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.

China’s attitude toward the U.S.-Japan and U.S.-Korea alliances, particularly the former, has drawn a lot of attention in the post–Cold War era. How China views the utility and function of these two security alliances and reacts to them could well shape the dynamics of the alliances. From a historical perspective, however, this is not a new issue. China has lived with these alliances for almost half a century. To better understand China’s current concerns about the alliances and to predict its future posture, we might look for clues in what China has done in the past. This paper attempts to provide a broad survey of Chinese perceptions of the two security alliances in the Cold War period to elucidate Beijing’s post–Cold War policy orientation. By tracing the evolution of the Chinese calculus of the U.S.-Japan and U.S.- Korea alliances, it hopes to find answers to the following questions. What are some of the important variables or conditions that defined China’s attitudes and approaches to dealing with these two alliances? How do these variables or conditions interact with each other? Have they been constant or changing over time? Are they still relevant in the post–Cold War era, and to what extent?

The paper draws its findings mainly from the Chinese official media. While this may not be an ideal source, it nevertheless provides a systematic data basis for a historical analysis of continuity and change. There is no question that the official Chinese media, particularly before the 1980s, was full of rhetoric and propaganda. There has always been a gap between rhetoric and behavior in Chinese foreign policy, as in other countries. Nevertheless it is equally true that behind rhetoric always lie perceptions, self-serving or not, that provide “diagnostic propensities” and “choice propensities” of the Chinese leaders and elites, and thus have policy implications.

The findings of the paper suggest that China’s perceptions of the targets, internal structures, and functions of the U.S.-Japan and U.S.-Korean alliances have changed remark- ably over time, from extreme hostility to high tolerance. These changes resulted from the interactions of such factors as China’s assessment of the world balance of power, the well- being of its relationship with both indigenous and outside powers, and the priority of its national policy. The evolution of Chinese perceptions also illustrates that China need not view the two security alliances as inherently hostile to its interests. Under some circum- stances they can be considered useful or at least harmless. Beijing’s attitudes are often determined not by the two alliances per se but rather by its perception of the sources of threat to its security and whether these security alliances can alleviate or aggravate the threat. On the other hand, given the nature of China’s foreign policy, Beijing does not have intrinsic love for these alliances. Since the 1980s, China has not particularly endorsed any bilateral or multilateral military alliance in the region. Normatively China is also uneasy with the reality of the American military presence in the region and tends to see it as a short-term arrange- ment rather than a long-term phenomenon. During the Cold War, the Chinese perceived the two security alliances as either against China or with China. In the post–Cold War period, they have yet to be convinced that the function of the two alliances could be neither.

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.

By almost any criterion of success—be it cost-effectiveness, risk-reward ratio, multiplier
effects, or sheer longevity, the Japan America Security Alliance (JASA) stands out as one of
the most successful alliances in twentieth century history. For the United States, chief
architect of a global network of military relationships, JASA is arguably the most important
of its many bilateral alliances. In terms of historic impact, JASA is comparable to the North
Atlantic Treaty Organization (NATO), a multilateral alliance that restructured the European
security landscape in 1949. For nearly a half-century, JASA and NATO have functioned
as the bedrock on which the Cold War security systems of Asia and Europe have been
constructed.

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.

In the area of economics, Jean OI's focus on loval self government links the political dilemmas of the previous section with the concrete economic problems of the locality in contemporary China. WIth her customary insight and skilful use of field reserach, Oi paints a complex picture of local development.

" Reprint from Information Infrastructure and Policy (Vol. 4 1995).

Reprint from The National Interest (Fall 1996).

One of the most persistent and important questions in international comparisons of health systems pertains to the wide divergence in costs between countries. Japan has significantly lower per capita health care costs than does the United States, despite having a fee-for-service reimbursement system and universal coverage, and aggressively purchasing and utilizing equipment-embodied medical technologies. 1 One important factor in the increase in American health care costs over time has been the substitution of surgical intervention for medical treatment. 2 This leads us to consider differential rates of surgery as a potential explanation for divergent cost performances. Indeed, although Japan has one-half the inpatient admission rate of the United States, it has only one-quarter the surgery rate per capita