By Yoon Jin Lee
Acemoglu and Robinson, in Chapter 9 of Why Nations Fail?, argue that extractive institutions (in the case of most African countries, these were based on slavery), which were imposed by the former European colonizers, hindered African and Southeast Asian countries from industrializing. Hence, the economic development of European countries largely benefited from the underdevelopment in other countries and explains the world inequality today. To what extent does this argument apply to other cases? This essay attempts to evaluate the external validity of the authors’ argument by examining the case of Korea.
The Japanese colonized Korea for thirty-five years and extensively extracted labor, resources, and all kinds of Korean products for their own benefits. For example, by 1936, Japanese took control of two-thirds of total Korean land, with a dramatic decrease in the number of Korean owner-tenants, and an increase in the number of Korean tenants from 39.4 percent to 55.7 percent (5). This is similar to the case in South Africa where Europeans stole the land of Africans for their own economic benefits. But interestingly, although these former colonies experienced similar cases of slavery and extraction from the colonizers, South Korea is one of the most economically prosperous countries, while many African countries are still suffering from a massive poverty. This essay attributes this contrast to the difference in institutions set up by the colonizers.
The Japanese, although using Korea for their benefits, created “a strong central state [that] included solid institutions.” These institutions included corporate governance, banking systems and meritocratic bureaucracy, which barely or did not exist in many African countries (6-7). The Japanese implemented these institutions due to their ambition in using Korea for their war efforts and in bringing Korea completely under their control. In contrast, most Europeans, who merely wanted to extract cheap labor force and resources, implemented extractive institutions that prevented their colonies from developing. This difference in institutions, then, accounts for the difference in post-colonial developments between South Korea and African countries.
To conclude, Acemoglu and Robinson were correct to argue that extractive institutions of European colonizers hampered their colonies from developing. Thus, strong institutions are significant for a country to develop.