Japan's Fall From Grace Offers Lessons for Korea

I recently visited Ise Grand Shrine near Nagoya, Japan. The journey was to piece together the puzzle surrounding Japan's founding mythology—specifically, the hypothesis that Japan is essentially an immigrant nation that developed through migration via the Korean Peninsula to the Japanese archipelago. The seamless transportation connections were impressive. However, the surrounding facilities appeared considerably aged.

"Japan has become a developing country." These were the first words from a friend who had worked at an international financial institution in Tokyo for an extended period about a decade ago. The notion of Japan as a developing country originated from self-deprecating assessments that while Japan's economy was advanced, its social systems resembled those of developing nations. Now it suggests that even the economic sphere is showing developing-country characteristics. But has Japan really become a developing country?

Japan is undergoing tremendous transformation. At its core is the weakening of economic power—once its trademark. Japan ceded its position as the world's second-largest economy to China in 2010, having held that rank behind only the United States. Per capita GDP, which once approached $50,000, has now fallen to the $30,000 range. A nation that was once an idol for both Korea and Taiwan now stands at a similar level. This was unimaginable in the past.

Many illusions have also shattered. Previously, despite being a wealthy advanced nation, Japan was so closed off due to excessive Japanization that it was difficult to approach. Now, under the banner of "tourism nation," tourism has become a major driver of domestic demand expansion. Subway announcements in Japanese and English are followed by Chinese and Korean, just like in Korea. Indeed, a significant portion of passengers are foreigners. An acquaintance who visited Osaka reported that seven out of ten tourists were Korean, estimating that Taiwanese, Chinese, and Westerners each accounted for roughly 10%. This mirrors the tendency of developing countries to prioritize tourism to maximize foreign exchange earnings during their growth phase. Surprisingly, many restaurant workers are also foreigners, and portion sizes have increased substantially. Homeless people can occasionally be seen in some downtown areas—a sight that was never visible before. Meanwhile, the job market for university graduates is experiencing a labor shortage. Characteristics typical of developing countries are appearing across society.

That said, labeling Japan as a developing country reflects an overly economy-centric view. Following the economic boom of the 1980s, Japan's real estate and stock markets soared to the heavens. Many new buildings stood in splendor. Such scenes cannot be replicated now. Moreover, since 2012, global average per capita GDP has exceeded $10,000, and traditional industrialization has ended. There is no guarantee that the darling of traditional industrialization will remain so. Yet even in the age of artificial intelligence, the experience of being a manufacturing technology powerhouse remains a significant asset. The metrics for national development must also become more comprehensive. Economic factors are just one component. It is true that Japan's economic power is not what it once was. Nevertheless, comprehensively speaking, it remains an advanced nation.

What is enviable is that wherever you go across the country—especially in rural areas—people live well without disparity. Residential environments are maintained immaculately. This is the result of a nationwide effort to keep surroundings clean and avoid causing inconvenience to others. It reflects how advanced the national consciousness has become. One can easily observe the efforts of returning leaders to develop their hometowns with distinctive characteristics. This may not directly translate into economic development. However, it has taken root as a uniquely Japanese strength, projecting an image to the world. It is an element that cannot be overlooked as a measure of development.

Japan is now entering its 40th year since the "bubble collapse," having passed one generation. The nation has grown by squeezing every available capacity within its limited island territory. When the need for major transformation became recognized, the people rallied around leaders who appeared like comets and achieved it. Japan also has experience rapidly imitating the West during industrialization to leap forward a stage. Once a world-class advanced nation, Japan is now absorbed in restructuring to extend that status. It is attempting to conceptualize its national identity and history in its own way. Signs of gradual improvement are appearing in the Liberal Democratic Party's one-party dominant political system, low productivity centered on large corporations, and the labor market with its stark gender gap. Direction matters. Rather than looking down on Japan, there is still much we must learn from it more thoroughly. Yet it is regrettable that no signs of improvement are visible on our side.