Example research essay topic: Analysing The Growth Of Korean And Japanese Economy – 1,412 words

… observers, the temptation to compare Korean
and Japanese development is irresistible. Many
people, both Koreans and foreigners try to
estimate the number of years Korea is behind
Japan. In this regard there is an interesting
coincidence; Korea was opened to foreign trade 23
years later Japan 1876 versus 1853. Similarly
Korea hosted the Olympics 24 years later they were
held in Japan in 1964, and finally in terms of
major economic indicators many Korean economists
say that Korea is also behind Japan by about 20 to
25 years. Japan aimed to develop the economy and
its army to meet the global competition, Japanese
reforms were meant to catch up with the western
countries and emerge as a self- sufficient and
strong power, similarly the motivational force
behind Korea was to develop the economy and to
compete with North Korea.

National growth was the
main focus in both the countries, the investments
decision by the businessmen in Japan and Korea
were made in national interest. During the Meiji
period, Japan lacked experienced entrepreneurs, so
was the case in Korea, therefore the governments
decided to develop and run certain key industries
while concentrating and helping few capable
entrepreneurs. Japanese industrial policy is
considered to be the most successful in the world.
According to M. Shinohara (1982) The Japanese
industrial policy equates to policies adopted by
the ministry of intervention trade and industry
(MITI) that have been designed to bring about an
overall strengthening of international
competitiveness of various modern industries. With
the offset of the first five-year plan in Korea,
it adopted similar industrial policy as in Japan
to achieve rapid economic growth. The business
conglomerates and the government facilitated the
industrial development in Japan.

In Japan the main
government organisation was MITI, however in Korea
the main government organisation was the president
himself, assisted by the economic planning board
and the MTI. As S Y. Kwack (1994) says Because the
role of government was much stronger in Korea than
in Japan, especially during the 1961-79 perioda
cooperative effort in which government took the
lead and business followed, whereas the opposite
was perhaps the case of Japan. The economic
development in Korea is characterised by high
growth rate, similar to Japan, however the time
span of growth in Japan was relatively short. B N.
Song says According to world bank statistics, the
average annual growth rate for per capita GNP in
Korea was 6.4 percent for the 1965-87 period this
far exceeded Japans growth rate of 4.3 percent
over the same period. During the economic growth
period in Japan, the average growth was higher
than Korea, because Japan did not face any
problems in this period, in fact the circumstances
were favourable and it boosted the economic
growth.

The banks in Japan were large and
privately owned; these played an important role in
promotion of industrial and economic development,
because the finance was easily and equally
available to everybody. Whereas in the case of
Korea the banks were small and were owned by the
government, the main role of the banks was to
implement the financial policies, therefore there
contribution was nominal towards the industrial
growth. The industrial policies of Japan and Korea
were also different. Japans policy was to develop
promising and modern infant industries on an
overall basis, while Korea directed its policy
towards development of export- led industries
leaving the other sectors under developed. Along
with export promotion, import substitution was
followed in Japan. In Korea export promotion was
accompanied by import promotion, the firms in
Korea were allowed to freely import machinery,
parts and raw material for the production of
export goods.

Goods could be imported up to the
value of export earnings. B N. Song states this is
the reason why imports expanded rapidly with the
rise of exports and why trade deficit grew sharply
between 1962 and 1985import substitution as such
was not considered an explicit policy objective
after the adoption of the export oriented growth
strategy. Japan had a huge domestic market, if any
firm was able to compete with the larger firms
then it was capable to export its products in the
world market; this boosted the export promotion
activity. In Korea the domestic market was too
small and so the firms had to directly start on an
international platform. In the domestic market
they marketed their goods only to meet the
domestic demands.

In Japan high economic growth
was achieved by strong demand from domestic
markets and high exports. Japan was capable of
producing parts and machinery required by the
export industries, therefore the export industries
were supplied with parts and machinery
domestically. However in the case of Korea, due to
concentration on only few industries, and small
domestic market it had to import goods for
production process in export industries. B N. Song
discusses When I computed the proportion of total
imports to the total output tables for the Korean
and Japanese economies for 1985, I found that the
figures for Japan was 6.9 percent, much lower than
the Korean figure of 28.1 percent for the same
year. The high economic growth in Japan was an out
come of export promotion as well as heavy
investments in domestic markets, in Korea as the
domestic market was small, investments were much
low.

There was an overall economic development in
Japan i.e. the large, medium and small sized firms
developed at the same time, where as in Korea the
main focus was on development of heavy industries.
Both the economies have been successful in
implementing there policies and developing the
economies. However Korea was not able to withstand
Asian crises. From riches to rags, once looked
upon as a role model for development, is in worse
economic crises. According to K O’Toole (1998)
Korea, known these days as one of the world’s
biggest debtor nations. According to OCED (1999)
the causes for this downfall were First the
corporate sector was characterised by low level of
profitability and high level of debt, reflecting
the tendency of the business conglomerates to
diversify into capital intensive industries.
Second, Korea had a poorly functioning financial
system that was further weakened by a string of
major corporate bankruptcies in 1997.

Third,
Koreas short term foreign debt was high relative
to its decision to liberalise short term
borrowings rather than direct investment inflows.
On the contrary though Japan faced the same crises
it was able to survive because, the Japanese
government was innovative in its approach for
example the government shifted towards promotion
of I-T industry. Korea has set up new plans to
overcome these crises. According to BBC News
(1998) The newly appointed Deputy Prime Minister
and Finance Minister, Lm Chang-Yuel, recognised
the need for financial reform and announced a
government plan to help the country’s economy. It
included a $10bn fund to help banks write off bad
debts, and a wider trading range of 10% for the
South Korean currency The IMF granted its biggest
ever loan of 57bn. Deregulation and globalisation
are the key issues, which need to be dealt with,
in present economic situation, according to
Ministry of foreign affairs, Japan. Japan in the
new millennium is likely to see an unprecedented
level of restructuring and merger and acquisition
activity, including major mergers and alliances
with foreign companies.

Similarly After Kim
Dae-Jung became the president of Korea measures
have been taken for speedy recovery from the
crises, the country is focusing on developing
financial segment, privatisation of sate owned
companies, opening the countries doors to foreign
investors and fundamental restructuring of the
companies. As B N. Song said we do not believe
that developing countries that want fast growth
can succeed simply by adopting macro-economic
policies similar to those in Korea. But an overall
development is essential to achieve the status of
self-sufficiency. References 1) Byung Nak Song,
The Rise of the Korean EconomyOxford University
press; year 1990. 2)BBC News, South Korea:
economic reforms run into difficulty; year1998
January 8, Published at 13:10 GMT.

3)Chenery
Hollis B and Moshe Syrquin, Patterns of
development, Oxford University press; year 1977.
4)Ha-Joon Chang, The Political economy of
Industrial policy in Korea, Cambridge journal of
economics; year 1993. 5)Kathleen O’Toole, Whats
next for Korea?; year 1998 source:
(http://www.stanford.edu/dept/news/report/news/jan
uary14/korea114.html) 6)Ministry of Foreign
Affairs, Japan, Japans economy enters an era of
globalisation; year 2001 Source:
(http://www.japan-emb.org.sg/JapanAccess/economy.h
tm) 7)Miyohei Shinohara, Industrial growth, trade
and dynamic patterns in the Japanese economy,
Tokyo, University of Tokyo press; year 1982.
8)OCED Economic Surveys, Organisation for Economic
co-operation and development; year 1999. 9)Sung
Yeung Kwack, The Korean economy at a crossroad;
year 1994..

Research essay sample on Analysing The Growth Of Korean And Japanese Economy