To pursue the imperial interest of Japan, the colonial government developed a full policy agenda to transform the economy of Korea. The broad strategy of transformation was two-pronged: the state utilized its bureaucratic capacities to undertake quite a few economic tasks, and, more important, the state involved propertied groups-both in the countryside and in the cities and both Japanese and Koreans-in production-oriented alliance leading up to sustained economic change. The results measured by the criteria of growth and industrialization were a considerable success. But they were accompanied by growing misery and exploitation, as much of the fruit of growth was taken out of Korea.
Two general observations ought to be noted at the outset. First, the governor-general in Korea was an agent of the Japanese imperial government, which exercised absolute powers in Korea. The colonial state in Korea thus pursued Japanese needs and interests that change over time, the first decade of the colonial rule, Japan treated Korea mainly as a strategic gain that could also be exploited in a fairly classic fashion: exchange of agricultural products for manufactured goods; Japanese demand for food outpaced its own supply, the colonial state aggressively undertook measures to increase food production in Korea; the colonial state also involved selected and prominent Korean businessmen in the growth of manufacturing. Aggressive industrialization of Korea occurred only in the 1930s. This was in part a result of Japan’s strategy to cope with the depression-that is, to create a protected, high growth economy on an empirewide scale- and in part a result of Japan’s aggressive industrialization, again on an empirewide scale the reflected national power considerations. It is important to notice that Japan was able to switch imperial policies in Korea frequently and decisively; this, in turn underlined the highly centralized nature of authority within the Japanese-controlled Korean state. The second related observation concerns the pressures on the governor-general in Korea to reduce the budget deficit by enhancing revenues within Korea and reducing expenditures, much of it caused by the need to maintain terrific repression throughout the society. The general point, then, is that, unlike many other governments, the colonial state in Korea did not operate with a “soft budget constraint.” On the contrary, there was consistent pressure to economize, “hardening” the budget constraint, with significant effort to deploy the state’s coercive power to extract tax revenues.