COLONIAL LEGACY AND MODERN ECONOMIC GROWTH
IN KOREA: A CRITICAL EXAMINATION OF THEIR
RELATIONSHIPS
YANG JONGHOE
Sungkyunkwan University
This paper examines the relationship between colonial experience and subsequent economic
development in Korea by closely looking at the process of economic growth during
the 1960s, when the Korean economy began to grow rapidly. Five aspects of colonial
legacy are usually identified as responsible for the take-off: an infrastructure of
communications and transportation, an industrial base, the strong state, accumulation
of high-quality human capital, and nationalism. However, most of the material capital
inherited from colonization had been destroyed by the Korean War, or not fully functional
due to lack of operating personnel and to the division of the country into the
North and the South. The remaining are indeed regarded as major factors for rapid economic
growth by many students of Korean development, but are only marginally related
to the colonial experience. In addition to these factors, the favorable international
environment since World War II and Confucian values were crucial for the growth of
Korea’s export-oriented economy. Thus, if the Japanese colonial legacy had anything to
do with the economic growth of modern Korea, it was “construction by destruction” or
“contribution by negation.”
Key Words: Colonial Legacy, Economic Development, Developmental State,
Nationalism
INTRODUCTION
Recent economic growth in Korea has been examined extensively by students
of development, as it represents an exceptional case of late development.
It is exceptional as Korea is one of the few non-Western, ex-colonial
countries that have achieved successful economic development since World
War II. The search for clues for Korea’s economic success, as well as for
those for other members of the newly industrializing countries in East Asia,
has yielded diverse theories and approaches. These theories and approaches
have suggested, as determinants for development, such factors as human
capital, the developmental state, and Confucian culture.
However, initial enthusiasm in finding single factors that could explain
the development experiences of the so-called four little dragons (Korea,
Taiwan, Singapore and Hong Kong) has waned, due to the realization that
not only do the four countries differ dramatically in their developmental
DEVELOPMENT AND SOCIETY
Volume 33 Number 1, June 2004, pp. 1~24
processes, but also that more complex mechanisms than a few sets of variables
are involved in development. Thus, some have turned to historical
approaches in their efforts to account for the Asian economic miracle. They
have especially focused on the colonial past in the Korean case, because it
seems to be during the colonial period that many of the modern institutions
were established, and that industrialization first began in Korean history.
Due to the distinct nature of colonial modernity, however, the effects of the
colonial legacy on subsequent development after liberation have been a
moot point among scholars. More nationalistic Korean scholars are prone to
reject the thesis by pointing to the contradictory and exploitative nature of
colonial modernity. In contrast, more empirically oriented researchers, many
of whom are foreign experts on Korean history, tend to argue for the positive
effects of colonial legacy, by analyzing statistical data on colonial industrialization.
This paper examines the controversy surrounding the colonial origin of
recent economic development in Korea. Since modern economic growth
began in earnest from the early 1960s, when the Park Chung Hee regime
first launched a series of ambitious economic development plans, the first
section of this study focuses on the process of economic growth in that
decade, and tries to determine whether economic growth indeed originated
during the colonial period. In order to test the thesis that the Japanese colonial
legacy provided the basis for Korea’s late industrialization, I will examine
the works that deal with the colonial period in the second section, and
theories and explanations for Korean economic growth since the 1960s in
the third section. In the fourth section, I will compare the two groups of
works and closely investigate each of the factors that are considered by
them in order to evaluate the colonial legacy thesis. Finally, conclusions are
presented in the last section.
COLONIALISM AND DEVELOPMENT
It is usually the case that colonial powers promote changes in colonial
societies, but within very specific limits. Changes introduced by the colonial
powers are generally confined to administrative and technical areas, rather
than deeper levels of social and cultural spheres, and are focused on the
central institutions of the society without parallel changes at the local level.
In the economic field, a market-oriented economy and certain limited types
of industries are encouraged to develop in order to facilitate the production
of those products which the imperial economy could use. In order not to
disturb the existing social order, however, they are expected to operate with-
2 DEVELOPMENT AND SOCIETY
out full development of new economic motivations or full participation of
the local population. In addition to these, the modern colonial economy’s
unequal ties to the metropolis’ economy usually result in distortion of the
former, which in turn have detrimental effects on its subsequent economic
development after independence (Eisenstadt, 1966: 110-111).
This general picture of a colonial economy was adopted by many Korean
economic historians and social scientists, in approaching the colonial period
in Korean history. Most of them examine Korea’s colonial experience from a
nationalistic perspective, and draw a conclusion similar to the above. These
scholars can broadly be divided into two distinct camps: the so-called
“sprout” school and those who deny both the “sprout” thesis and the colonial
origin of capitalist development in Korea. The basic idea of the sprout
(maenga) school is that the seeds of capitalism were evident in the late
Choson dynasty that had sprouted and could have grown in full if there
was no outside interruption. According to this theory, both the rise of rich,
managerial farmers, who hired wage-laborers in their commercial farming
and produced agricultural commodities to sell in the market, and increasing
commercialization in the 17th and 18th centuries, were signs of nascent capitalism
in Korea. Thus, the Japanese colonial period should not only be
rejected as the origin of Korean capitalism, but should also be treated as distorting
and obstructing the process of capitalist development.1
Theorists within the nationalistic camp are critical of the sprout school.
For example, Cho Kijun (1973) suggests that Korean capitalism began to
develop in earnest after liberation from Japanese colonial rule, rejecting both
the sprout theory and the positive effect of colonialism. He points out that
the colonial economy was a dual economy that depended on the Japanese
economy in terms of capital and technology, so that it ceased to produce
when Japan withdrew from Korea in 1945. He also notes that the division of
Korea into the North and the South disintegrated the industrial system and
severely hampered its production capacity. As a result, the Korean economy
had to start afresh after Korean independence, due to the unfavorable colonial
legacy.
These studies, however, tend either to pay little attention to statistical data
or to not place much confidence in empirical data. Thus, scholars who are
more empirically oriented may suggest contradictory interpretations to
those of nationalistic authors. Suh Sang-chul (1978) is one of the early
Korean economists who seriously examined empirical data, and attempted
to limit their arguments strictly within the purview of available data. Based
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 3
1 Earlier representatives of this school include Kim (1971) and Kang, M-G (1973).
on economic growth theory, he argues that the Korean economy under
Japanese colonial rule was marked by real growth of commodity production
per capita, industrialization accompanied by urbanization in the 1930s,
rapid and substantial change of the economic structure, and remarkable
expansion of foreign trade. He also points out that some concomitants of
pre-war economic growth, such as modern facilities and institutions including
transportation and communications facilities, a modern banking and
monetary system, modern factories, education and administrative facilities,
and various survey data in relation to development of the potential of the
Korean economy, were transferred to post-colonial Korea. However, by indicating
that colonial development failed to create such dynamic factors as
human elements, social values and organizational frameworks for further
economic development, he concludes that the colonial development produced
both conducive and detrimental factors for postwar economic growth
(Suh, 1978: 154-156).
Beginning in the early 1980s, studies have appeared that challenge the
nationalists’ simplistic arguments, and instead insist on the interlocking
relationships between colonialism and modernity. There are roughly two
groups of researchers in this revisionist camp. A group consists of Western,
mostly American, experts on Korean history, and the other group consists of
Korean and Japanese economists and economic historians who have collaborated
in a research project since the late 1980s.
It is interesting to note that most Western scholars studying modern
Korean history and/or development are almost unanimous in emphasizing
the role of Japanese colonial legacy in Korea’s later economic development,
and dismissing the thesis of the “sprout” school as not being supported by
sufficient evidence. For instance, Mason and his collaborators (1980: 75)
state: “Japanese colonial rule cannot be seen as an unrelieved disaster. … [It]
laid some of the key foundations for Korea’s later entrance into modern economic
growth.” Cumings (1984: 481) also argues that “the colonial period
played an undeniable role in placing Korea above most Third World nations
by 1945. … Korea’s capitalist revolution began — and got a long running
start — during the colonial period.” Similarly, Eckert (1991) criticizes the
“sprout” thesis, by indicating that there is simply not enough evidence for
it. He points out that the level of commercialization toward the end of the
late Choson dynasty, one of the key sprouts of capitalism that nationalist
theorists support, was not comparable to that seen in Tokugawa, Japan, and
that the existence of private artisans and hired labor cannot be regarded as
evidence of capitalist development, because “capitalism as an economic system
cannot be separated from industrialization (Eckert, 1991: 4).” In short,
4 DEVELOPMENT AND SOCIETY
according to Eckert, modern industrial technology in Korea was not invented,
but imported first through Japan during the colonial period.
In arguing for the positive role of Japanese colonialism in the colony’s
capitalist development, these Western scholars stress the distinct characteristics
of Japanese imperialism that could differentiate the Korean colonial
experience from others, say, those of African colonies by European imperialists.
Cumings (1984: 482) points to four of these differences: “it was late in
world time; it involved the colonization of contiguous territory; it involved
the location of industry and an infrastructure of communications and transportation
in the colonies, bringing industry to the labor and raw materials
rather than vice versa; finally it was accomplished by a country that always
saw itself as disadvantaged and threatened by more advanced countries.”
According to Cumings, the consequences of this distinctive imperialism for
its colonies, especially Korea, are manifold and significant. The territorial
contiguity made possible a tight linkage between the metropolis and the
colonial territories, to which Japan responded quickly with construction of
an extensive network of railroads, opening of ports and heavy investments
in communication sectors. In addition to these, a strong, centralized state
with a highly articulate and disciplined bureaucracy replaced the weak government
of the late Choson kingdom, and old institutions such as the subsistence
agrarian economy and Confucian education were substituted by the
market economy and modern, Western-style education. Japanese imperialism
also brought stable currency, credit and banking facilities, uniform
weights and measures, and the rule of law to the colony, which provided a
basis for commercial and industrial activity (Cumings, 1984).
These economic and social changes from Japanese colonialism not only
put an end to most of the traditional institutions of Korean society, but also
laid the basis for the development of Korean capitalism, according to the
Western scholars of modern Korean history. In terms of the effect of the
colonial experience on Korea’s economic growth since the early 1960s, they
seem to indicate four strands of colonial legacy. First and most important is
the extent of industrialization, which was expanded dramatically and rapidly
in the 1930s, after the Japanese engagement in war with China. During
WWII, Japanese imperialism transformed Korea into a supply base for food
and war materials. Along with the development of an infrastructure of
modern transportation and communications facilities, Japan located not
only such light industries as textile, but also various heavy industries
including steel, chemicals, and hydro-electric power, which were estimated
to be about a quarter of Japan’s industrial base by 1945 (Cumings, 1984:
487).
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 5
Second, as Eckert’s study on the origin of one of Korea’s leading entrepreneurial
families indicates, Japanese colonialism nurtured a small, native
capitalist class in colonial Korea, which has actively participated in Korea’s
late industrialization process after its liberation. According to Eckert (1991:
254), about 60 percent of the founders of Korea’s top fifty chaebols had some
colonial experience. They were mostly from the landed class, and the
Japanese colonial power saw it useful to keep them intact in order to extract
rice and to keep the countryside stable. However, they were encouraged to
enter into business activities such as publishing and education, as a result of
the so-called cultural rule that the colonial government replaced from the
previous repressive rule. Koreans were largely excluded from modernizing
activities, despite heavy industrialization and development of such modern
institutions as the elaborate administrative bureaucracy and educational
facilities. Thus, one estimate shows that more than 90 percent of capital in
the major enterprises had Japanese owners (Cumings, 1984: 489). Still, a significant
number of capitalists, along with a new urban intelligentsia, a small
group of white-collar managers and technicians, and a modern labor force
emerged during the colonial period.
Third, colonial industrialization provided a model of successful capitalist
growth. The model shares, with the Japanese archetype, such elements as
the central economic function of the state, the concentration of economic
power in the hands of a few major corporations (chaebol), the export-oriented
economy, and the threat or actuality of war as a stimulus for economic
growth. There are, of course, differences between the original Japanese
model and the Korean model in other respects. However, according to
Eckert (1991: 255-256), two aspects of the model are important in terms of
the role of colonial legacy in Korea’s later economic growth. One aspect is
the predominance of the state in economic affairs, and the other aspect is a
considerable dependence of Korean capitalists on their Japanese counterparts.
These are evidently present and are regarded as important in the
Korean pattern of capitalist development.
A fourth aspect of colonial legacy is a political dark side, that is, the bourgeoisie
in league with the forces of authoritarianism. The capitalist class
during the colonial period developed in close collaboration with the colonial
dictatorship, and was conditioned to working within an authoritarian
political framework. Since the bourgeoisie were politically unstable due to
their lack of nationalist credentials, they had to rely on the oppressive
power of the colonial government. This situation was replicated after 1945
(Eckert, 1991: 257-258). Until very recently, Korea’s major corporations had
been under the close control of, and flourishing in close cooperation with,
6 DEVELOPMENT AND SOCIETY
the authoritarian government.
Along with these Western scholars, a group of Korean and Japanese economic
historians and social scientists joined forces to provide an alternative
explanation to the nationalistic theory of the immanent momentum of capitalist
development in traditional Korean society. In the latter half of the
1980s, they initiated a project called “a historical study on Korean economic
development.” Their research interests were mostly concentrated on the
intensive wartime industrial growth in colonial Korea. They analyzed the
1930 and 1940 censuses and other statistical data using sophisticated
research methods. Their research was based on two fundamental assumptions.
First, the Japanese colonial exploitation of Korea was not a simple
plunder, but exploitation through development. A general tendency among
some scholars to underestimate the developmental aspect of Japanese colonialism
and to overestimate its exploitative aspect tends to ignore the fact
that capitalism was indeed developed by Japanese capital in colonial Korea,
and that modern classes were formed among the Korean population.
Second, Korean national capital that was considered by nationalistic scholars
to have sprung from inside Korean society was in fact neither autogenous,
nor always antagonistic toward Japanese capital. Korean capital during
the colonial period was transplanted capital under the influence of
Japanese capitalism, and survived and developed with a complicated relationship
with the latter (An, 1993: iv). From their research, these scholars
found that colonial industrial growth during the 1930s and the early 1940s
brought about an extensive range of structural changes that transformed the
traditional agrarian society into a dependent and yet developing urban society
and capitalist economy. The changes that occurred during this period
include: “(1) the penetration of society by capital; (2) the rapid change in the
occupational structure of the society; (3) the large-scale migration of peasant
farmers into urban areas; (4) rapid urbanization; (5) a substantial increase in
the number of male industrial workers; (6) an increase in the number of
small- and medium-scale Korean capitalists and entrepreneurs (Park, S-W,
1999: 131).”
Responses to these revisionist studies by nationalist scholars are characteristically
negative. One of their criticisms is that these studies focus only
on quantitative aspects of the colonial economy, ignoring issues of national
identity and autonomy. Another criticism is against their supposed overemphasis
on the role of Japanese imperialism on colonial capitalist development,
while underestimating native capital (Chung, J-J, 1996: 81-82). These
nationalist and progressive Korean social scientists do not seem to dispute
the very existence of colonial capitalism, colonial modernity and colonial
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 7
industrialization. What they disagree on are their characteristics, motives,
processes and consequences. Thus, for instance, Kim and Chung (1997) look
at colonial education not so much as an enlightening medium, but as a
means to transform the colonial population into the imperial subject that
could be mobilized without much coercion, by inculcating them with modern
discipline. The consequence of colonization on nationalism has also
been a frequent topic for these scholars. For instance, Park (1996) argues that
Japanese colonization affected Korean nationalism in two ways. First, it
served to unite the two strands of nationalism into one that sought modernization,
discarding the other line that tried to preserve traditions. Second,
nationalism, which was first discussed mostly by the elite, was now widely
spread into the general public. From a different perspective, Robinson
(1988) analyzes nationalist movements during the colonial period and concludes
that Korean nationalism developed after 1910, and that Japanese
colonial policies had much to do with the split among nationalist leaders.
In this vein, Chung Tae-Hun (1996: 250) redefines the characteristics of
colonial modernization as follows. First, colonial capitalism is a form of
transplanted capitalism that is the most efficient exploitation system, carrying
with it physical violence. Second, reason and rationality replaced the
pre-modern, non-scientific, and irrational system of thought in the colony,
in order to effectively mobilize people needed to implement colonial policies.
Third, the establishment of a modern nation state that is the basis for
citizenship and for capital accumulation was curtailed by the colonial government.
Fourth, the opportunity to develop democracy, the most important
value to realize modernity, was lost by the authoritarian dictatorship of
Japanese imperialism.
One of the implications of the debate among these diverse schools is “the
intrinsic, non-monolithic nature of the colonial industrial growth, its diverse
impacts on social differentiation and fragmentation, and the colonial modification
of modernization (Park, S-W, 1999: 131).” This theme of a unique
colonial modernity has also been a major topic that was explored during the
past decade by a group of students of Korean history and development,
who attempt to escape the trap between nationalistic bias and the illusion of
positive colonial modernization. They view the relationships between
nationalism, modernity and colonialism as mutually reinforcing. They also
put forward several revisionist theses regarding tripartite relations in the
Korean context: the colony-metropolitan relationship is not a zero-sum
game; Korean reception of modernity was mediated by a complicated filtering
mechanism, that is, colonialism; and the uneven spread of colonial
modernity created a potential for constructing diverse and competing forms
8 DEVELOPMENT AND SOCIETY
of identity within a complex field of cultural hegemony. They also posit that
economic growth, infrastructure development, education, and the creation
of human capital and institution building should not be dismissed as byproducts
of Japanese exploitation (Shin and Robinson, 1999). Others focus
on specific areas or topics such as legality (Lee, 1999), the status of women
(Choi, 1999), broadcasting (Robinson, 1999) and communications (Yang,
1999) during the colonial period.
These recent studies render more balanced analyses of the colonial experience,
and attempt to provide subtler interpretations of colonial modernity.
Thus, they may be more helpful than most other studies reviewed here in
answering the question of colonial development and its impact on subsequent
economic growth in the late 20th century. However, it is not until
there is an equally balanced and careful analysis of the process of economic
growth that we can possibly answer the latter question of the modern
effects of colonialism. Equally important is a critical study of the period
between the end of the colonial period in 1945, and the early 1960s, when
the Korean economy took off for sustained and rapid economic growth.
Unfortunately, socioeconomic research on this 15 year gap is lacking, seriously
undermining our understanding of the relationship between colonial
legacy and the growth experience (Park, S-W, 1999: 159; An, 1993: v). In the
following sections, I will try to identify major factors responsible for the initial
economic take-off in the 1960s, and to evaluate their possible connections
with colonial modernity. In the next section, I will first consider the
period between 1945 and 1960.
ECONOMIC GROWTH IN THE 1960S AND SOME THEORETICAL
EXPLANATIONS
The period between 1945 and 1962 has been one of the most eventful in
Korean history. Japan’s surrender to the Allied forces in 1945 liberated
Korea from the 35- year colonial rule. However, it also meant the division of
Korea into the U.S.-occupied South and the Soviet Union-occupied North.
South Korea had undergone three years of U.S. military rule before the
establishment of a modern, independent state. In terms of the economy, the
independent Korea lost its major export market, Japan, and the division of
the country separated the national economy into light industry and rice in
the South, and heavy industry and energy sources in the North. The military
government implemented various reform measures to liquidate the
colonial legacy and to build an independent national economy. Ironically, it
had to rely on those who had experience in colonial government for its
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 9
administration and policy implementation. Among the policies, land reform
had the farthest-reaching consequences on Korean society, although it was
far from complete because of resistance from the old landlord class, foreign
influence and the Korean War. Also, an effective national education system
was created in this period (Michell, 1988).
The U.S. military government handed over its political power to an elected,
domestic government in 1948, ending the three-year military rule and
establishing a first modern national state in Korea. Thus, two ideologically
opposite regimes in the Korean peninsula, the communist in the north and
the liberal democratic in the South, were created, and fierce antagonism and
conflicts between them have ensued since then. In 1950, the Korean War
broke out and lasted 3 years, which devastated the whole Korea. The war
not only destroyed most of the pre-1950 capital investment, but also provided
the momentum for the U.S. and other Allies to provide heavy economic
aid to South Korea. The total value of foreign aid between 1953 and 1961
amounted to 64 percent of the annual total investment in Korea (Lee, Jong-
Won, 2002: 93). The presence of U.S. troops in South Korea ever since has
been a major guarantor of the country’s security. The War also helped to
unite social classes, and produced “the will to develop” in the early 1960s.
Evidence of this will was a rise in the demand for education. As a consequence,
the illiteracy rate was greatly reduced from 78 percent in 1945 to
27.9 percent by 1960 (Michell, 1988: 11).
Politically, however, the period was turbulent. The first few years of modern
Korean politics were marked by the division of politicians into nationalist
exiles and those who remained home and collaborated with the Japanese
imperial power, and by the ideological conflict between the liberal democrats
and the communists. However, the Korean War helped to unite divided
politicians and to settle each ideology within each of the two separate territorial
entities. In the South, an anti-communist regime could consolidate its
political power and establish a dictatorial government. The corrupt and
incompetent Rhee Syng Man regime, which ruled the first modern Korea2
for more than 10 years, was finally put down in 1960 by popular uprisings,
especially by violent student demonstrations. An opposition party led by
Chang Myun won in a general election after the fall of the Rhee regime, and
Chang became a premier. However, within a year a military coup broke out
and an army general, Park Chung Hee took over the government. As a way
of securing legitimacy for its military regime, the Park Government committed
itself to national economic development, which resulted in remarkable
10 DEVELOPMENT AND SOCIETY
2 From now on, Korea denotes South Korea only, unless indicated otherwise.
economic growth, with an average GNP growth rate of nearly 9 percent for
the decade of the 1960s. National economic development must have started
almost from scratch. The per capita income in 1960 was a mere 82 dollars,
comparable with that of Japan in 1868. The industry’s share in the GNP and
the labor force corresponded to that of Japan in 1900 and of England in 1700
(Michell, 1988: 11). The Park government initiated a series of five-year economic
development plans beginning in 1962, with a major economic policy
shifting from the import-substitute to the export-oriented strategy in the
early 1960s. The result is a remarkable success story recounted many times
by both domestic and foreign scholars. Thus, only a cursory overview of the
process will be sufficient.
The gross national product grew on the average by 8-9 percent per annum
during the period from 1965 to 1990. The high economic growth rate can
mainly be attributed to rapid industrialization and expansion of foreign
trade. The once predominantly agrarian society had been transformed into
an industrial society in a decade, and then into an information society in
less than four decades. The proportion of secondary industry in the national
product outweighed that of primary industry for the first time in 1973.
Initially, the industrial sector was dominated by light industries, but heavy
and chemical industries soon began to take over and weighed more than
half of the industrial sector in the mid 1970s. The growth of export has been
no less remarkable. South Korea exported goods and services worth a little
more than 30 million dollars in 1960, but the total value of exports reached
the 10 billion dollar mark in 1971, and 100 billion dollars in 1995.
How can one explain this unprecedented economic growth achieved in
such a short period of time by a country that was a colony only fifteen years
before the take-off? Along with Taiwan, Hong Kong and Singapore, Korea
constitutes the so-called four little dragons in Asia, and has been examined
intensively in a number of studies. These studies have produced a plethora
of theories, explanations, and factors, but we may group these theories and
explanations into three broad approaches, that is, economic, political economy,
and cultural. Each of these approaches includes several specific theories:
growth theory and neo-classical economic theory within the economic
approach; dependency/world-system theory, the developmental state theory
and the holistic-structural theory within the political-economy approach;
and modified modernization theory and Confucian values theory within the
cultural approach. In the following section, I will briefly review each of
these approaches before attempting to extract a common set of factors for
Korean development.
Growth theory is a supply-side economic theory that applies the standard
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 11
economic theory of production to economic growth. According to this theory,
an increase in at least one of the production functions, that is, capital,
labor and technology, will make the economy grow. Thus, many economists
who specialize in economic growth attribute the Korean case of growth to
high-quality human capital and technological advancement, among other
factors. Specifically, they emphasize an abundant supply of well-disciplined,
well-educated and low-cost labor, and the competent and entrepreneurial
bourgeois class, in addition to the active intervention of the government
in the economy (Lee, J-W, 2002: 166; Amsden, 1989; Park, T-K, 1999).
However, since this theory tends to ignore most non-economic factors, few
social scientists seem to subscribe to it.
The neo-classical economic theory explains the East Asian economic success
in terms of the theory of comparative advantage. According to this theory,
the export-oriented development strategy of these countries is chiefly
responsible for their economic achievement, because they have comparative
advantages in the factors for export economy. This liberal economic theory
is based on the dynamics of the free market, and joins growth theory in
neglecting other than economic factors, such as political, social and cultural
ones.
Dependency/world system theory is basically a theory of underdevelopment,
emphasizing the exploitative nature of the economic relations
between core and peripheral countries, and is thus unable to explain such
peripheral development as that of the four little East Asian dragons. A modified
version does explain the so-called dependent development, utilizing
such concepts as the triple alliance among the state, the local bourgeois, and
transnational capital (Evans, 1979; Lim and Yang, 1987). However, dependent
development is a limited development, and cannot anticipate such a
prolonged experience of high economic growth as that of the East Asian
countries. Still, the theory provides important insights, such as the dynamics
of the world capitalist system and of class relations, while neglecting
other social and cultural factors.
In many ways, the East Asian development experience is quite distinct
from those of the West, due to the huge gap between them in terms of historical,
structural and cultural aspects. As a consequence, there have been
efforts to reflect these aspects in the analysis of East Asian development.
Depending on the emphasis, the efforts are divided broadly into the institutional
and the cultural approaches. The most popular example of the institutional
approach is developmental state theory. It is a political economy
approach, stressing the role of the state in economic development. At the
core of the theory lies the assertion that the market in less-developed coun-
12 DEVELOPMENT AND SOCIETY
tries cannot develop spontaneously, as classical economic theory might
assume, but requires the active and efficient intervention of the state in the
economy (Johnson, 1987). However, not all state intervention produces successful
growth of the market; only the developmental state, as contrasted to
the predator state, can produce economic growth. Successful state intervention
in the market requires the autonomy of the state from social forces, in
order to be able to plan and implement longer-term economic policies. Class
conditions, such as “breakdown of the landlord class, weakening of opposition
movements, and hegemonization of modernization projects and developmental
alliances” made state autonomy possible in South Korea (Cho and
Kim, 1998: 154). Thus, the developmental state has played an active role not
only in capital accumulation and investment distribution, but also in controlling
finance, the market, taxation and prices, and in effectively regulating
the relationship between the domestic industry and the international
economy (Lim, 1998: 59). However, developmental state theory seems to
forget the simple fact that the state does not produce. The production organization,
whose main actors are the bourgeois and labor, actually produces
commodities. It must also be noted that the market affects production in
many critical ways.
In this regard, Shin (1998) proposes a holistic and structural theory that
considers not only the role of the developmental state, but also the organization
of production, market and dynamics of international political economy,
in explaining the growth experiences of the East Asian countries. According
to the theory, these factors for the East Asian development are distinct in
many ways. The states have autocratic power and intervene with the economy
by establishing centralized economic policy making organizations, by
managing investment by controlling the flow of money, by initiating exportoriented
industrialization, and by maintaining a good business climate.
Strategic firms supported by the state may be characterized as soft, budgetconstrained
firms, the concept borrowed from Kornai, and the labor-management
relations in these countries are despotic. Another characteristic of
the East Asian economies is their dependence on Japanese technology and
on the U.S. market. In terms of international political economy, U.S. aid, the
Korean War and the Vietnam War contributed greatly to the economic
growth by providing necessary capital, and the Cold War made the
American market accessible to these newly industrializing countries.
Finally, authoritarian regimes in these countries created a best business climate
for foreign, especially Japanese and American investors, by their
repressive labor policies, and cheap and abundant labor.
However these political-economic theories cannot sufficiently answer
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 13
such critical questions as: Why have only certain East Asian countries
among the many with strong states and intervention policies succeeded in
economic development?; Why did the labor work hard and not protest
against harsh treatment by both the state and management?; Why did major
corporations comply with the one-sided policies of the authoritarian government?;
Why did the general population not strongly demand civil rights
which were suppressed severely? Thus, some researchers have turned to the
cultural aspect in their search for crucial factors that could help to explain
the uniqueness of the East Asian experience of economic growth, beyond
the political economy interpretation of the developmental state theory.
Modernization theory, once immensely popular, is now almost defunct,
except for a few attempts to revive it in a modified form. One of the few
efforts is a modified modernization theory suggested by Kyong-Dong Kim
(1994), who argues that modernization is basically an international acculturation
process, shaped by the interplay of internal and external forces in the
global context. According to him, it is mainly the effort to adapt to the
changing global environment on the part of developing countries. In the
case of capitalist development experienced by the East Asian countries, he
identifies five common factors: 1) the favorable global condition; 2) a strong
nationalism in the face of external threats; 3) an unusually strong psychological
motive instigated by the sense of security; 4) the strong control of internal
stability by the state; and 5) extraordinary entrepreneurship in the private
sector (Kim, 1994). He particularly emphasizes the impact of western
modernization and a form of extremely strong nationalism that have provided
the impetus for changes in this region.
Cultural explanations of economic growth have a long history, beginning
with Weber’s classic thesis of “the Protestant ethic and the spirit of capitalism.”
In the Asian context, it first applied to Japan’s development by such
scholars as Bellah (1957), and Kahn (1970). Roderick McFarquhar (1980)
probably first explored the role of the so-called “Asian values” in the
process of economic development of the four little dragons in East Asia.
In the context of East Asian development, the term “Asian values”
denotes the elements of Confucian culture that are a common feature of the
four East Asian countries. Some of the early studies concentrate on finding
in Confucian culture one or more independent variables for economic
development, such as collectivism, harmony, discipline, this-world orientation,
familism, communitarianism, and the commitment to education
(McFarquhar, 1980; Berger, 1983; Tai, 1989; Glazer, 1999; Han, 1999; Kook,
1999; Lee, 2000).
In addition, some scholars propose a theory of Confucian capitalism,
14 DEVELOPMENT AND SOCIETY
which claims that the emergence of a unique capitalist economic system in
the Confucian East Asia is a combination of Confucian values with a capitalistic
economic framework. According to Lew (1997), a proponent of this theory,
Confucian capitalism is unique in that the state intervenes in the market
and mobilizes the civilian sector through social networks based on family,
school, and locality, in its efforts for economic development, and that the
government-business nexus, in which the government renders preferential
treatment to selected chaebols based on the latter’s competitiveness in the
international market, is a major mechanism to produce economic growth.
This is a cultural version of the developmental state theory, and reverses the
effects of certain Confucian values from the negative to the positive, or the
other way around.
COLONIAL LEGACY AND ECONOMIC GROWTH
It is now time to return to our initial question: to what extent and what
elements, if any, of colonial legacy has contributed to Korea’s economic
growth? A review of previous theories and explanations yield a group of
factors considered important either for economic growth or as elements of
colonial legacy, as seen in the following summary table (Table 1).
These factors may be grouped into the following five broad categories: (1)
physical capital; (2) human capital; (3) institutions; (4) culture; and (5)
international environment. Each of these categories contains several specific
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 15
TABLE 1. ELEMENTS OF COLONIAL LEGACY AND FACTORS FOR ECONOMIC GROWTH
Category Colonial legacy Economic growth
1. Physical capital Infrastructure
Some industrial base
2. Human capital Bourgeois class Bourgeois class
Industrial worker Labor
3. Institutions Strong state Developmental state
Capitalist economy
Modern education Education
Other modern institutions
4. Culture Nationalism Nationalism
Asian values/Confucian culture
Will to develop
5. International Korean War
environment Cold War
U. S. Market
factors brought up by the scholars reviewed here. I will examine each of
these to test the thesis of the effect of colonial legacy on economic growth.
According to Western and revisionist scholars, physical capital is one of
the most important legacies from the colonial period that has significantly
affected economic growth since the 1960s. Physical capital includes an infrastructure
of transportation and communications and some industrial facilities.
It is probably indisputable that Korea was industrialized, to whatever
extent, during the colonial period for the first time in its history. However, it
is one thing to prove the occurrence of industrialization; it is quite another
to claim its effect on later economic growth. First of all, industrialization
was very limited and partial in several ways. As Ho (1984) shows, only
those industries that would not compete with, but complement the industries
in Japan were developed in the colony. The colonial government also
discouraged general industrial development by treating Japanese and
Korean industrialists differently, the latter being severely limited in their
business activities. According to an estimate, only 6 percent of the total
paid-up capital and 16 percent of the total technical manpower in manufacturing
in 1940 were Korean (Lee, D-G, 2002: 37). In addition, most of the
producer goods were imported from Japan. For example, in 1940, all the
locomotives on Korean railroads, more than 95 percent of the engines and
engine parts, and 80 percent of the manufacturing machinery were imported
from Japan (Lee, D-G, 2002: 28). Secondly, the colonial industries were
unevenly distributed between South Korea and North Korea. Heavy and
chemical industries were concentrated in the North, while many light
industries, such as textile, food, printing and wood, were located in the
South. In 1940, North Korea’s share of the total production in the metal
industry was 96 percent, and 82 percent for the chemical industry. Also, 92
percent of the total electricity production originated from the North in 1945
(Lee, D-G, 2002: 39). Thus, in 1945 when Japan withdrew from Korea and
when Korea was divided into two separate political regimes, the South
Korean economy in general and industry in particular were severely crippled.
Moreover, the production facilities had been almost completely destroyed
during the Korean War. The total amount of the three-year war damage was
estimated to be 412.3 billion hwan, 1.7 times that for GDI. About 40 percent
of the buildings and 35 percent of the facilities in the 7 industries surveyed
in the South were destroyed by August 1951, just one year after the breakout
of the war (Jang, 1999: 129-130). In addition, the war reduced the electricity
production capacity to less than half of that before the war. Thus,
chief objectives of the first and second economic development plans, begin-
16 DEVELOPMENT AND SOCIETY
ning in 1962, were to expand infrastructure and energy sources such as electricity
and coal, and to lay major industries including cement, fertilizer and
oil refinery (Lee J-W, 2002). From these, it seems evident that the industrial
legacy inherited from the colonial period was almost completely destroyed
by the Korean War, or inadequate at most, for later economic development.
In terms of human capital, colonial industrialization was claimed to have
produced the bourgeois and the modern working class, which would play
important roles in later economic growth. There are two aspects in this issue
that are disputed among researchers. The first issue is the extent of the
development of the modern class during the colonial period. An analysis of
the industrial structure during the colonial period estimates that 80 percent
of the colony’s population was still agrarian to the end of this period.
Moreover, operators, engineers and owners of industrial establishments
were mostly Japanese, with Koreans in unskilled and lower-level managerial
positions (Lee, J-W, 2002: Amsden, 1989). On the contrary, Eckert (1991)
argues that the Japanese deliberately and purposely fostered the growth of
the Korean bourgeois. He also shows that these Korean capitalists in the
colony played a significant role in the economy after its independence, by
indicating that nearly 60 percent of the founders of South Korea’s top fifty
chaebols were from them. Similarly, Cumings (1984) insists that the period
from 1935 to 1945 was the beginning of Korea’s industrial revolution, which
uprooted peasants from the land, and produced a working class, and widespread
population mobility and urbanization. However, it is still not clear to
what extent these workers and low-level managers and technicians contributed
to the independent Korea’s economic development. One important
question in this regard is whether they could and indeed had initiated economic
growth without the state’s guidance and support. This question may
ultimately be unanswerable, but before addressing it, we must consider the
changes that had occurred within the working class in the turbulent fifteenyear
period between liberation and the advent of economic growth.
The developmental state is probably the strongest factor considered by
students of Korean development, but least suggested by colonial legacy theorists.
Among the few, Eckert (1991) and Cumings (1984) insist that the
Japanese colonial state has provided a model for state-directed development
in modern Korea. However, it is difficult to sustain this argument for several
reasons. First of all, the Japanese colonial state was different from the
Korean developmental state in terms of its purposes (exploitation versus
development), developmental strategies (substitutive industrialization versus
export-oriented industrialization) and constituencies (colonial subjects
and sovereign citizens). Unlike the previous Rhee Syng Man regime, the
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 17
Park Chung-Hee regime had to transform itself into a strong developmental
state due to the problem of legitimacy arising from the fact that it had seized
political power through a military coup (Lee J-W, 2002: 98). External security
threats and the abolition of the landlord class through land reform also
contributed to the creation of a powerful authoritarian regime (Waldner,
1999; Cho and Kim, 1998). However, according to Amsden (1989), the student
movement and the American occupation force made the Korean state
vigorously seek economic growth. Thus, it is at best a remote possibility that
the colonial state provided a model for the Park Chung-Hee regime. Rather,
the internal and external conditions that the regime faced at that time determined
the nature and behavior of the state.
It is still debated when the capitalist economy was initiated in Korea. It
also remains controversial whether Korean capitalism was autogenous or
transplanted from outside. It seems most likely that capitalism, at least
industrial capitalism, started to develop in Korea during the colonial period.
However, it does not automatically lead to economic growth, as experiences
of many peripheral capitalist countries attest. Also, we have to note the better
economic performance of the socialist North Korea than that of South
Korea until the 1970s. Capitalism can certainly be an important factor for
economic growth, but capitalism itself does not always guarantee growth.
The foundation of capitalist development in Korea was laid down in the
first decade after liberation. U.S. military rule and the Korean War played a
decisive role in capital accumulation and economic dominance of the capitalist
class, by dismantling the feudalistic estate system through land
reform, and by drawing a vast amount of economic aid mostly from the U.S.
(See Jang, 1999).
Education is another institution that is often considered to be important
for development or modernization. Education is important because it transforms
people, that is, the actors of development, and is regarded as a major
element of human capital. Against the claim that the colonial government
vastly expanded the modern educational institution in the colony, and, as a
consequence, enhanced the general level of education of the population,
several points can be made. First, by 1937, only about 17 percent of the total
school age children attended primary school (Ho 1984: 353). The primary
school attending rate was never above 50 percent up to 1945, and educational
opportunities for Koreans beyond elementary school level were very limited
(Kim, Chung, and Kang, 1997). For example, in 1942, the total number
of college level students was only about 7,400, of which 42 percent were
Japanese (Tsrumi, 1984: 306). Second, the colonial education system, by
design, discriminated against Koreans in terms of its contents and adminis-
18 DEVELOPMENT AND SOCIETY
tration. Third, colonial public schools had to compete with private schools
run by Korean compatriots and Western missionaries in attracting students
and in their effects on modernization and development. The fields of religion,
medical care and social work, in addition to education, were contested
areas between Western modernity represented by missionaries and colonial
modernity represented by the Japanese government-general (Kim and
Chung, 1997). Another point made by a nationalist scholar is that colonial
education was imbued with an inferiority complex devoid of national consciousness
and philosophy. The chief purpose of colonial education was to
transform Korean people into imperial subjects who were obedient and
compliant rather than creative and entrepreneurial (Chung, T-H, 1996).
Indeed, education was expanded rapidly, and its contents changed vastly
during and after military rule. For example, the number of students in elementary
schools increased from 1.4 million in 1945 to 2.2 million in 1947.
During the same period, the number of middle-school students expanded
from 80,000 to 212,000, while there were 29 colleges and universities and
22,000 students in November 1947, a fivefold increase from that for the colonial
period (Lee, G-S, 2002: 233-242).
It is often the case that nationalism arises and develops during the colonial
period. Korean nationalism began to develop in the late 19th century
when the Choson dynasty was threatened by foreign powers (Robinson,
1988). It was a conservative nationalism that attempted to preserve tradition.
During the colonial period, however, progressive nationalism that
sought modernization took over conservative nationalism, and nationalism
also spread widely among the population, as evidenced by the 1919 popular
uprising (Park, 1996). Specifically, Japanese colonialism produced both bitterly
anti-Japanese nationalist consciousness (Tsrumi, 1984: 302) and the
“catch-up-with-Japan” nationalism (Park, 1999: 158), which may have contributed
to producing the motives and drive for efforts to modernize and
develop the independent Korea.
Confucian culture has stirred many controversies and debates regarding
its role in the East Asian development. Since there is ample literature and
reviews on this topic, I will be brief. As Confucian behavior was esteemed
as a model for good subjects, Korean Confucianism was in general protected
and encouraged by the colonial government (Kang, W-J, 1973). On the other
hand, the colonial Confucians who were conciliatory with the colonial
authority were in an awkward situation after independence because they
were viewed as colonial collaborators. However, Confucian values themselves
have selectively affected the development process. Since
Confucianism has long been with Koreans, and since values change very
COLONIAL LEGACY AND ECONOMIC GROWTH IN KOREA 19
slowly, it cannot be a colonial legacy, regardless of whether it was a major
factor for economic growth.
Finally, the international environment and geopolitics must be regarded
as important factors for Korean development, given Korea’s export-oriented
development strategy. The division of the country into the liberal capitalist
South and the socialist North made the South turn to outward economic
policies, because most raw materials necessary for industrial growth are
concentrated in the North. The Cold War was instrumental for the U.S. to
safeguard South Korea from the threat of Communist invasion and provide
not only a vast amount of military and economic aid, but also access to the
huge American market. These factors have seldom been examined in the
third-world development literature, but must be considered important, as
Shin (1998) has demonstrated convincingly. They are certainly not a colonial
legacy.
CONCLUSION
Colonialism is certainly a trauma to the colonial population, because it
changes almost all social, political, economic, and cultural conditions. It
tends to destroy traditional institutions, but can seldom erase the memory
of the people. There may be certain differences between Japanese imperialism
and Western imperialism, in terms of its colonial policies and strategies.
However, as I have tried to show in this paper, they seldom differ in their
effects on later modernization and the economic growth of newly independent
countries. In the Korean case, changes that occurred during the turbulent
years between 1945 and 1960 made obsolete whatever remained from
the colonial period and paved the way for later development. In this sense,
Korean development can hardly be attributed to the Japanese colonial legacy.
If colonial experience has anything to do with the economic growth of
modern Korea, it is the role of Japanese colonialism that “dismantled the
institutions of 1,000 years of domestic rule and accomplished overnight, in
1910, what dynastic rule had failed or neglected to achieve in centuries
(Amsden, 1989: 32).” It is “contribution by negation” or “construction by
destruction.” Perhaps we may add one more contribution of colonialism to
this: that is, the “will-to-develop” or the “will-to-catch-up” ideology which
began to be fostered during the colonial period, and may be behind all of
those factors mentioned above.
20 DEVELOPMENT AND SOCIETY
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YANG JONGHOE is Professor of Sociology at Sungkyunkwan University in Seoul, Korea.
His recent writings include American Cultural Industry System (in Korean, 2004, coauthored),
British Cultural Industry System (in Korean, 2003, co-authored), “Korean
Middle Class since 1990,” “Globalization and Value Change in Korea,” and “The Recent
Economic Crisis and Its Social Impact in Korea.”
24 DEVELOPMENT AND SOCIETY
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