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Yahoo
4 days ago
- Business
- Yahoo
Opinion - Trump's economists should study what happened in Japan and South Korea
The Trump administration's economic strategy — achieving trade surpluses and deploying tariffs and non-tariff barriers to protect domestic industries and promote growth — is reminiscent of the strategies that Japan and South Korea pursued during their periods of rapid economic growth in the mid-20th century. Japan experienced annual growth rates averaging around 10 percent from the 1950s through the 1970s, while South Korea achieved similar rates from the 1960s to the 1980s. The economic model behind the rapid economic growth by Japan (and later South Korea) was often referred to as 'administrative guidance,' reflecting significant government intervention in industrial organization, banking and trade compared to more free-market economies. In Japan, elite officials at the Ministry of International Trade and Industry meticulously analyzed trade and productivity data to identify promising sectors. They then guided banks toward providing favorable loans to strategically chosen sectors and firms. This tight public-private collaboration and the shared desire for growth allowed the government and the private sector to rely on mutual signals and support, fueling Japan's remarkable postwar economic expansion. South Korea's administrative guidance was more heavy-handed. Korea suffered colonization, civil war and literal national division in the 20th century. Though South Korea emulated Japan's strategies, it pursued even bolder administrative guidance by investing in sectors such as steel, shipbuilding, automotives and semiconductors — areas where it initially had no clear comparative advantage. To support these ambitious ventures, the government imposed steep tariffs on consumer and luxury goods, and the Economic Planning Board coordinated interest rates and exchange rates to ensure that limited dollar reserves were strategically allocated to targeted industries. But just about when Japan seemed poised to overtake the U.S. economically, it entered its 'Lost Decades.' South Korea's economy also crashed during the 1997 Asian Financial Crisis. Eventually, administrative guidance lost its luster. Japan's economic malaise and South Korea's economic restructuring — under the guidance of the IMF and the U.S. Treasury — served as evidence that administrative guidance distorted the economy, was inefficient and outdated, and further reinforced American liberal capitalism as the superior economic policy. As Paul Krugman put it, perhaps East Asian economic success was more perspiration than inspiration, i.e. more due to hard work and accumulation than increased innovation or labor productivity. Regardless, Japan and South Korea's miraculous economic growth in the second half of the 20th century was real, and administrative guidance played a critical role. Liberal capitalism may still be America's dominant economic ideology, but there is a growing sentiment within the White House that the government should take a more active role in steering the economy. Revisiting lessons from Japan and South Korea's experience with administrative guidance may prove especially valuable at this moment. First, effective administrative guidance requires motivated officials with deep understanding of the economy and public administration. Japan's Ministry of International Trade and Industry and South Korea's Economic Planning Board were staffed by highly trained public servants who not only passed rigorous exams in law, economics and statistics but also learned from their experienced superiors. These extremely talented people committed to serve their country over higher-paying jobs in the private sector. Second, industrial policy is successful when it works with market forces and promotes competition. The U.S. government helped nurture Silicon Valley through early investments in semiconductors, which was later vetted by venture capital. South Korea picked industries to invest in, but pitted firms against each other to promote innovation and productivity. Industrial policy in the U.S. today should be compatible with American financial markets and venture capital. The U.S. financial and private sectors would likely want to invest in AI or future energy rather than coal and steel. Third, expanding trade is essential for economic growth. South Korea had no iron or oil but developed steel, automobiles and shipbuilding. The only way it could develop these industries was by importing what it did not have and exporting value-added products. Strategic openness is necessary for successful industrial policy. Finally, education is foundational to the welfare of the country and its people. America was among the first nations in the world to provide universal secondary education. Its higher education system remains unparalleled in terms of research productivity and its capacity to educate and train the next generation of leaders and citizens. The emergence of the U.S. as the world's political, economic and scientific superpower in the 20th century was built upon a large population of educated citizens. Ensuring high-quality education for Americans must remain a key priority for the 21st century and beyond. Yong Suk Lee is an associate professor at the Keough School of Global Affairs at the University of Notre Dame, where he is the director of the Future of Labor Lab. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
4 days ago
- Business
- The Hill
Trump's economists should study what happened in Japan and South Korea
The Trump administration's economic strategy — achieving trade surpluses and deploying tariffs and non-tariff barriers to protect domestic industries and promote growth — is reminiscent of the strategies that Japan and South Korea pursued during their periods of rapid economic growth in the mid-20th century. Japan experienced annual growth rates averaging around 10 percent from the 1950s through the 1970s, while South Korea achieved similar rates from the 1960s to the 1980s. The economic model behind the rapid economic growth by Japan (and later South Korea) was often referred to as 'administrative guidance,' reflecting significant government intervention in industrial organization, banking and trade compared to more free-market economies. In Japan, elite officials at the Ministry of International Trade and Industry meticulously analyzed trade and productivity data to identify promising sectors. They then guided banks toward providing favorable loans to strategically chosen sectors and firms. This tight public-private collaboration and the shared desire for growth allowed the government and the private sector to rely on mutual signals and support, fueling Japan's remarkable postwar economic expansion. South Korea's administrative guidance was more heavy-handed. Korea suffered colonization, civil war and literal national division in the 20th century. Though South Korea emulated Japan's strategies, it pursued even bolder administrative guidance by investing in sectors such as steel, shipbuilding, automotives and semiconductors — areas where it initially had no clear comparative advantage. To support these ambitious ventures, the government imposed steep tariffs on consumer and luxury goods, and the Economic Planning Board coordinated interest rates and exchange rates to ensure that limited dollar reserves were strategically allocated to targeted industries. But just about when Japan seemed poised to overtake the U.S. economically, it entered its 'Lost Decades.' South Korea's economy also crashed during the 1997 Asian Financial Crisis. Eventually, administrative guidance lost its luster. Japan's economic malaise and South Korea's economic restructuring — under the guidance of the IMF and the U.S. Treasury — served as evidence that administrative guidance distorted the economy, was inefficient and outdated, and further reinforced American liberal capitalism as the superior economic policy. As Paul Krugman put it, perhaps East Asian economic success was more perspiration than inspiration, i.e. more due to hard work and accumulation than increased innovation or labor productivity. Regardless, Japan and South Korea's miraculous economic growth in the second half of the 20th century was real, and administrative guidance played a critical role. Liberal capitalism may still be America's dominant economic ideology, but there is a growing sentiment within the White House that the government should take a more active role in steering the economy. Revisiting lessons from Japan and South Korea's experience with administrative guidance may prove especially valuable at this moment. First, effective administrative guidance requires motivated officials with deep understanding of the economy and public administration. Japan's Ministry of International Trade and Industry and South Korea's Economic Planning Board were staffed by highly trained public servants who not only passed rigorous exams in law, economics and statistics but also learned from their experienced superiors. These extremely talented people committed to serve their country over higher-paying jobs in the private sector. Second, industrial policy is successful when it works with market forces and promotes competition. The U.S. government helped nurture Silicon Valley through early investments in semiconductors, which was later vetted by venture capital. South Korea picked industries to invest in, but pitted firms against each other to promote innovation and productivity. Industrial policy in the U.S. today should be compatible with American financial markets and venture capital. The U.S. financial and private sectors would likely want to invest in AI or future energy rather than coal and steel. Third, expanding trade is essential for economic growth. South Korea had no iron or oil but developed steel, automobiles and shipbuilding. The only way it could develop these industries was by importing what it did not have and exporting value-added products. Strategic openness is necessary for successful industrial policy. Finally, education is foundational to the welfare of the country and its people. America was among the first nations in the world to provide universal secondary education. Its higher education system remains unparalleled in terms of research productivity and its capacity to educate and train the next generation of leaders and citizens. The emergence of the U.S. as the world's political, economic and scientific superpower in the 20th century was built upon a large population of educated citizens. Ensuring high-quality education for Americans must remain a key priority for the 21st century and beyond. Yong Suk Lee is an associate professor at the Keough School of Global Affairs at the University of Notre Dame, where he is the director of the Future of Labor Lab.
The Star
4 days ago
- Business
- The Star
Tengku Zafrul: Asean-China-GCC cooperation can reap huge economic benefits
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. KUALA LUMPUR: ASEAN can reap huge economic benefits through deepening ties with China and the Gulf Cooperation Council (GCC), says Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. "The recent ASEAN-GCC-China Summit has also positioned our region as a bridge between Asia, the Middle East, and beyond. "This trilateral partnership offers an opportunity to combine China's technology and infrastructure capacity, the GCC's energy and capital, and ASEAN's market and industrial dynamism into a new engine for growth and resilience,' he said in his keynote address at the ASEAN Business Forum 2025, here today. The speech was delivered on Tengku Zafrul's behalf by the Malaysian Investment Development Authority's (MIDA) chief executive officer, Sikh Shamsul Ibrahim Sikh Abdul Majid. Tengku Zafrul said the newly established ASEAN Geoeconomics Task Force, co-chaired by Malaysia and Indonesia, is now fully operational. He noted that the task force's mandate is to provide real-time economic analysis, scenario modelling, and coordinated policy recommendations to help ASEAN anticipate and mitigate economic risks and, where appropriate, turn them into opportunities. "Additionally, our ministers have reaffirmed an unwavering commitment to a rules-based multilateral trading system, with the World Trade Organisation (WTO) at its core. "Our joint statements underscore a mature, forward-looking approach as ASEAN will respond to external shocks not with retaliation, but with deeper engagement, open dialogue, and collective solutions,' he said. Meanwhile, Tengku Zafrul added that ASEAN's true superpower is the region's unity, resilience, and pragmatism. "As the world undergoes a profound realignment, ASEAN's unity and centrality matter more than ever. "From the Asian Financial Crisis to the pandemic to the present day, ASEAN has shown the world that collective action, trust, and shared purpose are the bedrock of our success,' he added. - Bernama
India Gazette
6 days ago
- Politics
- India Gazette
Secretary (East) P Kumaran signs condolence book, pays tribute to former Vietnamese President Tran Duc Luong
New Delhi [India], May 27 (ANI): Secretary (East) P Kumaran signed the book of condolences at the Embassy of Vietnam in New Delhi, paying tribute to Tran Duc Luong, former State President of Vietnam. Sharing a post on X, the Ministry of External Affairs spokesperson Randhir Jaiswal said, 'Secretary (East) P. Kumaran signed the book of condolences at the Embassy of Vietnam in New Delhi on the passing of H.E. Tran Duc Luong, former State President of Vietnam. India warmly remembers late President Tran Duc Luong's contribution to strengthening India-Vietnam friendship.' Meanwhile, Singapore President Tharman Shanmugaratnam has written to President Luong Cuong of Vietnam, and Senior Singaporean Minister Lee Hsien Loong has sent a condolence message to Prime Minister Pham Minh Chinh to convey their condolences on the passing of former Vietnam President Tran Duc Luong on May 20. In the letter, Tharman wrote, 'On behalf of the people of Singapore, I would like to offer my deepest condolences on the passing of former President Tran Duc Luong. President Luong served his country with steadfast determination during a time of profound transformation for Vietnam. President Luong helped to steer Vietnam post-Doi Moi, seeing the country through the Asian Financial Crisis of 1997, and its integration into ASEAN's structures following its formal accession in 1995. His contributions were immense and will be remembered. Our heartfelt sympathies are with you, the people of Vietnam, and President Luong's family.' Lee Hsien, in his letter, said, 'It is with great sadness that I learned of the passing of former President Tran Duc Luong. I had the honour of meeting President Luong during my introductory visit to Vietnam in December 2004 as the then-Prime Minister of Singapore. President Luong was a statesman who devoted his life to serving his country. Under his leadership, Vietnam advanced steadily along its reform path and deepened its engagement with Singapore and the rest of the region. He played a crucial role in laying the foundation for the enduring trust and friendship between our two countries. His legacy will be remembered.' (ANI)
Straits Times
26-05-2025
- Business
- Straits Times
President Tharman, SM Lee send condolence letters to Vietnam after passing of former president
Vietnam's former president Tran Duc Luong died on May 20 at the age of 88 after an illness. PHOTO: AFP President Tharman, SM Lee send condolence letters to Vietnam after passing of former president SINGAPORE - President Tharman Shanmugaratnam and Senior Minister Lee Hsien Loong sent condolence letters to Vietnam's leaders on May 26, following the death of the country's former president Tran Duc Luong. Mr Luong had died on May 20 at the age of 88 after an illness, reported Viet Nam News . He served as Vietnam's president from 1997 to 2006 . 'On behalf of the people of Singapore, I would like to offer my deepest condolences on the passing of former President Tran Duc Luong,' President Tharman wrote to his counterpart, President Luong Cuong. Mr Tharman noted that Mr Luong had 'served his country with steadfast determination during a time of profound transformation for Vietnam'. Mr Tharman added that the late Vietnamese leader had helped to steer his country in the aftermath of Doi Moi, or a series of market reforms in 1986, seeing Vietnam through the Asian Financial Crisis in 1997, and 'its integration into Asean's structures' after it became a full member in 1995. 'His contributions were immense, and will be remembered,' said Mr Tharman. Mr Lee wrote to Vietnam's Prime Minister Pham Minh Chinh, remembering his introductory visit to Vietnam in December 2004 where he met Mr Luong as then-Prime Minister of Singapore. 'President Luong was a statesman who devoted his life to serving his country,' said Mr Lee. 'Under his leadership, Vietnam advanced steadily along its reform path and deepened its engagement with Singapore and the rest of the region. He played a crucial role in laying the foundation for the enduring trust and friendship between our two countries. His legacy will be remembered.' Join ST's Telegram channel and get the latest breaking news delivered to you.
