This study aims to evaluate the industrial cooperation established between Korea and Japan under the persistent strengthening of the Japanese Yen, examine the investment environments of the recent Japanese and other foreign industrial cooperative plans, and ultimately develop a road map of building industrial cooperation between Korea and Japan and examine its feasibility.
Since September 1985, Japan has exerted continuous efforts to respond to the drastic surge in its Yen through restructuring, international division of labor, international cooperation, and cultural exchanges. It has also worked to avoid trade conflicts with developed countries including US and the European Community. Korea on the other hand is receiving persistent calls for international cooperation, at a time of increasing industrial cooperation with Japan due to the Yen’s strengthening. Under this situation, there is a necessity for both countries to acknowledge each other’s different stances, and then carry out a cooperative scheme on areas through methodologies that can easily accommodate cooperation. Up until now, the two countries have held different perspectives on ‘motives and outcomes of industrial cooperation,’ which however seems to have reconciled with the recent ‘procurement of Japanese products and components,’ ‘export to third-world countries’ with the strengthening Yen. Such an increased cooperation is expected to ease the two countries’ relations, making cooperation actually possible and sustainable.
The difficulty Japan was facing due to its strengthening Yen is being relieved through the economy’s revitalized exports. However, there is change expected in the industrial and employment structures with the fall in import and oil prices. Japan’s export volume increased 17% year on year with a volume of $213.3 billion, while import decreased 7.9% year on year at $109.6 billion. In 1987 however, export increased by 9.5% year on year with the J-curve effect. After going through a cut in costs and production facilities, sophistication of products and expansion of overseas production from its strengthening currency, Japan’s amount of export against the Yen dropped year on year while the amount of export against the U.S. Dollar rose. In addition, protectionist schemes are reinforced, while the risk foreign companies bear in cooperating with the unstable Japanese companies remains.
Establishing cooperation with foreign industries is affected directly and indirectly by the host company and target country’s domestic situation, political, economic and socio-cultural factors. As Korea holds a comparative advantage on ‘traditional factors of investment climate,’ the country is regulating areas of ‘tax reduction’ and ‘foreign corporate activities.’ But the country will have to gain advantage by deepening cooperation as industrial cooperation is expected to focus on preindustrial areas.
Japan is a developed country that shares similar conditions of natural resources with Korea and shows a pattern of rapid growth. There is however, a sense of gap between Korea and Japan. Regardless of this gap, there is still a necessity for both major and small-and-medium businesses to maintain sustainable relations of industrial cooperation with developed countries, including Japan as well. For this, a direct one-to-one relationship is most feasible, and concrete cooperation will be difficult to establish if both countries push through with one-sided calls. There is a need to evaluate whether or not the areas of cooperation are passing on the issues held by domestic industries. Meanwhile, governments and relevant departments need to develop appropriate response measures.
At the same time, both countries will have to recognize the different perceptions toward each other and minimize harmful factors. Korea believes to have difficulty in advancing its industrial structure and constructing economic independence with Japan being uncooperative, while Japan percepts a problem in Korea’s industrial structure.
The rising importance of the Asia-Pacific region in the global economy as the Yen stays strong implies a necessity for Japan to establish industrial cooperation with the region.
In order to build successful cooperation, Korea must do away with obstacles that block cooperation with the private sector, continue searching for successful cases and promoting them, request for cooperation in carrying out industrial cooperation, and expand its cooperative network with other developed countries. As for Japan, it needs to maintain continuous collaboration and discard local protectionist schemes. Ultimately, both countries must reinforce stability in their long-term cooperation by minimizing gaps between each other.
엔화강세하의 한일산업협력 추진방안(A road map of Korea-Japan industrial cooperation with the strengthening Yen)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Administration|
|Holding||산업연구원; KDI 국제정책대학원|