South Korea is confronting a question it can no longer afford to ignore: can it avoid Japan’s “lost 30 years”? The concern is not only economic. More troubling is the sense that politics itself has lost the capacity to solve problems and steer the economy.
The scale of South Korea’s transformation makes the question all the more striking. After liberation, average life expectancy stood at just 44 years. Infant mortality reached 102 per 1,000 births—the world’s second highest. Illiteracy among those aged 13 and older was 77 percent. Dried squid accounted for 40 percent of exports. Tax revenue made up only 15 percent of national income, and electricity self-sufficiency hovered in the 30 percent range.
Gen. Douglas MacArthur was quoted as saying it would take a century for the country to stand again. Britain’s The Times mocked that expecting democracy in South Korea was more plausible than expecting roses to bloom from a trash heap.
Yet over the next 70 years, South Korea defied those judgments. Gross domestic product expanded from 47.7 billion won to 2,560 trillion won. Semiconductors, shipbuilding and defense emerged as world-leading industries. In the AI era, the chip sector has again ridden a global boom. Korean culture has gone global as well—from Parasite and Squid Game to K-pop, K-dramas and global stars such as BTS and Blackpink.
The fear is not that these achievements were illusory, but that they may prove temporary.
Japan once stood alongside the United States as a de facto G2 in the 1980s. After its asset bubble burst in the early 1990s, however, it endured more than three decades of low growth, deflation and stagnant incomes.
South Korea, which caught up by emulating Japan in semiconductors, consumer electronics and automobiles, earned the name “the Miracle on the Han River.” Today, its potential growth rate has fallen below 2 percent, and the economy has remained stuck in a low-growth trap for years.
Warning signs feel uncomfortably familiar: the world’s fastest-aging society, a record-low birthrate, regulations shaped by entrenched interests, and weakening innovation. Despite the launch of a new government, skepticism is spreading that South Korea may be sliding down the same path Japan took—especially as extreme political conflict pushes livelihoods and the economy to the sidelines.
Japan’s strength rested on technology, manufacturing and social stability. Its crisis began in politics. As the “political engine” weakened, structural reforms were postponed, society grew more closed, companies hoarded cash and households tightened spending. What followed was not a sudden collapse but a long, quiet stagnation.
In Day of Empire, Amy Chua describes the rise and fall of great powers as a struggle between “openness and inclusion” on one side, and “exclusion and closure” on the other. Japan’s slump cannot be explained by policy mistakes alone; it also reflected a closed, inward-looking social mood that emerged as politics regressed.
Similar warning signs are appearing in South Korea. Protectionist pressures are intensifying under the Trump administration just as domestic politics remains locked in confrontation. Social mobility has broken down, leaving young people to conclude that “there is no hope,” with few credible political solutions offered. Polarization and class conflict deepen amid distrust in politics. Policy has long been reduced to election strategy, while cycles of retaliation and demonization repeat with every change of power. The economy is caught in a “perfect storm.”
South Korea’s growth over the past half-century was not accidental. It was built on education, hard work, allies and an open economy—backed by decisive political choices at critical moments. Land reform, compulsory education, five-year economic development plans, democratization in 1987, the Korea-U.S. free trade agreement and the opening of Japanese culture all required political resolve.
Former president Roh Moo-hyun persuaded skeptical supporters of the FTA by saying, “No country develops without opening up.” Openness in the economy and culture creates new opportunities and industrial order. But decisions for the community and social consensus require political capacity first.
Japan’s “lost 30 years” did not begin overnight. It unfolded gradually as political paralysis persisted and no one made difficult decisions. When vested interests are protected and the costs of change are pushed onto the next generation, a society ages—slowly, but decisively.
To avoid the same fate, South Korea must boldly change how its politics works.
Several priorities stand out. First, stable politics—ensuring that the nation’s broad direction does not swing wildly with each administration. Second, cross-partisan agreements on long-term challenges such as pensions, labor, education, immigration and balanced regional development. Third, policies to reduce polarization, recognizing that welfare expansion alone cannot resolve structural problems in housing, education and the dual labor market. Fourth, an end to factional warfare, as demonizing opponents makes cooperation impossible. Fifth, bold deregulation—acknowledging that regulation is a safety net, but one that can suffocate growth if it fails to keep pace with change. And finally, genuine social integration built on trust that sustains policy over time.
Copying the “answer sheets” of advanced economies no longer works. With AI, decarbonization and geopolitical risk arriving simultaneously, South Korea must act as a first mover. Politics must prioritize long-term productivity, accept uncomfortable reforms even at the cost of sacrifices by one’s own side, and mobilize national capacity. Growth gains must be shared fairly, and the costs of transition borne equitably.
It is not too late. This remains a golden moment—but only if politics does its job: distributing benefits fairly, channeling conflict into institutions and pursuing long-term goals without wavering. The phrase “the sun is setting but the road is long” may also carry a warning: the later the choice, the worse the options become.
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* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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