Restructuring Revisited: Flexible Korea and Rigid Japan

Abstract

Korea has successfully undergone economic restructuring, as compared to Japan. The "flexibility" of Korea and "rigidity" of Japan are strongly related to the differences between development strategies the two countries adopted. Although Korea adopted the Japanese developmental state model, it excluded workers from the development coalition. Whereas excluded workers had been a source of instability in the Korean system, the well-found coalition of government, business, and workers in Japan had guaranteed stability of the system. This difference was not conspicuous before the economic crises; strong performance of the Korean economy and a heavy-handed government had silenced discontented Korean workers. When the crisis occurred, Korean workers demanded the overhaul of the system, while Japanese workers did not. While Japan attempted to protect the system, Korea dismantled it due to the lack of support of the disenchanted Korean people, in addition to pressure from IMF and foreign countries. Though Korea has been successful in revamping its economic system and regaining economic growth since restructuring after the economic crisis of 1997, the new system is not stable. Workers, still not fully represented in national decision-making processes, are calling for revision of the system, and are frequently expressing their anger. Japan, reluctant to accept an Anglo-American economic model, is struggling to get out of a sluggish economy, but it still enjoys a relatively stable social system.