Seeking Autonomy: Comparative Analysis of the Japanese & South Korean Defense Sectors Master’s Thesis Presented in partial fulfillment of the requirements for the Degree Master of Arts in the Graduate School of the Ohio State University By Adam Gerval, B. Interdisciplinary East Asian Studies MA Program The Ohio State University 2016 Thesis Committee: Philip Brown, Advisor Hajime Miyazaki Youngbae Hwang Copyright by Adam Gerval 2016 Abstract The development of defense technologies has blended economic and national security policies in the postwar era. Many countries have invested heavily in defense industries as a means to stimulate economic gain and technological innovation. However, vibrant defense industries are rarely developed through autonomous production alone.
They tread a slow path that often follows shortly behind economic and industrial development, and signals rising players in the international community. However, these developments are often nurtured and influenced by key allies that illuminate both partner’s international and domestic objectives. In this paper I seek to compare the overall historical development of the Japanese and South Korean defense sectors in the post-World War II era. In doing so, I will reveal their technological capabilities, methods for infusing technology into each nation’s defense sector, and finally how these transfers provided the technological foundation for developing defensive autonomy.
My findings lead me to argue that the postwar development of both sectors has been path dependent upon the evolution of their diplomatic relationships with the United States. This path has been instrumental in both nations’ economic and technological ascent, but has also been determinant of their abilities and limitations to achieve capability in specific defense technologies. This has led both countries to pursue policy objectives that serve to increase their position within their US partnerships to pursue greater economic and diplomatic interests, even sometimes at the peril of their relationship with the United States. ii Dedication To my mother iii Acknowledgements I would like to thank each of my professors for the unwavering support in my academic pursuits and in shaping my interests and ambitions to complete this work.
Specifically, the professors that on my thesis committee, Dr. Hajime Miyazaki and Dr. Youngbae Hwang, who influenced and guided much of my interests in economics and international relations. Most of all I want to thank Dr.
Philip Brown who made helped guide me through many troubling times and has been an unwavering source of support and inspiration throughout my graduate studies. Finally, I thank my family, Jason, Kati, Izzy, Lily, Steve, Nancy, Mark, and lastly, my lovely girlfriend, Francesca. Without the help of each of you this achievement would not be possible. iv Vita May 2005……………………………………Ronald Reagan High School 2013……………………………………….
History, The University of Kansas 2014 to present…………………………….East Asian Studies Interdisciplinary MA Program, The Ohio State University Fields of Study Major Field: East Asian Studies – International Relations Minor Field: Economics v Table of Contents Abstract……………………………………………………………………………………ii Dedication……………………………………………………………………………….v List of Tables…………………………………………………………………………….vii List of Figures………………………………………………………………………….1 Chapter 1 – Technological Foundations in Japan & South Korea……………………….7 Chapter 2 – Conflict With a Cause – Early American Technological Transfers……….13 Chapter 3 – The Use of Licenses and Offsets……………………………………………21 Chapter 4 – Autonomous Production & Reform Efforts………………….60 vi List of Tables Table 1. US Licenses granted to South Korea 1978-1988……………………………….36 vii List of Figures Figure 1. South Korea defense exports, 2006-2015………………………………………. Japanese income from US Special Procurement (1950-1963)……………….14 viii Introduction When Republic of Korea (ROK) President Roh Moo-hyun introduced the Defense Reform Policy 2020 in 2005, he intended to bolster the South Korean defense industry and transform the sector to a more a prominent role in the South Korean economy.
By expanding defense exports, and reducing personnel levels in favor of heightened technological capability commensurate with its economic strength, the South Korean government sought to transform its defense industry into an “economic asset.” 1 Since the policy’s introduction, South Korea has dramatically increased exports, reaching its peak in Figure 1 – South Korea defense exports, 2006-2015 (Source: Jane’s Defence Weekly) 2014 totaling over $3.2 Ambitions to expand its role in the global arms market has long been an objective of the ROK government, but the policy’s pledge to greatly reduce troop totals signaled a commitment to increasing the technological divide between South Korea and its northern adversary. The policy called for the reduction of ROK forces from 680,000 in 1 Kaan Korkmaz and John Rydqvist, The Republic of Korea: A Defense and Security Primer, FOI, Defense Research Agency (2014) 14. 2 Jon Grevatt, “South Korean defence exports over USD3 billion in 2015,” in Jane’s Defence Weekly (online) January 19, 2016, accessed March 13, 2016, http://www.com/article/57301/south-korean-defence-exports-over-usd3-billion-in- 2015. To compensate, the government pledged to increase investments in advanced weapons systems in an effort to streamline its defense sector.3 In contrast, Japan has historically not employed its defense industry as a direct instrument of economic gain.
This is primarily due to the restrictions of many of its pacifist policies towards defense. Most notably, Japan renounced its right to wage war in its postwar constitution at the behest of the American occupation. Additionally, Japan has undertaken many commensurate policies to bolster the nation’s pacifist stance. For example, Japan enacted a self-imposed a ban on arms exports to all countries since 1970, and placed a 1%GDP cap on all defense expenditures.
However, under the leadership of Prime Minister Shinzo Abe, Japan is at the cusp of a new era in national security. Through controversial changes to many of Japan’s aforementioned postwar policies, Abe has sought to propel Japan to a more prominent role in international affairs, and claim a more active role in its alliance with the United States. In light of these changes, Japan has also revealed its intentions to shift its defense industry to a more influential position in the nation’s economy and technological development. The characteristics determining each nation’s technological capabilities are rooted in economic, diplomatic, and technological conditions that are indicative of their objectives and capabilities.
Central to each nation’s postwar technological development is their alliance with the United States. Determining the path through which both Japan and South Korea have reached current levels of defense capability illuminates the characteristics that have shaped each nation’s objectives, as well as their abilities and limitations. These developments are the topic of this essay. 3 Korkmaz and Rydqvist, The Republic of Korea, 14.
2 In this paper I seek to compare the overall historical development of the Japanese and South Korean defense sectors in the post-World War II era. In doing so, I will reveal their technological capabilities, methods for infusing technology into each nation’s defense sector, and finally how these transfers provided the technological foundation for developing defensive autonomy. My findings lead me to argue that the postwar development of both sectors has been path dependent upon the evolution of their diplomatic relationships with the United States. This path has been instrumental in both nations’ economic and technological ascent, but has also been determinant of their abilities and limitations to achieve capability in specific defense technologies.
This has led both countries to pursue policy objectives that serve to increase their position within their US partnerships to pursue greater economic and diplomatic interests. However, the presence of moral hazard pervades both countries’ relationship with the United States. In the exchange of defense technologies, moral hazards arise when the recipient country lacks the incentive to honor the interests of the opposing state. This problem has manifested itself primarily in the unauthorized export of US technologies and in the development of autonomous defense technologies.
These acts imperil US economic and diplomatic interest by threatening its global market share in a number of defense technologies, primarily aircraft, but also through the illicit exchange of US-designed defense technologies to third parties. Outline & Structure – The defense sectors in Japan and South Korea share a series of developmental features that have enabled each to expand technological capabilities. In both cases the role of the United States is essential. The United States’ role in revitalizing 3 the Japanese and South Korean economies is a familiar notion in East Asian studies, however, it also served as the catalyst for technological advancement in both nations’ defense sectors.
No other country has contributed more to the technological basis of both the Japanese and South Korean defense industries than the United States. Since 1950, the United States is responsible for 95% of arms transfers to Japan, and 84% to South Korea.4 Moreover, just as American conflicts in East Asia (namely the Korean and Vietnam Wars) ushered both countries’ high economic growth periods, they also helped bring about their postwar entry into modern weapons development. The earliest weapons transfers from the United States reveal much about each nation’s technological foundations in the immediate postwar era. Despite its defeat in the Second World War, Japan maintained a range of technological know-how, as well as extensive experience in arms manufacturing during its imperial era (1868-1945).
Conversely, South Korea had little experience in developing technology, serving primarily as an agrarian economy prior to the Korean War. This underlying distinction determined the initial capabilities of each defense sector, limiting the early technological transfers of weapon systems to their initial experience with weapons development. The alliance with the United States enabled both countries to diffuse sophisticated technology across a variety of industries through the licensed production of American technologies. These licensing agreements extended critical information related to the design and production of US defense equipment that advanced the technological base in each country.
By these means, both countries addressed crucial economic, diplomatic and military objectives. Given its prewar technological foundation, Japan was able to 4 SIPRI Database for Japan and South Korea, 1950-2015. 4 integrate more advanced weapons systems into its technological base. By doing so, Japan sought to close the gap with the United States technologically, as well as economically.
Although South Korea began from a lower level of technological sophistication, it also utilized US licenses to initiate technological transfers to its fledgling defense sector. The gains from US technology transfers enabled South Korea to address specific disparities in its capability compared to North Korea. This has enabled the ROK to surpass the North in technological sophistication and defense capability. However, in addition to its fledgling technological base, South Korea’s ability to procure licenses was hampered by a series of disputes regarding its unauthorized transfer of US-designed arms to third parties.
This moral hazard led to a decline in licensing agreements between the US and South Korea throughout the 1980s. Despite the formative gains, relying solely on US technological transfers would be detrimental to the objectives of each nation’s economic and national security interests. Fears of abandonment and entrapment are a common notion in alliance politics. These trepidations stem from concerns that overreliance reduces the client state’s (South Korea or Japan) economic and security objectives by marginalizing its interests in the alliance.
Therefore, these anxieties have led to movements to pursue greater autonomy in the defense sector, as well as efforts to reform policies related to defense production. However, in each nation’s attempt to achieve greater clout in its alliance with the United States, the history of each partnership has created obstacles to achieving many of their policy objectives. This paper’s foundations lie in the scholarship established by Richard Samuels and Michael Green. Both have crafted studies regarding technological innovation, 5 industrial autonomy, and defense legislation that will serve as key components in this essay.
Furthermore, I have used a variety of resources in compiling this study. Government documents, newspapers from the time, and annual reports from relevant defense firms serve as the material basis for my research. Finally, the data used in this study is primarily derived from the Stockholm International Peace Research Institute (SIPRI), an international institute dedicated to researching armaments transfers, expenditures, and weapons development.
