Just like many other crises, the Korean currency crisis came suddenly. In mid-November 1997, headlines in the Korean press consisted mostly of presidential election stories. At that time the presidential race was very close; the Grand National Party candidate, Lee HoiChang, was making a dramatic comeback, while the National Congress for New Politics candidate, Kim Dae-jung, was making his best effort to maintain his narrow lead. Thus, when President Kim Young Sam announced on November 19 his decision to fire key economic policy-makers on the grounds of mismanaging the economy, most Koreans were surprised at the news and questioned the president’s motivation. Two days later they were completely shocked to learn that the Korean government was asking the International Monetary Fund (IMF) for emergency standby loans because the Korean foreign reserve level was very low at $7.3 billion and most foreign financial institutions were unwilling to roll over their short-term loans to Korea.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

Alliances are organizations between or among independent entities that concert to produce “collective goods” for the mutual benefit of alliance members. The statement applies whether the alliances are between or among countries, corporations, universities, research centers, or other institutions. Of course, the nature of the collective goods, as well as the membership in the collectivity, differs across these cases. That the goods (or benefits) are“collective” means that their availability to one alliance member (or their production by any member) implies their availability to the other members of the alliance.

Because the beneficiaries of collective goods cannot readily be excluded from access to
them, the so-called “free rider” problem arises. As a result, “Let George do it” becomes the
prevalent incentive structure. The more George does, the less is the burden (i.e., “cost”) on
other alliance members, while the benefits are collectively available to all members.

Several corollaries follow with respect to the formation, functioning, and prospects of
alliances in general, and those in Northeast Asia in particular:

First, while the benefits of an alliance are available to all its members, their respective
valuations of these collective benefits may differ. It is also worth noting that non-alliance members—for example, China—may appraise the putative alliance products as representing
not benefits, but “dis-benefits” (threats or risks) for themselves.

Second, devising an appropriate formula for sharing the costs of producing the collective
alliance benefits is complicated by the aforementioned differences in valuations among
alliance members, as well as differences in their capacity and willingness to pay.

This paper addresses the general question of the collective burdens (costs) and benefits of
the U.S. alliances with Japan and Korea, as well as the respective capacities and willingness
of the alliance members to bear these burdens. The economics of these issues are inextricably linked with their politics, and so crisscrossing between these two domains occurs frequently in the paper.

The paper is divided into five sections. Section 2 addresses the economic capacities of the
alliance members to bear alliance costs. Section 3 deals with the costs—both economic and
non-economic—of each of the alliances. Section 4 assesses the security and other benefits of the alliances. Section 5 considers the politically dominated “willingness” of the alliance
members to bear alliance burdens. And Section 6 provides a concluding assessment of the
balance between the burdens and benefits of the two alliances, the interdependencies
between the two alliances, and ways of enhancing the alliances while mitigating the
drawbacks associated with what we refer to as the “China–Japan conundrum.”

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

Reprint from NBR Analysis volume 7, number 4.

Reprint from Journal of Far Eastern Business originally printed Autumn, 1994.

The first book available devoted exclusively to China's rural organizational change and the subsequent implications for rural societies and politics. Following China's successful decollectivization, diverse new organizational forms arose in response to different local situations. Yet the collective tradition did not die. The contributors dissect the closely structured relationships among the newly emerging class of rural entrepreneurs, local officials, and their family members and associates.

Part of the Walter H. Shorenstein Distinguished Lecture Series

This APARC discussion series clearly recognizes that the international and regional condi- tions of the post–Cold War era raise new and vexing questions about the future of the United States and its alliance relations in Northeast Asia. Today I would like to raise and begin to analyze a specific subset of questions related to proliferation, which I believe have a direct bearing on the future security situation in the region—and, more importantly for us, the U.S. alliances there. I do not think that this subject receives sustained analysis, so I would like to try to initiate that process. I am at the outset of putting this research together and welcome the opportunity to hear your thoughts and criticisms as the study evolves.

In this presentation, I take a preliminary look at how issues of proliferation affect the present and future disposition of U.S. alliances in Northeast Asia. In particular, I hope to answer three questions. First, how do issues of proliferation either weaken or strengthen U.S. relations with its allies in Northeast Asia? Second, how do issues of proliferation affect the overall security situation there? And third, how does the security situation, in turn, shape the rationale or justification for continued U.S. alliance presence in the region? For this presenta- tion, when I speak of proliferation I generally refer to the spread of nuclear, missile, and advanced conventional weapon capabilities. I will not address issues related to chemical and biological weapons, although I do believe that these are a concern. Such a definition obviously casts a rather wide net, and in a presentation such as this at a relatively early stage of the research, I want to keep my focus relatively narrow. Thus, I will not address what I consider global issues of nonproliferation, such as the Non-Proliferation Treaty, the Chemical Weapons Convention, or the Comprehensive Test Ban Treaty. Rather, I want to focus more narrowly on issues of specific relevance to Northeast Asia.

In trying to keep this focus narrow, then, I will proceed in four steps. First, I wish to briefly consider the contemporary trends of proliferation, around the globe and regionally, which have a bearing on the security situation in Northeast Asia. Second, I want to discuss three types of proliferation concerns and show how they intersect and interact with U.S. alliance relations. The first is nuclear proliferation, and here I would like to look at alliance relations in the context of the Korean Peninsula Energy Development Organization, or KEDO. On the issue of the proliferation of theater missile defenses (TMD), I want to look specifically at the development of these capabilities by South Korea and Japan. And third, on the issue of ballistic missile proliferation, I would like to consider the efforts by South Korea to develop a more powerful ballistic missile force. In the third part of the talk, I would like to address how these and other proliferation issues affect relations with China, because future U.S. alliance relations will be shaped in no small measure by Chinese reactions to them. In the fourth and concluding section of the talk, I will try to look ahead and assess how these several developments affect relations between the United States and its allies in Northeast Asia; how they influence security in the region; and how U.S. alliance relations in Northeast Asia might be readjusted in the future so that cooperation and nonproliferation can help justify a continued U.S. presence in the region, simultaneously contributing to long-term regional confidence and stability.

Published as part of the "America's Alliances with Japan and Korea in a Changing Northeast Asia" Research Project.

Just as numerous scholars have delved into the interplay between markets and institutions in an attempt to explain the postwar economic miracle, this paper examines the relationship between markets and institutions in Tokugawa Japan in an attempt to better explain the phenomenon of economic development at that time. In particular, this paper focuses on the Tokugawa era institution of the sankin kotai, or alternate attendance system, and argues that conventional explanations attributing the unusual economic development of this period to the unilateral coercive government power of this institution are problematic. The author argues that the alternate attendance system must instead be understood as a rational institution which promoted mutual compliance ex post and allowed for credible commitments ex ante through its harmonization of interests. The resulting peace dividend generated the positive externalities requisite for the development of a market economy.