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The 21st Century with an Eye to the Past: Beyond a Century of Breakthrough in East Asia

By Ezra Vogel

A Look Back

During the twentieth century, except for China and North Korea, all the East Asian Confucian countries (Japan, South Korea, Taiwan, Hong Kong, and Singapore) achieved industrial breakthrough. In the industrialized countries, the average person's livelihood has been raised from poverty to the level of the advanced nations. In the last two decades China has made an excellent start and, if the opening of North Korea continues apace, both China and North Korea have excellent prospects for achieving the breakthrough.

The paths to this success have been fundamentally different. Japan achieved the initial breakthrough as the one colonial power in Asia. It recovered quickly from the material devastation and defeat of 1945, but even today it suffers from the consequences of its colonial past through its poor relations with China and Korea and the slow process of gaining a self-confident national identity within a system imposed by the Western victors.

Korea and Taiwan began the breakthrough as colonies under Japan, which was far more helpful to development than European colonialism. Under Japanese rule, people in Taiwan and Korea achieved much higher educational levels and became acquainted with electricity, railways, banking, and industrial products. Korea developed modern chemical plants and Taiwan developed modern sugar mills.

Hong Kong made the breakthrough as a colony in the late 1950s when its role as an entrepot port was destroyed by the closing of China in the Korean War. Industrialization provided the only option for economic growth and the migration of textile magnates from Shanghai provided the know-how to achieve that option. Singapore made the breakthrough after 1965 when it was forced to be independent and some thoroughly rational rulers embarked on an industrialization program.

The United States urges all countries to become democratic, but the reality is that all the East Asian countries made the breakthrough under authoritarian governments. The governments desiring industrial breakthrough were staffed not by corrupt rent-seeking officials but officials committed to economic growth and prepared to impose the discipline to achieve it. One would hope that other countries could make the breakthrough while being democratic, but some of the tough decisions to push ahead with development, to give priority to industrial areas of the future rather than agricultural sectors of the past, would not have been possible in more democratic countries. Park Chung Hee, for example, could not have rammed through the highly unpopular normalization with Japan in 1965, paving the way for a new round of investment and industrial know-how to ignite the industrial take-off, had Korea been democratic.

There has not been a one-to-one relationship between development and democratization or even between the growth of the middle class and democratization. Japan was becoming more democratic in the 1920s, but the 1930s Japan-like Germany-became fascist as industrialization picked up the pace. After 1945, the Japanese had an easy transition to democracy under the tutelage of the Occupation which allowed democratization, snuffed out by growing military rule in 1931, to pick up where it left off. Taiwan and Korea made it in 1987, not only because the Aquino revolution in the Philippines showed what could happen if authoritarians lacked popular support, but because a broadening industrial and service base, connected with international trade, required broader and more open communication and more informed independent judgment. The same forces transformed Hong Kong, even under colonial rule, and Singapore. The same forces are now transforming China.

The Asian financial crisis of 1997 created huge problems for Southeast Asia-Indonesia, Malaysia, and Thailand-which is still not out of the woods. But in Korea the government and companies moved with such speed that the financial crisis of 1997 is likely in historical perspective to appear as a blip on the screen.

The Road Ahead

All the East Asian countries now confront formidable challenges for the first decades of the next century. All the changes are slower and more contested as democracy has taken root and vested interests find ways of resisting. Japan's system of bureaucratic leadership was great for guiding the breakthroughs for higher literacy, building the infrastructure, and starting the industrial revolution. But the Ministry of Education, well equipped for hands-on leadership in raising the standards of compulsory education, is a straight-jacket for university entrepreneurs trying to adapt to changing global currents. In areas where Japan has faced the best competition in the world, as in industrial products, Japanese organizations proved superior. But in domestic financial services and selecting faculty for universities, which have not been subject to open competition, it will take decades before Japan can undo its past and catch up with world standards. Yet today, as in the entire twentieth century except for the late 1980s, the world underestimates Japan. Japan is still the world's number two economy and the world's largest creditor. It retains its organizational skills and a highly trained and disciplined work force, but it will take decades to complete the institutional changes required to reach global standards in financial services and creative thinking for basic research.

China must still divest itself of state enterprises that soak up investment capital and make a transition to private housing, medical care, and welfare that will take perhaps half a century to finance at the levels of advanced countries. But the policy of rapid development of China's inland areas will lay the basis for inner China completing the industrial breakthrough in the early decades of the next century.

Korea and China still suffer the problems of division as a result of the Cold War. Both may take decades to resolve, but the close economic, social, and informational contacts between Taiwan and mainland China will, with increased confidence on both sides, create the basis for a deal. The deal: mainland China grants a very high level of autonomy to Taiwan and Taiwan acknowledges that both sides are part of one Chinese people which has some form of non-threatening sovereignty over Taiwan. The North Korean regime has farther to go. In the short run, the leaders face a dilemma for as much as the economy requires opening, they fear they and their system may not survive opening. Once opening takes place, changes are likely to come quickly.

The combined East Asian GNP is likely to pass that of Europe or North America in the early decades of the new century. East Asians will increasingly take part in global organizations created by the West and still led by Westerners. Although not likely to foment revolutions, the East Asian countries are likely to play a larger role in leading and reforming global institutions as they rise within them.