Economic Growth in Northeast Asia: Implications for Security

[ 42 ] asia policy Economic Growth in Northeast Asia: Implications for Security Dwight H. Perkins Japan was the first non-Western country to enjoy sustained and often rapid economic growth beginning around 1900. In the 1960s Japan was joined by the four Asian “tiger” economies (South Korea, Taiwan, Hong Kong, and Singapore), followed soon after by several Southeast Asian nations. Beginning in 1978 China—the largest country in the world in terms of population— joined this economic race, followed in 1989 by Vietnam. In these countries growth often reached sustained rates of 9% a year, causing GDP to double in eight years and to increase by as much as eightfold over a quarter-century. What were mainly poor rural economies rapidly became urban industrial powerhouses. In terms of politics and security, the economic rise of Japan alone brought on World War II in the Pacific, which resulted in both the physical destruction and eventual democratization of Japan and the end to European and American colonialism in the rest of Asia. If the rise of Japan in economic and military strength could produce that much upheaval, what does the comparable economic rise of another nearly 1.5 billion people in the rest of East Asia portend for the future of security in the region? Economic Relations in Northeast Asia and Beyond The most direct impact of rapid growth in Northeast Asia is on economic relations within the region and between the region and the rest of the world. In the 1950s (and before World War II) Japan was the producer of products manufactured by low-cost labor that were shipped to the rest of the world (e.g., toys, textiles, garments, shoes, and consumer electronics). Beginning in the 1960s the four economic tigers took this role away from Japan, and Japan moved on to producing and exporting more sophisticated products from automobiles to more advanced electronics. By the 1990s these same labor-intensive products moved from the four tigers to China and, to a lesser degree, to parts of Southeast Asia, although the high value-added elements in  The population of China alone is just over 1.3 billion (including Hong Kong); South Korea, Taiwan, and Vietnam (which is actually in Southeast Asia) add another 150 million people. Dwight H. Perkins is the Harold Hitchings Burbank Professor of Political Economy at Harvard University. His previous positions at Harvard include Associate Director of the East Asian (now Fairbank) Research Center, 1973–1977; Director of the Harvard Institute for International Development (HIID), 1980-1995; and Director of the Harvard University Asia Center, 2002-2005. He is available at . [ 43 ] roundtable • pursuing security in a dynamic northeast asia many of these products (design, marketing) remained in South Korea, Taiwan, and Hong Kong. In terms of the rest of the world, the trade deficit of the United States with South Korea and Taiwan was shifted to China. Japan’s high savings rate, however, also meant that Japan continued to run large current account surpluses (notably with the United States) even though the growth of Japanese exports slowed to a crawl. Generally speaking, China’s rise has meant opportunities—not economic competition—for Japan, South Korea, Hong Kong, and Taiwan. The same can not be said of several countries, such as Malaysia or Thailand, where competition from China may be the dominant force. Because Japan, South Korea, and Taiwan each pursued “mercantilist” policies that pushed exports and restricted imports, the rise of these nations as major exporters was a regular source of low-level political tensions, notably with the United States, throughout much of this period. Trade negotiations designed to remove various import restrictions were the source of many headlines and speeches in the U.S. Congress, although in the end the shared security interests of these countries always trumped economic considerations. Today most of the tension in this area is directed at China even though China, for the most part, is not pursuing a mercantilist policy and imports into China are subject to relatively few restrictions as compared to the earlier experience with Japan, South Korea, and Taiwan. China’s weak protection of intellectual property rights (a product in part of the weakness of the Chinese...