'Plans for Increasing Rice Production' and Industrialization of Korea in the Colonial Period

Abstract

The purpose of this paper is to show how industrialization of Korea in the 1930s was influenced by the preceding agricultural development plans for increasing rice production (1920-34). Until now the rapid industrialization has been explained mainly by Japan's armaments-expanding policy in the 1930s. However this paper emphasizes internal factors created in the process of agricultural transformation in the 1920s. On the one hand, increase in rice production and its export to Japan at relatively high price produced an enormous surplus in the agricultural sector. This, in turn, enabled Korea to increase imports of manufatured goods. Through the agricultural development and trade with Japan, Korean economy could rapidly expand markets for manufactured goods beyond her production capacity. Later this expansion stimulated new rise and growth of many small-scale factories owned by Koreans or Japanese residents in Korea. Also it induced private direct investments from Japan to the manufaturing industry in Korea. This process promoted import substitution for manufactured goods. On the other hand, most of agricultural surplus fell into the pockets of large landlords and merchants who took the lead in rice production and export under landlord-tenant system. In order to examine whether agricultural surplus remained within the agricultural sector or was transferred to other sectors, we made access to the available lists of large landlords and stockholders, and examined the relationship between them. The results of this examination revealed that a lot of landlords not only took actively part in stock investment, but also established their own companies in non-agricultural sectors. In case of the companies owned by Koreans, it is estimated that more than one third of their capital was invested by landlords and one forth of their owners were also landlords. In short, agricultural development in the 1920s provided favorable conditions for the industrialization in Korea in the next decade in terms of domestic market expansion and capital formation.