Can Korea avoid Japan’s peak trap?

Yeom Jae-ho

The author is the president of Taejae University.

I recently revisited "Peak Japan: The End of Great Ambitions" (2020), a book by Brad Glosserman, a longtime observer of Japan and former journalist. His analysis remains striking. Japan once accounted for 17 percent of global GDP and stood as the world’s second-largest economy. Today, its share has fallen to about 3.6 percent, leaving it ranked fifth. Why did a country once celebrated as “Japan as No. 1” endure three lost decades?

Glosserman’s conclusion is that Japan’s government, corporations and citizens became intoxicated by their own success. Rather than preparing for the future, they failed to create a new national vision. The opportunity for a grand design was missed.

Korea’s rise has been no less remarkable. In 1960, the country’s per capita GDP was only $79. Today, its economy is approaching $2 trillion in size and accounts for roughly 1.6 percent of global output, making it one of the world’s leading economies. Only six countries with populations above 50 million have achieved per capita income exceeding $30,000: the United States, Germany, Britain, France, Japan and Korea. Exports are expected to reach around $740 billion this year, ranking sixth globally.

Not long ago, concerns about “Peak Korea” were widespread as China’s rapid rise appeared to threaten Korea’s competitiveness. Yet the emergence of AI has altered the outlook. Demand for semiconductors has surged, while growing electricity consumption has renewed interest in nuclear power. The Russia-Ukraine war has also drawn global attention to Korea’s defense industry and shipbuilding sector. As a result, fears of Korea’s decline have faded considerably.

At the same time, K-pop, Korean dramas, beauty products and food have become global phenomena. The Kospi has surpassed the 8,000-point mark, and Korea is increasingly viewed as a country to emulate. But the question remains: can this prosperity last?

History suggests that long-term success requires a vision beyond immediate achievements. In 1962, U.S. President John F. Kennedy declared in a speech at Rice University that the United States would send a man to the moon within a decade. The pledge came after the Soviet Union launched Sputnik in 1957 and sent Yuri Gagarin into space in 1961. It was a response to a growing sense of national vulnerability.

Many politicians dismissed the plan as unrealistic and wasteful. Critics argued that the money should be spent helping the poor. Kennedy disagreed. He argued that America should pursue the mission precisely because it was difficult. It was a grand design intended to shape the nation’s future.

That vision produced the Apollo program. It led to the establishment of major facilities in Houston and Florida and culminated in the successful lunar landing of Apollo 11 in 1969. Yet the program’s significance extended far beyond reaching the moon. Many of the technologies that later underpinned American leadership emerged from investments associated with space exploration. Semiconductors, computers, the internet, wireless communications, GPS and satellite broadcasting all benefited. So did lightweight alloys, specialized plastics, telemedicine and wearable health devices. Even instant coffee owes part of its development to freeze-drying technologies created for space food.

Korea’s experience offers a similar lesson. The country’s competitiveness in defense manufacturing is rooted in heavy and chemical industry development policies launched in the late 1970s. The growth of machinery industries in places such as Changwon laid the foundation for today’s strengths in shipbuilding, nuclear power, submarines, fighter aircraft and advanced manufacturing.

At the time, many countries viewed these ambitions as unrealistic. Yet Korea pursued technological development through institutions such as KIST and sustained investment in research. Today, the country ranks among the world’s leaders in research and development spending relative to GDP and is one of the largest investors in research overall.

Periods of crisis often drive extraordinary innovation. Korea strengthened its competitiveness through a persistent awareness of external threats. But when that sense of urgency disappears, danger follows. During the Kim Young-sam administration, confidence surged after financial liberalization and Organisation for Economic Co-operation and Development membership. Soon afterward, Korea was struck by the Asian financial crisis.

That lesson remains relevant today. As semiconductor profits rise amid the AI boom, demands to distribute those gains are growing. Yet the government has already committed substantial financial support, tax incentives and infrastructure investment to the industry. Ultimately, these costs are borne by the public.

If unions, shareholders and governments focus only on sharing immediate profits, Korea risks neglecting the investments needed for future technological leadership. The nation must avoid sacrificing tomorrow for today’s rewards.

The local elections are over. It is time for political leaders to move beyond domestic political struggles and focus on a long-term national vision. Korea’s future will depend not on celebrating current success, but on creating the grand design that will define the next generation.

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