In contrast with the U.S., cooperation between Korea and Japan did not begin until 1965 when diplomatic ties between the two countries were normalized. The development grant from Japan made a huge contribution to financing infrastructure investment projects and fostering industrial development in Korea. This set the stage for increased trade and investment between Korea and Japan. As Korea’s exports became more capital-intensive and technology-intensive, Korean firms’ competition with Japanese counterparts intensified in world markets. At the same time, it also boosted Korea-Japan trade in industrial goods, such as machinery and components. The relative importance of Japan in Korea’s trade has declined, as trade and investment expanded with agrowing number of nations. Nonetheless, Japan still remains one of Korea’s major partners in trade and investment, with great potential for further cooperation.
Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.
