked on import substituting
on import substituting industrialization a very tight St
industrialization a very tight St controls a license Raj as it was called
controls a license Raj as it was called you had to have a permit to do to do
you had to have a permit to do to do anything but in a way which held back
anything but in a way which held back development rather than encourag
development rather than encourag development now uh one doesn't
development now uh one doesn't necessarily agree with uh modi's um
necessarily agree with uh modi's um Hindu
Hindu nationalism uh well you know I don't
nationalism uh well you know I don't want to go into other people's politics
want to go into other people's politics uh but he is trying to break down those
uh but he is trying to break down those licenses now I think that's an
licenses now I think that's an interesting question in terms of what
interesting question in terms of what I've been talking about here can you
I've been talking about here can you actually modernize by building a
actually modernize by building a cultural
cultural identity which can be pretty
identity which can be pretty awful so I think
awful so I think that's if I were giving another lecture
that's if I were giving another lecture four lectures Richard rather three this
four lectures Richard rather three this year it would be to look at what's going
year it would be to look at what's going on in
on in India um Martin I'm afid Time Marches On
India um Martin I'm afid Time Marches On I I'm conscious that there being many
I I'm conscious that there being many more questions we could have taken from
more questions we could have taken from the floor and more on slider which might
the floor and more on slider which might to lead to a podcast later on um however
to lead to a podcast later on um however ladies and gentlemen it's been a
ladies and gentlemen it's been a delightful Insight um into these asan
delightful Insight um into these asan tiger economies and would you join me in
tiger economies and would you join me in thanking our visiting professor of
thanking our visiting professor of economic history Professor Mar
economic history Professor Mar thank
thank [Applause]
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