Part II: Discussion

Odaka: Thank you very much, Prof. An. That was an extremely stimulating presentation. Let's open the floor up for discussion.

Low Share of Traditional Crafts and Industries

Mizoguchi: I'd like to ask about the metalwork industry. In the pre - war period, the Korean metalwork industry produced tableware and brassware. It seems likely that "national capital" constituted the largest share of the industry, but what were your findings? It seems to me that traditional metal crafts accounted for a high share of the industry.

Odaka: In Table 1, for 1914, metalworks account for 14.9% of the total. Quite a high percentage.

Mizoguchi: The number is most likely not from modern metalwork industries.

Ahn: In Korea, there was a long tradition of making eating utensils. Until the 18th century, the raw materials for such utensils, copper, had to be imported from Japan. In the 19th century, copper mines were developed in Korea, and consequently, the industry grew through the production of tableware, weapons, copper coins, and coin minting. At the time, iron pot manufacturing was also one of the metalwork industries.

Mizoguchi: I'd like to ask a bit more about the share of the metals industry in the early colonial period. Often, when we analyze the pre - war period, the patterns is that traditional industries exist in the initial period, then as time passes, modern industries take over. For example, chemical industries held a large share in the early stages, so some people assume it was heavy industries. In actuality, it was all traditional industries, for example, matches, and in the case of Taiwan, Chinese medicines, that sort of thing. It was only later on that chemical industries came to be made up of fertilizer and other modern industries.

But in Korea, this process is not clear. The share of metals in the 1910's was extremely high. It struck me that this might also be such a case. Later on in the colonial period, the Government - General started operating in the metalwork industry, so the share increased, but what was the metals industry like in the early colonial period?

Ahn: I don't know what percentage of metals were tableware or iron pot manufacturing, but after modern machinery came in, the number of repair shops increased. I can't be certain, but I think the early colonial period metalwork industries might have been mainly repair shops, since they sprang up all over Korea.

Odaka: In the context of your presentation, how would Japan fit in. Today, you compared Korea and Taiwan, but was prewar Japan closer to Taiwan or Korea?

Ahn: Japan was most likely completely different. The fact that there were many petty industries makes it similar to Taiwan. Distribution processes and the roles of wholesalers were also similar to Taiwan. However, in Taiwan related industries did not develop very much. In Japan, these related industries developed. For example, in the case of knitted goods, knitting machinery for small and medium industries were invented. This did not occur in Korea and Taiwan. In that sense, Japan was completely different from both.

Odaka: In Table 2, the net product numbers for Taiwan until 1920 are very similar to those for Japan, but from 1920 on, the numbers for Japan become much larger.

Ahn: I'm not sure, but in 1904, Japan had higher numbers, but by 1916, Taiwan's numbers were larger by about 1%. This was probably the result of Japan aggressively developing the sugar industry.

Taiwan - An Unusual Colony

Mizoguchi: I recall Prof. Ishikawa Shigeru saying from awhile ago that in comparing various colonies, he found Taiwan to be an extremely rare case. Normally if we categorize colonies, there are two patterns:the first, a colony which exports commercial crop and imports food items, and the second, one which exports food items. The first case might be best exemplified by Malaysia, which imported rice and exported rubber, while an example of the second pattern might be Thailand, which exported rice. Korea, after it was colonized by Japan, was an exporter of rice. However, Taiwan was an exceptional case, exporting both a staple crop, rice, and a cash crop, sugar. This kind of colony did not exist in any other part of the world.

Taiwan was clearly blessed with many agricultural products. This resulted in an odd phenomenon. Industrial production and agricultural production percentages remained constant throughout the colonial period. Only agriculture - related industries developed, so the agriculture - to - industry ratio would increase a little bit after the introduction of modern industries, but then sugar and rice industries would grow. This in turn would trigger the development of related industries, creating this peculiar phenomenon.

On the other hand, the industrialization pattern of Korea was very similar to other areas. At first, growth occurred in agriculture, then subsequently in industry. The fact that the ratio of industrial production to agricultural production was constantly increasing can be explained. In that sense, Japan and Korea might have been similar, and Taiwan might have been an extremely rare case.

Odaka: Of course, since Japan was not a colony, it is impossible to make exact comparisons with Korea and Taiwan, but Japan in the medieval and early modern periods was rich in natural resources. The fact that merchants in Japan were very active might make Japan of the early modern period similar to Taiwan. In the Meiji period, the "medium" end of the category of small and medium firms were in many cases petty industries. In some sense, in Japan, medium and small firms as we understand them today emerged during the inter - war period, another point of similarity between Japan and Taiwan. However, I agree that the industrialization process in Japan was likely more similar to that of Korea than Taiwan.

Mizoguchi: We were somewhat aware of the differences in natural resources as a factor, but the really interesting part of Prof. An's presentation was that it linked this point to commercial activity and small - medium firms to analyze Taiwan. This is an issue we haven't explored very much until now. I learnt a great deal from the presentation.

How to View Commercial Functions

Saito: I'd like to ask a question about commercial activity. The Taiwanese rice millers seem to be engaged not only in rice milling but buying and selling rice. So, probably when buying rice, some financing was attached as well. For example, provide an advance loan, then buy milled rice from someone else, and then sell it as a wholesaler.

If that was the case, it's possible that the numbers for industry are somewhat inflated. If all toranken were put under industry in industry and laborer categorizations, the commercial functions value added might be attached. This is of course just for the case of rice milling, but if we include all rice milling under "industry" it's possible to end up over-estimating industry and conversely under-estimating commerce.

Ahn: I don't know about the specific categorizations in rice milling, but I originally started this research in conjunction with research on hats. The hat industry in Taiwan started out as an important portion of total exports. Around \2 million to \3 million in export value. Taiwanese exporters, with headquarters in Taiwan and branch offices in Kobe, initially manufactured hats in factories. But as the industry developed, most of the factories disappeared, and hat making became a sideline industry for housewives. Therefore, it is unclear whether the hat industry should be categorized as a part of industry or commerce. But from the empirical study of the hat industry, I realized the importance of the role of distribution in economic activity. As you pointed out, Prof. Saito, it is possible that there was confusion as to whether to categorize toranken in industry or commerce.

Mizoguchi: As far as Table 2 is concerned, as the numbers are generated from commodity flow calculations and thus value added is included, this problem does not apply for these estimates. However, if the Taiwan government added up the total sales, then it is possible that there may be some bias as Prof. Saito said.

Saito: I see. In my research on labor resources, the documents all divide by occupation, so I had thought about this issue from sometime ago. Normally, you can't divide between the craftsman who sold something and made something, we can't simply divide arbitrarily by half. Even something that looks completely industrial has commercial factors included in it.

Mizoguchi: With my calculations for GDP, I only looked at rice millers as millers and added them to industry calculations, so in that sense, it may be a legal fiction. If we look at the firm as one unit, I may have been dividing what is essentially indivisible.

Including the Demand Structure

Matsuda: One of the most interesting points in your talk was the discussion of differences in factory scales of Taiwan and Korea in both pre and postwar periods. If you add demand structure to this, would it change any of your views? In Korea, Japanese new zaibatsu used Korean electrical power to set up large - scale fertilizer factories. Large - scale modern factories increased in number at a very high speed in Korea, but the demand for the fertilizers was probably limited to the three markets of Japan, Korea and Manchuria. If we add the demand structure to the relationship between a highly fertile agricultural area like Taiwan, where traditional fertilizers were sufficient, and Korea, a totally different kind of area, how does it help explain the differences between the paths taken by the two countries?

Also, what happened to the Japanese-owned factories and facilities after Liberation? How many of these factories were destroyed during the course of the Korean War? At the start of your talk, Prof. Ahn, you mentioned the striking predominance of big business in the postwar Korean economy. If you could clarify if it is your intention to link the prewar and postwar periods, I would be grateful.

Ahn: I appreciate your comments regarding the need to include demand structure as an unit of analysis which might provide alternative insights. It's something I definitely need to think about. As I hadn't considered the issue before, I cannot answer your question at this stage of my research.

With regards to the fate of the Japanese - owned factories after Liberation, there are various aspects to the issue. As it is a large issue, I cannot give a simple answer. But what I can say is that first, although there were operating capital and raw materials shortages, since enough technological knowledge had been accumulated, many of the factories continued to operate after Liberation. Of course, there was not enough knowledge and skills for technological innovation. But the bigger problem was political instability. As post - Liberation Korea was unable to avoid political turmoil, many of the industrial facilities from the colonial period were scrapped.

Although many colonial period industrial facilities were destroyed or ceased operations, certain legacies and continuities remained, namely, human capital from the industrialization of the colonial period. Over the last few years, I've conducted research on training, technical knowledge, technology, education, and other areas, and have come to the conclusion that human capital was the key to Korean economic development.

My motives have often been misunderstood in Korea. I often get asked in Korea how I can possibly view the history of the colonial period in such a positive light. I do not conduct my research in order to present a positive portrayal of the colonial period. My aim is to find out more about one of the origins of post - Liberation economic growth. If we do not understand the past history of economic growth, we will not be able to make effective decisions in the present or for the future.

Reconfiguration of Historical Conditions

Hori: I have been conducting joint - research over the last fifteen years with Prof. Ahn, and I feel I know Prof. Ahn's views well. Since the mid - 1980's much research has been conducted on industrialization in the colonial period, but much of it focused on specific industries and developmental stages of that industry. Recently, research has broadened to include the entire division of labor within society. Prof. Ahn has led the way in this new trend, and I agree with him that such new approaches are needed.

First, with regards to sources, under the 1929 Industrial Resources Survey Law, industrial survey methods, which had been different in the various territories under Japanese control, became standardized. However, in Taiwan, in addition to the "more than five workers" clause, a "factories with power - driven machinery" clause was included. This changed the nature of the documents. My understanding of the issue is basically the same as Prof. Ahn's. In Korea's case, there are fragmentary surveys of petty industries of under five workers, but the numbers are very small. In contrast, Taiwan had many factories with under five workers. Thus, Taiwan Government - General bureaucrats, when they saw the original plan for the Industrial Resources Survey Law, probably realized that this would not capture the reality of the situation, and decided to include the clause on mechanization. In my view, the differences between the documents on Korea and Taiwan reflect the actual conditions that existed at the time. In that sense I agree with Prof. Ahn.

However, I am not sure if I am in complete agreement with Prof. Ahn's differentiation between transplanted and traditional industries. If one applies these categories indiscriminately, it seems to me that there is a danger of reducing all origins of present - day economic structure in Korea and Taiwan to late - Qing and late - Choson periods. History of course tends to emphasize changes over time, but we also need to think about changes that took place concurrently in both Korea and Taiwan.

If we look at the growth of household textiles industry in Korea, the main expansion occurred in the 1910's rather than from the late - Choson period on. As Japan began to control cotton harvest around its territories on the Asian continent, farmers also started to accumulate raw cotton. Japanese textiles firms could not use all of the cotton, thus, farming villages came to distribute cotton through their own channels. This in turn led to increases in the number of households engaged in textiles. This was the situation until the beginning of the 1930's. In the case of Taiwan, the term toranken existed from the Qing period, but these small rice mills increased in numbers only after exports to Japan increased and mechanization and electrical power began to be used. Due to these conditions, the number of toranken increased greatly starting in the 1910's.

My point is that, granted that there were historically different conditions in the two societies, but how these conditions were reconfigured in later periods must also be included in the field of analysis. If we do not do so, if we look at the differences between the industrial structures of Taiwan and Korea and merely trace these differences back to the Qing and Choson periods, then this obviates the need for any empirical analysis of the changes that occurred afterwards. I think that the starting assumption should be that the Qing and Choson periods, the Japanese colonial period, and the post - Liberation regimes of Syngman Rhee and Chiang Kai - shek, all contributed toward creating the differences which exist today.

Also, on the issue of fertilizers that Prof. Matsuda raised during the discussions, Taiwan was not self - sufficient in fertilizers. Ammonium sulfate from Korea and soy bean sediment from Manchuria were extremely important for Taiwan's agriculture. The reason why Taiwan was able to increase its agricultural production was that Manchuria-Taiwan trade increased dramatically after Japan took over the South Manchurian railway lines, resulting in the input of soy bean dregs as fertilizer. In the 1930's, when Hungnam factory began operations in Korea, the products were shipped to Japan, but around one - third went to Taiwan. In that sense, the division of labor within the Empire during the colonial period was quite organized. It is clear that Taiwan was not self - sufficient in fertilizers.

Mizoguchi: As you said, the relative importance of commercial fertilizers in Taiwan's agricultural households was considerably higher than Japan's. Taiwan's was an extremely modern agriculture.

Matsuda: In that case, why was it only in Taiwan that there was no effort to produce fertilizers?

Hori: In Taiwan in the first half of the 1920's, there was an effort to build a hydroelectric power plant at Sun Moon Lake. It ran into difficulties raising capital and only began operations in 1934. The initial objective was to generate power for the manufacture of fertilizers, specifically ammonium sulfate. But by the time it was ready for operation, the economy was in a semi - war - time state, so the power was converted for use in aluminum production. Aluminum production continued until 1945. When aluminum became unnecessary, all the factories were converted to fertilizer production. The origins of the Takao chemical fertilizer industry and postwar mercury pollution can be found in the prewar period.

Ahn: Prof. Hori has made some very good points. While I was preparing this report, I was in fact worrying about some of the exact points Prof. Hori raised. I used the vague concept "roots in tradition" simply because I have not thoroughly examined modernization and changes in the various industries. In my future research, I would like to continue to explore the changes which occurred after the original beginnings of the various industries.

The Commercial Function within Industry

Hori: Until recently, most of the attention was focused on analyzing changes in the colonial period through the factories in the List of Factories. However, despite the importance of the subject, there has been little in the way of comprehensive analysis of small industries which were sideline industries in farming households, and the commercial activities which linked them, due to differences in the data. As a result, we were unable to grasp the differences between Korea and Taiwan, except on a superficial level. Thus, by conducting research on a field with scarce primary sources, commerce, we will be able draw a clearer picture of economic history and generate more persuasive analyses. I am very enthusiastic about Prof. An's research and support it wholeheartedly.

Odaka: What if we put Prof. Matsuda and Prof. Hori's respective comments together and think about the implications for the postwar period? The postwar roles of small - medium enterprises are vastly different in Korea and Taiwan as well. These differences originated in the 1930's, and were increased by postwar policies and international conditions which continued to the present.

Ahn: I cannot say definitely one way or another as I feel I have done insufficient research. What I presented today is merely my opinion at the present stage of my research. The role of tradition, however, is larger than what we generally imagine it to be. Just like in the colonial period, even now in Korea, the owner - operators of petty factories or businesses dislike making family members work in the business. Recently, things have changed considerably, but the basic attitudes remain essentially unaltered. It's as if the late - Choson period is still alive and well in 1990's Korea.

Odaka: That is very different from the situation in Japan.

Ahn: Yes. To overcome this attitude, the government has to implement systematic policies to promote changes in lifestyles and fundamental values. Until the mid - 1980's, I was very critical of the Korean government and participated actively in the democracy movement, but recently, I've begun to re - evaluate the New Village Movement ( Saemaul Undong ). Of course, I may be criticized as a conservative and a reactionary but when I think about the objectives of the Movement, although the economic benefits are not very clear, the impact it had on the way people think, the way they live was profound. It was a movement which changed people's patterns of life.

Korea under President Park implemented the New Life Movement with great vigor, but in the 20 years afterwards, there have been no movements along these lines. Therefore, people's attitudes and lifestyles have not changed much. Granted, as Prof. Hori has pointed out, there have been many changes over the course of Korea's contemporary history, but there are also many aspects which have remained fundamentally unaltered.

Market Mechanisms in the Colonial Economies

Hwang: Although I was born in Korea, since I wasn't alive during such historical periods, I have no knowledge of the colonial period. But as I have a deep interest in Asian economies, I found Prof. An's presentation today very stimulating.

I learnt from today's talk that the differences in Korea and Taiwan's market structures and mechanisms arose from their respective origins. The entrepreneurial spirit was very different in Korea than in Taiwan from the late - Choson period to the end of the colonial period. As the example of overseas Chinese in Southeast Asia shows, the Chinese engaged in commerce from several hundred years ago, exerting great effort in expanding capital stock and market shares. This was possible because of the accumulated business knowledge, and perhaps Taiwan's entrepreneurial spirit stemmed from some of this knowledge.

Regarding the fact that Korea's trade balance was in the red until 1986, unable to escape from a structure of loan - financed management. In the case of Taiwan, from before the colonial period, "national capital" or capital had been formed from commerce. This was probably given free play during the colonial period. In contrast, Korea had no such major tradition of entrepreneurship. Regardless of industrialization in statistical terms, there was little capital accumulation among entrepreneurs running small organizations operating in the market economy.

Even in the postwar period, in Taiwan, people were used to managing small household industries, and could use their accumulated private capital. In contrast, Korea had very little in the way such entrepreneurial traditions. Therefore, in order to fuel economic growth, Korea entered the path of state - directed deficit financing. This point has many implications for my own current research.

Since I don't know very much about the colonial period, I'd like to ask about the objectives of the market economy. In the colonial economy, whose welfare was the primary objective? I think that the colonial economies in Taiwan and Korea were controlled economies. It was designed and controlled by Japan. My intuition is that colonial policies were designed to promote Japanese welfare. This is the same as Britain and other colonial powers. Although the basic fundamentals were different, I think that the colonial policies in Taiwan and Korea were different. Both were colonies, but Korea had lower transportation costs, and was a lot closer geographically. Japanese colonial policies had war with China in mind, and implemented far more severe policies in Korea.

For example, in food production, since it was probably a controlled economy, each of the government - generals planned for profits;therefore, profit and wage gaps in Taiwan and Korea were completely different. Colonial policies in Korea were very severe. Even with economic development, late - Choson period Korea was predominantly an agricultural society, but productivity was extremely low in comparison to Taiwan. With such low productivity, it was hard for agriculture in Korea to develop as commerce.

At the same time, rice and other goods were exported. What I want to point out here is that trade was unequal. In Japan, if the same rice was produced, the Japanese government would purchase it at one price, and for the same type of rice imported from Taiwan and Korea, purchase it at a different, unequal price. If it was truly trade, the conditions should have been equal. Even excluding price differentials due to shipping costs, there were trade inequalities in rice prices. If such points are analyzed, different conclusions can be reached.

Ahn: My frank answer to the question - for whose welfare economic development occurred in the colonial period - is that I don't know. It is not possible to say in one simple phrase for whose benefit economic development took place. Those participating in the market were most likely all working for their own benefit. Second, what exactly were colonial policies. Of course, I agree that they were linked to the goals of the colonial metropole, but I have grave doubts about making a simple direct link between policies and systematic exploitation of the colonized.

Hwang: In Korea today, per capita GDP growth rates are considered as welfare.

Ahn: That is also a very complex issue. Recently, there has been some research addressing that problem. GDP increased but people's heights did not grow;or looking at changes in income distribution by ethnicity, and concluding that Koreans in the colonial period were better off;or GNP increased but people had to work harder to maintain living standards, thus heights did not increase, and other such research has been done. The fact that Korea was a colony does not necessitate specific economic outcomes in and of itself.

Additionally, on the unequal trade issue, this is also very complicated. If unequal trade policies with the colonies were implemented, this would distort Japan's overall economy. Korea was exporting rice to Japan, so if hypothetically, the government lowered Korean rice prices in the Osaka market. Then, rice prices in all of Japan would become lower, and price structures would be distorted. Of course, this did not happen in reality, but you can see my point. To sell cheaply, one has to acquire cheaply. For that, policies ordering coercive purchasing would be necessary, but no such policies existed, the distribution of rice rations during war - time notwithstanding.

Business Scale and Capital Formation

Abe: At the start of your talk today, Prof. Ahn, you said that Korea was big business - centered and that Taiwan was medium and small industry - centered. I gather from your presentation that there were incentives for Korea to promote large-scale firms, while in Taiwan, there were merits for retaining small and medium firms. You traced the roots of this difference to the prewar or colonial period.

But I am not clear about one point. The capital accumulation among toranken operators in Taiwan seemed quite high. But Korea, as you pointed out, was characterized by high - debt management, and the firms' own capital accumulation was rather thin. Why didn't Taiwan, with more capital available, expand the scale of its firms? On the other hand, why did Korea, despite the paucity of capital, employ many more workers and form large organizations? Your explanations so far have not touched on the reasons for expansion or lack thereof.

One additional point. The fact that Korean firms increased organizational scale to reduce transaction costs meant that they thought establishing internal labor markets was better than procuring personnel from the labor markets. If that was indeed the case, I don't quite understand why Korean labor mobility ratios were high until now.

Ahn: I don't know too much about management practices in the past. To answer your questions on the basis of analysis of empirical sources would take some more time and research. But according to developmental economics theories, late - industrializing countries suffer from a shortage of managers, technicians, and other forms of human capital. This in combination with the fact that labor turnover fees are expensive, creates a tendency for firms to expand in scale. I need to research this point further, but it is possible that such mechanisms were at work in prewar Taiwan and Korea.

In the present, there are newspapers and other sources, so we can determine the reasons. Korea has large conglomerates dominating its economy now, while Taiwan has many small and medium businesses. In Korea, there were advantages for continuous expansion in scale, both in terms of policy and capital supplies. The high - debt or credit economy also played an important role in driving this trend.

Abe: So in Korea, capital was intensively invested in big business?

Ahn: At first, I said that the government promoted the growth of large firms, but conversely, government policies also stemmed from the weakness of small and medium enterprises. Once the economy came to be centered around the big conglomerates, if such large - scale firms were to go bankrupt, the effect on the national economy would be disastrous. So, the government protected and nurtured big business, and the firms grew in scale under the government umbrella. Of course, I can't say that all Korean conglomerates developed from this pattern. At any rate, the result has been that while scales are huge, profit ratios are very low for many of these conglomerates. This is the basic problem facing Korean big businesses today.

Abe: Were there cases in Korea where like in Japan, big corporations fostered internal labor markets and increased accumulation of human capital?

Ahn: Yes, there were. In Korea, big conglomerates had to form internal labor markets to collect the technicians and engineers needed. After 1987, labor mobility rates declined significantly.

Abe: With the so - called Big Five, Big Ten, Big Fifty chaebol, can their origins be traced back to the colonial period?

Ahn: There are very few chaebol which were formed in the prewar period. The majority were formed in the postwar years.

Abe: Even then, can we conclude that the roots were in the prewar period?

Ahn: There were many continuities in terms of business experience, such as managing small businesses or engaging in commerce. However, only a handful of conglomerates, such as Samyang or OB, have actual organizational roots in the prewar period. The development of capitalism in Korea was not an autonomous process, but a catch - up process;thus, it was greatly influenced by world capitalism. As a result, it is possible that the preconditions for economic development found in advanced countries was inputted during the process of economic growth in Korea.

Family Structure and Industrial Structure

Saito: This may be outside the bounds of today's talk, but at the start, you mentioned that differences in family structures was one of the reasons for the different industrial structures. If you could explain how family structures were different.

Ahn: According to sociologists, Taiwan has a communal family structure, while Korea has a lineal descent family structure. Communal families have hierarchical divisions between the male head of the family and other members of the household, but have equal relations between the all other members of the family. In Taiwan, in a family business, the authority of the head of the house ( laopan ) is very strong. Nevertheless, although the sons and adopted sons - in - law all work under the family head, each person has individual shares over assets in specific companies. In Korea, this would be hard to imagine, but among Chinese families this system is called "Live together, finance together."

Since Korean families are lineal descent, there are clear rank divisions between father and sons, and even among the sons. Korea is an extremely hierarchical society. In Korea, you must respect someone even if they are only a year older than you. Even people who are not your older brothers, you have to call "older brother." When such intra - family relations are applied to a large company, the structure becomes highly pyramidal.

Further, in Taiwan, since families practice "live together, finance together" in times of recession, units can be spun - off for risk diversification, while when growth occurs and capital resources are necessary, the units can be brought back together again. It is also easier to form subsidiary companies out of the main company. In Korea, this is very difficult to do. Due to these differences, Korea became big business - centered while Taiwan came to be dominated by small and medium-sized firms, or so goes the sociological theory.

Undeveloped Wholesales System

Hori: One more issue, one related to the application of transaction theory. In Korea, wholesalers are very weak in manufacturing industries. I've never understood the mechanisms behind why such a status quo is maintained. In other words, instead of the manufacturer distributing directly to the consumer or retailers, it seems to me that the costs could be reduced considerably if an intermediary wholesalers were used. Looking at things from cost theory, I cannot understand why there is no developmental convergence in Korean wholesales systems.

Ahn: In Korea, there were traditional merchants called "kaekju" or "yogak." Kaekju were owners of official trading operations. This was a form of wholesaling centered around consignment sales and commission trade. Korea originally did have wholesalers. But, according to recent research, there is some doubt as to whether kaekju and yogak were merchant class or not. Documents recording transactions of kaekju rights are preserved in Seoul University's Kyujang'gak Archives. An analysis of these documents revealed that within a 5 to 10 year span, these rights or commissions were sold very frequently. Of course, these documents were part of the records of the royal families, so they may well have some biases. Nevertheless, if kaekju and yogak were really part of a well - established merchant class, these rights would not have changed hands with such regularity. We can hypothesize that there was very little capital accumulation among kaekju and yogak. As a result, kaekju were unable to make the necessary changes to become key players in the modern economy as distributors or wholesalers. As you know, during the colonial period, the kaekju dealt in agricultural products, but were shut out of all modern distribution networks.

Hori: I don't know if things can be changed through legislation. Supermarkets and convenience stores are expanding into the Korean market as new distributors. But the channels for the distribution of manufactured goods to the consumer are very thin. I simply cannot understand why there is no rationalization of the process and why no specialized distribution companies emerge.

Odaka: I am sure there must be many other questions, but as we are out of time, let us end our session here. Thank you very much.

(Institute of Economic Research, Hitotsubashi University, July 25, 1998)

Translted by Hyung Gu Lynn