As I watched the results of the Japanese election on Sunday, I was reminded again of how Japan has shrunk in influence in recent years. Japanese elections rarely commanded international attention, but Japan was in the news much more than it is today. What happened and why? And what does it mean for South Korea?
After its defeat in World War II, Japan worked with US-dominated occupation authorities to implement political and economic reforms that laid the groundwork for recovery and sustained economic and social development. The rise began in the 1950s and accelerated in the 1960s. Japanese goods flooded Europe and North America, which were also experiencing strong economic growth. At home, the large domestic economy benefited from ever-rising incomes and consumption.
The boom slowed in the 1970s as the economy matured and growth in other developed markets slowed. Japan continued to expand its share in important markets such as electronics and automobiles. Strong investment in research and development during this period helped Japanese companies achieve technological dominance in a range of fields.
The 1980s saw Japan peak in relative economic strength and influence. As Japanese companies maintained their technological edge, Japanese cultural products, ranging from fashion to sushi, swept the world. The combination of technology and culture made Japan into a cool global brand for the first time in its history.
The ground shifted in the 1990s with the spread of personal computers and the internet. Japanese companies remained competitive in hardware but failed to compete in software and internet applications, such as e-commerce. By the end of the decade, the technological edge had shifted to the US.
At the same time, the domestic economy began to weaken after the collapse of the late-1980s real estate bubble. The combined debt, both public and private, became a drag on the economy. Though anime and other forms of Japanese pop culture developed a global following, the loss of its technological edge and sluggish economic growth sapped Japan’s cool by the 2000s.
As Japan faded, Korea began to attract cool. As the country recovered from a sharp but short financial crisis in the late 1990s, Korean companies invested more in R&D and improved their technological edge in the 2000s. Rapid diffusion on the internet created a large domestic market for tech, which enhanced the country’s budding cool image.
In the mid-2000s, Korean TV dramas swept much of Asia, marking the first time that Korean popular culture had reached large audiences in multiple countries overseas. At the same time, Korean companies began to build their brand power, turning Samsung, LG and Hyundai into household names for the first time. In the 2010s, these trends accelerated as K-pop spread around the world and Korean companies took a larger share of the smartphone market.
Compared with most nations, the Korean economy recovered quickly from the Great Recession at the end of the 2000s and again from the 2020 COVID-19 recession. The country’s resilience in crisis has helped ward off stagnation while helping to project an image of stability and competence.
Which brings us to 2021. “Peak Japan” lasted about 15 years, stretching from the late 1970s to the early 1990s. It weakened because the country did not adapt to the tech boom in the 1990s as the domestic economy stagnated. As repeated efforts to stimulate a recovery failed, cool moved to Korea and elsewhere.
This raises the interesting question of whether Korea has reached “Peak Korea.” Japan’s experience underscores the importance of the question. If the answer is “yes,” then it reflects a combination of satisfaction and complacency that makes it hard to adjust to rapid change. If the answer is “no,” then it suggests an awareness of weaknesses and a willingness to embrace change.
“Peak Japan” was short because satisfaction and complacency had set in. Fortunately, Koreans have traditionally been open to self-criticism and wary of comforting platitudes. This has led to an awareness of weaknesses and an interest in addressing them. The popularity of benchmarking reflects this mindset.
As the campaign for president heats up, Korean voters should look at how the candidates view “Peak Korea.” Do they embrace my-country-first trends and encourage inward-looking satisfaction that breeds complacency? Or do they acknowledge areas of weakness and offer a vision of how the country can do better to reach new peaks? Presidents are not responsible for the many decisions that came together to make Korea cool, but their actions and words have great sway over public discourse. Choose wisely.