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The origins and development of the Northeast Asian political economy: industrial sectors, product cycles, and political consequences

  • Bruce Cumings (a1)

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Theories of the product cycle, hegemony, and the world system are used to analyze the creation and development of the Northeast Asian political economy in this century. Japan, South Korea, and Taiwan have each developed in a particular relationship with the others; the three taken together form a hierarchical, constantly interacting political-economic unit. During the period of colonial rule Japan was unique in building an imperial economic unit marked by a strong role for the state (whether in Tokyo or Taipei), by a tight, integral Unking of all three nations into a communications and transport network running toward the metropole, and by a strategy of both using the colonies for agricultural surpluses and then locating industries there. After 1945 a diffuse American hegemony replaced Japan's unilateral system, but elements of the prewar model have survived: strong states direct economic development in South Korea and Taiwan (here termed “bureaucratic-authoritarian industrializing regimes”); both countries are receptacles for Japan's declining industries; and both countries develop in tandem, if in competition, with each other. The most recent export-led competition has seen Taiwan succeed where South Korea has (temporarily?) failed, leaving Seoul in an export-led “trap,” burdened with rapidly increasing external debt. Taiwan, furthermore, has industrialized relatively free of social disruption, whereas Korean society resisted its transformation at Japanese hands and remains more rebellious today. There can be one Japan and one Taiwan, but not two or many of either, in the world economy.

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1. U.S. Central Intelligence Agency (CIA), Handbook of Economic Statistics 1979 (Washington, D.C.: National Foreign Assessment Center, 1980).

2. Allen, G. C., Japan's Economic Policy (London: Macmillan, 1980), p. 1; see also Ohkawa, Kazushi and Rosovsky, Henry, Japanese Economic Growth: Trend Acceleration in the Twentieth Century (Stanford, Calif.: Stanford University Press, 1973), pp. 74, 82–83. For the comparisons of growth rates with Korea and Taiwan see Umemura, Mataji and Mizoguchi, Toshiyoki, eds., Quantitative Studies on Economic History of Japan Empire [sic], 1890–1940 (Tokyo: Hitotsubashi University, 1981), p. 64.

3. Kojima, Kiyoshi, Japan and a New World Economic Order (Boulder, Colo.: Westview, 1977), pp. 150–51.

4. Wade, L. L. and Kim, B. S., Economic Development of South Korea: The Political Economy of Success (New York: Praeger, 1978), p. VI.

5. See Susan Greenhalgh, “Dependency, Distribution and the Taiwan ‘Paradox,’ ” and Simon, Denis, “U.S. Assistance, Land Reform, and Taiwan's Political Economy” (both papers presented at the Taiwan Political Economy Workshop,Columbia University, New York,18–20 December 1980).

6. For a good example of this line of reasoning see chap. 2 in Mason, Edward S. et al. , The Economic and Social Modernization of the Republic of Korea (Cambridge: Harvard University Press, 1980).

7. For references, see Calleo, David P. and Rowland, Benjamin M., America and the World Political Economy (Bloomington: Indiana University Press, 1973), and Viner, Jacob, “Power versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries,” World Politics 1 (10 1948), on mercantilism and neomercantilism; Vernon, Raymond, Sovereignty at Bay: The Multinational Spread of U.S. Enterprises (New York: Basic Books, 1971), on the product cycle and free trade; Wallerstein, Immanuel, “The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis,” in Wallerstein, , ed., The Capitalist World-Economy (New York: Cambridge University Press, 1979), for the world system approach.

8. Kindleberger, Charles P., “Group Behavior and International Trade,” Journal of Political Economy, 02 1951, p. 42.

9. Wallerstein, “Rise and Future Demise.”

10. Like most interesting concepts, these categories of core, semiperiphery, and periphery have problems of definition and scope, but they are useful for locating nations in the world economy. A similar set of categories is Krasner's tripartite distinction between makers, breakers, and takers among nations. See Krasner, Stephen D., “US Commercial and Monetary Policy: Unravelling the Paradox of External Strength and Internal Weakness,” in Katzenstein, Peter J., ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978), pp. 5152.

11. See Bergsten, C. Fred, Keohane, Robert O., and Nye, Joseph S. Jr., “International Economics and International Politics: A Framework for Analysis,” in Bergsten, and Krause, Lawrence B., eds., World Politics and International Economics (Washington, D.C.: Brookings, 1975), p. 14; also Keohane, and Nye, , Power and Interdependence: World Politics in Transition (Boston: Little, Brown, 1977), pp. 4246.

12. The “grand area” was a concept used in Council on Foreign Relations planning in the early 1940s for the postwar period. See Shoup, Laurence H. and Minter, William, Imperial Brain Trust: The Council on Foreign Relations and U.S. Foreign Policy (New York: Monthly Review Press, 1977), pp. 135–40.

13. Hirschman, Albert O., National Power and the Structure of Foreign Trade (1945; rpt. Berkeley: University of California Press, 1980), pp. ix–x; Burke is quoted in Hirschman.

14. Kindleberger, , “Group Behavior,” pp. 4344, 46. The locus classicus for such reasoning is now Kurth, James R., “The Political Consequences of the Product Cycle: Industrial History and Political Outcomes,” International Organization 33 (Winter 1979), pp. 134.

15. Krasner, , “US Commercial and Monetary Policy,” p. 60; Gerschenkron, Alexander, Economic Backwardness in Historical Perspective (Cambridge: Harvard University Press, 1962)

16. Poulantzas, Nicos, Political Power and Social Classes (London: NLB, 1975), part 4.

17. Polanyi, Karl, The Great Transformation (New York: Farrar & Rinehart, 1944).

18. See Cumings, Bruce, The Origins of the Korean War: Liberation and the Emergence of Separate Regimes (Princeton: Princeton University Press, 1981), chap. 1. On Taiwan see Ho, Samuel, The Economic Development of Taiwan 1860–1970 (New Haven: Yale University Press, 1978), pp. 26, 32; he puts a similar emphasis on the role of the colonial state in Taiwan.

19. Lehmann, Jean-Pierre, The Image of Japan: From Feudal Isolation to World Power, 1850–1905 (London: Allen & Unwin, 1978), p. 178;Winter, M., “The Webbs and the Non-White World: A Case of Socialist Racialism,” Journal of Contemporary History 9 (01 1974), pp. 181–92.

20. Umemura, and Mizoguchi, , Quantitative Studies, pp. 7077.

21. Landes, David S., “Japan and Europe: Contrasts in Industrialization,” in Lockwood, William W., ed., The State and Economic Enterprise in Japan (Princeton: Princeton University Press, 1965), p. 182.

22. Cumings, Origins, chaps. 1 and 2; Ho, , Economic Development, pp. 2857; also Lin, Ching-yuan, Industrialization in Taiwan, 1946–1972: Trade and Import-Substitute Policies for Developing Countries (New York: Praeger, 1973), pp. 1328.

23. Palais, James B., Politics and Policy in Traditional Korea (Cambridge: Harvard University Press, 1975), pp. 119.

24. Ho, , Economic Development, pp. 43, 57.

25. Cumings, Origins, chaps. 8–10.

26. Stein, Guenther, Made in Japan (London: Methuen, 1935), pp. 181, 191.

27. Ohkawa, and Rosovsky, , Japanese Economic Growth, pp. 180–83, 197.

28. Ho, , Economic Development, pp. 7090;Lin, , Industrialization in Taiwan, pp. 1922.

29. Mason, et al. , Economic and Social Modernization, pp. 76, 78.

30. Lin, , Industrialization in Taiwan, p. 19.

31. Cumings, Bruce, “Corporatism in North Korea,” Journal of Korean Studies 4 (1983).

32. Cumings, Origins, chaps. 1 and 2.

33. Pempel, T. J., “Japanese Foreign Economic Policy: The Domestic Bases for International Behavior,” in Katzenstein, Between Power and Plenty, pp. 139–90.

34. Johnson, Chalmers, “A Japanese Model?” (Paper presented at the Japan Seminar, University of Washington, School of International Studies, Seattle, 05 1981); also Johnson, , MITI and the Japanese Miracle (Stanford, Calif.: Stanford University Press, 1982), pp. 305–24.

35. Allen, , Japan's Economic Policy, pp. 4250, 119–20.

36. Ohkawa, and Rosovsky, , Japanese Economic Growth, pp. 221–23.

37. Allen, , Japan's Economic Policy, pp. 50, 102, 128.

38. Ibid., pp. 51–54.

39. Emmerson, John, The Japanese Thread (New York: Holt, Rinehart & Winston, 1978), p. 256. I am indebted to Michael Schaller for providing me with this quotation.

40. Halliday, Jon, A Political History of Japanese Capitalism(New York: Pantheon, 1975), pp. 183–84.

41. Iriye, Akira, “Continuities in U.S.-Japanese Relations, 1941–1949,” in Nagai, Yonosuke and Iriye, , eds., The Origins of the Cold War in Asia (Tokyo: University of Tokyo Press, 1977), pp. 378407.

42. Viner, , “Power versus Plenty,” p. 91.

43. Roberts, John G., “The ‘Japan Crowd’ and the Zaibatsu Restoration,” Japan Interpretor 12 (Summer 1979), pp. 384415.

44. Maier, Charles S., “The Politics of Productivity: Foundations of American International Economic Policy after World War II,” in Katzenstein, Between Power and Plenty, p. 45.

45. Halliday, , Political History, p. 183.

46. See Kennan's, remarks in “Transcript of Roundtable Discussion,” U.S. Department of State, 6, 7, and 8 10 1949, pp. 25, 47, in Carrollton Press Declassified Documents Series, 1977, 316B.

47. U.S. Central Intelligence Agency, ORE 43–48, 24 May 1948, in HST/PSF file, Memos 1945–49, box 255, Harry S. Truman Library, Independence, Missouri.

48. Economic Cooperation Administration, unsigned memorandum of 3 November 1948, in Dean Acheson Papers, box 27, Harry S. Truman Library.

49. Central Intelligence Agency, ORE 69–49, “Relative US Security Interest in the European-Mediterranean Area and the Far East,” 14 July 1949, in HST/PSF file, Memos 1945–49, box 249, Harry S. Truman Library.

50. Calleo, and Rowland, , America and the World Political Economy, pp. 198202.

51. Draft paper, NSC 48, 26 October 1949, in NSC materials, box 207, Harry S. Truman Library. For a fuller elaboration see Cumings, Bruce, “Introduction: The Course of American Policy toward Korea, 1945–53,” in Cumings, , ed., Child of Conflict: The Korean-American Relationship, 1945–1953 (Seattle: University of Washington Press, 1983).

52. Krasner, , “US Commercial and Monetary Policy,” pp. 6366; Hirschman, National Power, passim.

53. Halliday, Jon, “Japan's Changing Position in the Global Political Economy” (Paper presented at the annual meeting of the Association for Asian Studies, 1979, Los Angeles).

54. See ibid.; also Caldwell, Martha, “Petroleum Politics in Japan: State and Industry in a Changing Policy Context” (Ph.D. diss., University of Wisconsin, 1980), chap. 2.

55. Vogel, Ezra F., “Growing Japanese Economic Capabilities and the U.S.-Japan Relationship” (Summary of the 1st meeting of the American Discussion Group on U.S. Policy toward Japan, Harvard University, 13 12 1979; hereafter cited as Harvard Seminar 1979).

56. Johnson, , “A Japan Model?” Also Allen, Japan's Economic Policy, pp. 108–9.

57. Pempel, , “Japanese Foreign Economic Policy,” pp. 163–64;Halliday, , “Japan's Changing Position”; Halliday, Political History, p. 283.

58. Ohkawa, and Rosovsky, , Japanese Economic Growth, pp. 118,235–36; Pempel, , “Japanese Foreign Economic Policy,” pp. 149–55.

59. Ho, , Economic Development, p. 103; Lin, , Taiwan's Industrialization, pp. 2728.

60. Ho, , Economic Development, p. 104.

61. CIA, , Handbook 1979, also Ho, Economic Development, pp. 108–11; also Mason, et al. , Economic and Social Modernization, p. 165.

62. CIA, Handbook 1979.

63. Allen, , Japan's Economic Policy, p. 130.

64. Ho, , Economic Development, p. 237.

65. Immanuel Wallerstein, “Dependence in an Interdependent World,” in Wallerstein, Capitalist World-Economy.

66. Ohkawa, and Rosovsky, , Japanese Economic Development, p. 92.

67. On Korea, see Mason, et al. , Economic and Social Modernization, pp. 78; also Kuznets, Paul W., Economic Growth and Structure in the Republic of Korea (New Haven: Yale University Press, 1977), pp. 4871; on Taiwan see Lin, , Taiwan's Industrialization, pp. 34, and Ho, , Economic Development, p. 106.

68. Amsden, Alice H., “Taiwan's Economic History: A Case of Etatisme and a Challenge to Dependency Theory,Modern China 5 (07 1979), p. 362.

69. Simpson, Paul B., “Report on the University of Oregon Advisory Mission,” mimeo. (Eugene: University of Oregon, 1961), p. 49. I am indebted to Tony Michel for bringing this quotation to my attention.

70. O'Donnell, Guillermo A., Modernization and Bureaucratic-Authoritarianism in South American Politics (Berkeley: University of California Institute for International Studies, 1973); see also the articles by O'Donnell, FernandoCardoso, Henrique, Kaufman, Robert, Kurth, James, Hirschman, Albert, and Serra, Jose in Collier, David, ed., The New Authoritarianism in Latin America (Princeton: Princeton University Press, 1979). Serra, Hirschman, and, in part, Kaufman challenge the O'Donnell theses.

71. Mason, et al. , Economic and Social Modernization, p. 47; Little, Ian M. D., “An Economic Renaissance,” in Galenson, Walter, ed., Economic Growth and Structural Change in Taiwan (Ithaca: Cornell University Press, 1979), p. 474. See also Ho, , Economic Development, p. 195.

72. Mason, et al. , Economic and Social Modernization, pp. 96, 129–32; Kuznets, , Economic Growth, pp. 73, 96–97; Lin, , Taiwan's Industrialization, pp. 8393.

73. Kuznets, , Economic Growth, p. 103; Wade, and Kim, , Economic Development, p. 100; Chul, Suh Sang, “Development of a New Industry through Exports: The Electronics Industry in Korea,” in Hong, Wontack and Krueger, Anne O., eds., Trade and Development in Korea (Seoul: Korea Development Institute, 1975).

74. Lin, , Taiwan's Industrialization, p. 134.

75. Huntington, Samuel, Political Order in Changing Societies (New Haven: Yale University Press, 1968), pp. 7, 25, 258–61.

76. Mason, et al. , Economic and Social Modernization, pp. 1617.

77. Kuznets, , Economic Growth, p. 85; see also pp. 105–7.

78. Mason, et al. , Economic and Social Modernization, pp. 16, 263, 485.

79. Ibid., p. 277.

80. Ibid., pp. 19, 486.

81. Ho, , Economic Development, p. 251.

82. Mason, et al. , Economic and Social Modernization, p. 22.

83. Lin, , Taiwan's Industrialization, pp. 139–44; Choe Boum Jong, “An Economic Study of the Masan Free Trade Zone,” in Hong and Krueger, Trade and Development.

84. Kuznets, , Economic Growth, p. 67; Mason, et al. , Economic and Social Modernization, p. 99; Greenhalgh, , “Dependency, Distribution”; seminar paper by Michel, Anthony, University of Washington, Seattle, 5 05 1983.

85. Kuznets, , Economic Growth, p. 152; Lin, , Taiwan's Industrialization, p. 137.

86. Chirot, Daniel, Social Change in the Twentieth Century (New York: Harcourt Brace Jovanovich, 1977), pp. 218–20.

87. Cole, David C. and Lyman, Princeton N., Korean Development: The Interplay of Politics and Economics (Cambridge: Harvard University Press, 1971), p. 135; also Kuznets, , Economic Growth, p. 71.

88. Greenhalgh, “Dependency, Distribution.”

89. Lin, , Taiwan's Industrialization, pp. 131–32.

90. Wade, and Kim, , Economic Development, p. 10; Kuznets, , Economic Growth, p. 103.

91. Hirschman, , National Power, pp. 3435.

92. Ibid., p. 30.

93. Mason, et al. , Economic and Social Modernization, pp. 138, 497; Kuznets, , Economic Growth, p. 73.

94. Kuznets, , Economic Growth, p. 85.

95. Lin, , Taiwan's Industrialization, p. 173.

96. Vogel, , Harvard Seminar 1979.

97. Lin, , Taiwan's Industrialization, p. 134.

98. A good summary of the recent economic problems of the ROK's export-led program can be found in Park, Yung Chul, “Recent Economic Developments in Korea” (Paper presented to the Columbia University Seminar on Korea, 24 04 1981).

99. See “South Korea's New Leaden Off and Running,” Far Eastern Economic Review, 30 01-5 02 1981; Christian Science Monitor, 5 01 1982; Tonga Ilbo (East Asia Daily), 26 12 1981.

100. World Bank, Korea: A World Bank Country Economic Report, Hasan, Parvez and Rao, D. C., co-ordinators (Baltimore: Johns Hopkins Univesity Press, 1979), pp. 89, 47. This is also a good source on World Bank criticism of Korea's deepening industrialization strategy during the Third Five Year Plan.

101. Lecture by Thorpe, Norman, Seoul correspondent for the Asian Wall Street Journal, Seattle, Wash., 8 01 1982; also Marcom, John Jr, “Korea Dents Japanese Dominance in Steel,” Asian Wall Street Journal, 28 12 1981.

102. Raymond Vernon, in Harvard Seminar 1979, Halliday, Jon, “The Struggle for East Asia,” New Left Review no. 124 (12 1980), pp. 324.

103. Vogel in Harvard Seminar 1979.

104. Vernon in ibid.

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