Explaining Korea’s Economic Miracle

/ Jim Sojourner / Leave a comment

To the American advisors stationed in Seoul in the late 1950s, the South Korea that limped out of the Korean War was strategically vital and otherwise hopeless. That South Korea was shattered and poor, its workforce reputedly lazy and its leadership corrupt. Development was an afterthought, content as it was to slurp from the turgid flows of American dollars that sloshed through the upper ranks of Syngman Rhee’s government. But today, the neon lights of Seoul advertise a different reality. Korean-made technology is renowned across the globe—things given shape by Korean steel, infused with Korean microprocessors, and delivered to market on Korean ships.

Korea is becoming a rich country. Its approximately $31,000 USD per capita GDP is about equal to that of Spain or Italy.[1] In the span of 50 years, Korea has gone from one of the world’s dimmest to one of the its shining stars. Its purchasing power parity of $280 USD in 1960 grew to $28,384 in 2010, riding a 50-year average GDP per capita growth rate of 9.52 percent.[2] In 1960, foreign trade amounted to $377 million; in 2013, it was $1,068 trillion, making little Korea the 11th largest trading nation in the world.[3] How can we explain that tremendous development? And might it have lessons for other developing countries mired in poverty and corruption as South Korea itself once was?

Maybe … and probably not. The set of policies pursued by South Korea from 1962 through the early 1980s first set up Korea for its developmental run and then enabled that growth. Those policies might be carefully replicated by developing nations hoping to follow in the footsteps of the Asian tiger. But blazing those policy paths required a set of unique circumstances both internally and externally that created the conditions for Korean growth and, often, supported it. Those circumstances owe their existence to Korea’s particular niche in the history of the 20th century.

So how did Korea get rich? The centerpiece of its developmental model was a concerted effort to create an export-driven economy under military junta Park Chung-Hee, who wrested control of Korea from the notoriously corrupt Rhee government in a nearly bloodless military coup in May of 1961. Park immediately got to work weening South Korea from American developmental aid. In the first decade of Park’s rule, South Korea prioritized light industry with an eye toward foreign exports.[4] The Park government shifted the Korean economy away from the import substitution model that bogged down in Latin American countries and toward an export-based structure. Under a system of five-year plans, the first of which called for a transformation from aid-dependent to independent, a central economic planning board unified national budgeting, planning, and review and directed money into diversified manufacturing industries.[5] By the middle of the 1960s, Korea was exporting everything from radios and batteries to steel products and textiles to rice and fish.[6] The value of Korea’s manufacturing exports grew from $41 million to $81 million from 1961 to 1963 alone, and it multiplied 24 times between 1961 and 1975, from $41 million dollars to $2 billion.[7] The emphasis on exports was accompanied by financial sector reforms, including nimble monetary policy to counteract  the inflation endemic during the Rhee days, as well as deregulation of investment and import restrictions. In this reformist environment, savings grew from 2 percent of GDP in 1961 to 14 percent in the 1970s.[8]

Park’s mercantilist government did not let the market decide where those savings went. By offering negative interest rates on loans guaranteed by the government, the bureaucracy monopolized investment decisions and directed those savings out of the informal banking sector and into certain productive channels—not for short term returns on investment but to serve long-term national goals.[9] Park’s government directed investment first into those light industries and later into steel, chemicals, and electronics, especially during Park’s Heavy-Chemical Industry Drive (HCI) in the early 1970s, which emphasized heavy industries such as steel, ship building and especially chemical production, a counter to its scarce natural resources.[10] These industries, many of which did not even exist at the beginning of the drive, fed off each other in interlocking supply chains, the steel industry feeding the machine tools industry feeding the shipping industry as Korea climbed up the value chain, defying American economic advisors and the International Monetary Fund.[11] Park’s government told those industries what to produce, and it built the infrastructure for those industries, provided them property and preferential treatment, and secured buyers in foreign countries, especially the United States.[12] These industries congealed into Korea’s famed and giant chaebol conglomerates. And slowly, under government-directed development, Korea got rich.

Salient internal realities made these policies possible. Park himself deserves much of the credit for the transformation of the Korean economy. Park learned many lessons as an officer in the Japanese Imperial Army. Key among them was its strategy of forced industrialization in Manchuria. Park, who admired what Japan had done during the Meiji Restoration and after, borrowed much from Japan’s own development, including its economic structure, corporate culture, and five-year plans.[13] That experience gelled with Park’s personal proclivities and fed his hopes for a different kind of Korean nation. Another lesson Park learned was the utility of political repression. Park ruthlessly quashed worker and social resistance to his economic program and his regime.[14] Park was a man with a vision and an iron fist. He kept that fist gripped on the tiller, despite resistance from his American backers and international financial authorities. Park believed that “steel is national power.” He dragged his country toward that particular brand of hard power by instilling a “can do” spirt among Korea’s people, as well as by building national infrastructure, much of which at the time seemed imprudent.[15] It is difficult to believe Korea’s astounding development would have happened as it did without that kind of leadership. Despite his dictatorial excesses, Park remains South Korea’s most popular leader.[16]

Park was aided by other characteristics inherent to Korean social culture. As a model Confucian polity for thousands of years, meritocratic, scholar-official leadership was not alien to the Korea people. Park drew on Confucian ideals of filial piety, obedience, and loyalty to secure his technocratic government’s position, and he deployed Confucian reverence for education to develop an educated, trainable, and still-cheap labor force. Drawing on the Confucian belief in the “perfectibility” of people, Rhee and Park’s South Korea implemented a stringent compulsory education requirement.[17] Literacy rates shot up from 20 percent to 80 percent in 20 years,[18] achieving a level above 90 percent by 1964.[19] The educated workforce provided the basis of the economic growth. Korea had a homegrown, abundant supply of educated workers—workers that were 2.5 times as productive as American workers at 1/10th of the cost.[20] The Korean people, working in concert with Park’s leadership, were a critical piece of its economic miracle.[21]

Those internal factors—strong leadership for government-directed growth and an emphasis on abundant, educated labor—could (and should) be replicated by developing countries today. The external factors that were also critical to Korea’s success, however, are more difficult to replicate. Korea, like Japan, began its industrial rise from a nearly blank slate; the Korean War had wiped out existing infrastructure and leveled social hierarchies.[22] During wartime, this meant opportunities for a new class of entrepreneur who seeded businesses that served the omnipresent American military.[23] Those individuals and businesses were then “fertilized by the inconceivable amounts of American cash that flowed into the country.”[24]  After the war, the destruction of existing infrastructure also allowed state planners to build power and industry infrastructure that served the goals of the development plans rather than having to work with existing inefficiencies.

The United States continued to be a critical piece of Korean success. Aside from providing for the defense that kept South Korea in existence—no small thing—the USA poured aid dollars into South Korea in the years after the Korean War. Although these aid dollars—which reached $12 billion between 1945 and 1975, according to official sources that exclude private American expenditures and black-market transactions—created in Korea a dependent and deficient state under Rhee, they also helped pay for the infrastructure that would prove critical for Korean industrial development.[25]

Finally, the international situation in 1965 proved momentous for Korea. In May 1965, Korea got help from its old enemy Japan. Under pressure from Washington and facilitated by the American involvement in both countries, the normalization of relations between Korea and Japan in the spring 1965 injected $800 million into the Korean economy (a mix of loans, grants, and credit) at a time when Korean exports amounted to only $200 million.[26] That financing provided the basis for significant sectors of industrial development, including Korea’s indigenous steel industry.[27] Korean manufactures energized by that “Japanese Marshall Plan” quickly found an outlet for their products, too: another American war in Asia. By the middle of the 1960s, increasing American involvement in Vietnam required equivalent investment. Korea provided it in both people and stuff. In exchange for what would amount to more than 300,000 South Korean combat troops, the United States paid more than $1 billion in foreign exchange to Park’s government by 1970, close to 10 percent of its total GDP.[28] That foreign exchange facilitated purchases of the raw materials needed for Korea’s fledgling industry to pump out products. Those products then returned to the American effort in Vietnam. As much as 94 percent of Korean steel production and 52 percent of its transportation equipment exports went to Vietnam during the war.[29] These flows of foreign capital into domestic industry provided the energy behind Park’s HCI in the early 1970s and launched Korea on the trajectory to developed nation. In the background to all of this, American and Japanese light industries were declining just as Korean manufacturing began to take off.

There are lessons to be taken from the Korean economic model. Through a combination of leadership and culture, Korea embarked on a successful, long-term, state-led project of export-driven development. That, at least, is a path other developing nations could try to follow. Korean development did not happen in a domestic vacuum, however, and significant external factors contributed to the environment in which Korea succeeded. Most notably was its connection to the United States, which not only supplied Korea with money and markets but also facilitated its rapprochement with Japan as well as its lucrative involvement in the Vietnam War. Korea’s unique historical position, then, makes the Korean economic miracle a difficult one to fully replicate.

[1] International Monetary Fund data (imf.org, accessed December 11, 2019).
[2] Hayam Kim and Uk Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan,” Asian Perspective (Volume 41, Number 1, January-March 2017).
[3] Ibid.
[4] Princeton Lyman, “Economic Development in South Korea: A Retrospective view of the 1960s,” in Edward Reynolds, ed., Korean Politics in Transition (Seattle: University of Washington Press, 1975), 244.
[5] Kim and Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan.”
[6] Lyman, “Economic Development in South Korea,” 248.
[7] Ibid, 246-248.
[8]Ibid, 247-248
[9] Cumings, Korea’s Place in the Sun: A Modern History (New York: WW Norton, 1997), 314-331.
[10] Ibid, 320-324.
[11] Ibid, 320-324.
[12] Ibid, 314.
[13] Sung-Yoon Lee, “Korea Under Park Chung Hee” (lecture at The Fletcher School at Tufts University, October 28, 2019).
[14] Cumings, Korea’s Place in the Sun, 314.
[15] The RoK’s Seoul to Busan highway, built before many Koreas even owned cars, is one example. Sung-Yoon Lee, “Korea Under Park Chung Hee” (lecture at The Fletcher School at Tufts University, October 28, 2019).
[16] Ibid.
[17] Cumings, Korea’s Place in the Sun, 300.
[18] Lyman, 255
[19] Kim and Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan.”
[20] Cumings, Korea’s Place in the Sun, 313.
[21] Lyman, 247.
[22] Cumings, Korea’s Place in the Sun, 300.
[23] The Chairman of Hyundai is one such individual who began his business career moving supplies for American military bases, according to Cumings, Korea’s Place in the Sun.
[24] Cumings, Korea’s Place in the Sun, 306.
[25] Cumings, Korea’s place in the Sun, 301.
[26] Lee, “Korea Under Park Chung Hee.”
[27] Cumings, Korea’s Place in the Sun, 320-322.
[28] Lee, “Korea Under Park Chung Hee.”
[29] Cumings, Korea’s Place in the Sun, 320-321.

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Parallel Networks

/ Jim Sojourner / Leave a comment

China’s dual strategy to usurp the American-led order

China is a revisionist state of a hybrid sort, balanced between two webs.

Revisionists, John Ikenberry tells us, are states that challenge the global order made up of “settled rules and arrangements between states that define and guide their interactions.”[1] Powerful states create and maintain those rules and arrangements to “take advantage of their elite status and establish rules, institutions, and privileges that primarily benefit themselves.”[2] Once an order is established, the state at the top—the “status quo” power— does what it can to maintain the system it created. Great Britain, which established the system of rules and arrangements that tied together the world in the 18th and 19th centuries, was one such “status quo” state. The United States in the current day is another.

Revisionists like China, meanwhile, attempt to redraft the rules by which relations among nations function, especially as they rise through the global hierarchy. Revisionists do not have identical goals or identical methods, and most international relations scholars argue that revisionists come in two varieties: limited-aims revisionists and revolutionary revisionists.[3] Limited aims revisionists do not seek to overturn the entire established order but instead hope to alter the existing order in limited ways that improve their position in it. Revolutionary revisionists, on the other hand, challenge the system itself.[4] They do not merely attempt to revise the distribution of resources or power and prestige within the system, they try to create an entirely new order in which they author the rules and define the arrangements.

Since its inception in 1949, the People’s Republic of China has been revisionist state. It has waffled back and forth between revolutionary revision and limited-aims revision. During its first decades of existence, Red China sought to undermine the American-led, capitalist world order through revolutionary revision. It failed. Then, beginning with its Reform and Opening in the late 1970s, China shifted tack and became a limited-aims revisionist. Since, it has worked within existing international institutions to grow rich and improve its position in the global order. It has been hugely successful, rocketing up the ranks of the international hierarchy as it transformed from backwater to potential great power.

Still, China today has nowhere near enough economic or military hard power to directly challenge the American-led order.[5] It doesn’t have to. China is now both a limited-aims revisionist and a revolutionary revisionist. Rather than thinking of China as a rising red star, it is helpful to think it as a giant spider at the intersection of two webs. One of those webs, spun mostly by the United States which still sits near the center, links much of the world in a network of states and non-state actors tied together by trade and ideas. This web we call the liberal world order. The other web is newer, smaller, and weaker. It is a work in progress. China spins it parallel to the liberal world order, and it is largely tied off from American power. China—one of the few actors with strong ties to both webs—sits between these two parallel networks. It builds new ties and strengthens old ones in the liberal world order, while continuing simultaneously to build the new web of its own. In this way, China reaps the benefits of the liberal world order’s institutions and can edit the established system in ways that give it greater prestige and greater resources. At the same time, it builds an alternative, revolutionary world order, one in which it writes the rules and one with which, if the time comes, it might usurp the American-led order. By leveraging its position in two global networks, China is slowly remaking the future.

China’s Network Power

The international system is a network. Networks—the spiderwebs described above—are defined by their links (relationships) among nodes (actors).[6] In international relations, those nodes are predominantly states, but they might also include others such as corporations, militant groups, or multinational organizations. The links between actors allow the transmission of both material and nonmaterial goods, including money, guns, information, and ideas. These links “have both form and content: they include ‘real’ material transactions, such as alliances and trade transactions, as well as ideational relations, such as narratives and repertoires that define appropriate behavior, legitimate authority, and give meaning to behavior in world politics”[7] And more than just simply modes of organization, networks are “structures that can constrain and enable individual agents and influence international outcomes.” [8] In other words networks grant power.

The beliefs and actions of actors in the international system are never independent, and “structural relations are as important as, if not more important than, attributes of individual units.”[9] That is because the position of an actor in a network and the strength of its ties to other nodes can have a significant effect on both the power and prestige of an actor in an international order. Networks provide states with influence, affect their ability to mobilize alliances, augment or inhibit the resources they can muster, and provide or deny ideological and cultural capital to justify either maintaining or transforming the existing order.[10]

Network position, then, is of particular importance for would-be revisionists like China. Stacie Goddard defines two types of network position that shape a state’s revisionist tendencies: “access” positions and “brokerage” positions. Access is “the extent to which a revisionist is integrated into the dominant network. … With access, a state can leverage material and ideational ties to give it influence within the existing institutional system.”[11] Access to the dominant network provides China with social capital that allows it to demand changes to the existing order, especially through the multilateral organizations in which it participates. The greater access, the greater power a state has to frame agendas and debates and to push for edits to the rules of the international system. A brokerage position, on the other hand, allows an actor to fill gaps in the international framework or bridge divides between one network and another. A broker “might have ties with great powers in the dominant institutional order, but also hold exclusive ties with another cohesive subgroup in the international system.”[12] By sitting in a brokerage position in a Chinese-made subgroup, China can draw on significant resources that are excluded from the liberal world order, “mobilize new allies from outside dominant institutions,” and if China “faces sanctions from status quo actors, they can offset costs through closer economic ties with other states.” [13] Within its subgroups, China can also begin writing new rules, norms, and arrangements that circumvent or subvert the existing international order.

States invest in relationships that maximize their strategic interests and network positioning. Revisionists, especially, try to build ties that “increase their power and influence relative to status quo states. … They may seek alliances with other powers or attempt to wedge apart existing alliances. They may pursue economic ties that maximize wealth, and diplomatic relations that strengthen their spheres of influence.”[14] China pursues all of the above strategies from a position in the international networks that gives it both high access and brokerage. It is from this uniquely efficacious position that China seeks to both benefit from and challenge the America-led liberal world order.

China the Accessor

China’s access power has increased as it integrated into the liberal world order. It is more integrated than ever before. China holds a permanent seat on the UN security council and has been ever more involved in multilateral peacekeeping operations (especially near its investments in Africa). It ascended to the International Monetary Fund in the early 2000s and participates in the World Bank. Chinese officials increasingly fill spots in a variety of international organizations and have signed onto international pacts to deal with climate change, nuclear proliferation, laws of the sea, and more, taking a greater leadership role in setting global rules and norms.[15] From those involvements, it has gained prestige as a participant in global good governance and has reaped the benefits of its inclusion in the world’s trade and legal systems, which were built on liberal principles.

Those commitments demonstrate China’s top priority in the current world order: “a liberal economic order built on free trade.”[16] China’s rise from the 1980s on was powered by exports as Chinese manufacturing slowly climbed the value chain until its products (mobile technology, software, and artificial intelligence, especially) began to compete with the advanced industrial economies. “Now as then, these exports are the lifeblood of the Chinese economy: they ensure a consistent trade surplus, and the jobs they create are a vital engine of domestic social stability. There is no indication this will change in the coming decade.”[17]

China, then, has a critical vested interest in maintaining its access position in the international order. It has an interest in promoting multilateralism that keeps goods flowing across the world’s ocean highways. By participating in the international bodies responsible for setting the rules of trade, Beijing can ensure that it has access to the markets that make its export economy possible. Furthermore, because it “relies on a global network of trade ties,” China the limited-aims revisionist has no desire to risk confrontation with the United States, which might hamper or destroy its access to those trade networks and markets. This is also why China will continue to deepen its engagement in organizations that maintain the current order, assist in antipiracy and antiterrorism efforts, and otherwise maintaining the freedom of most global commons—whatever keeps global commerce running smoothly.

The more integrated into this system China becomes, the less likely it is to directly challenge it. “Access changes the costs and benefits of revisionist behavior … access may provide influence, but over time it can make revisionist behavior costly. Revisionists [like China] with access are likely to reap significant benefits from the existing international order. Challenging the system thus carries serious costs,” Goddard writes.[18] China, therefore, is pursuing a different strategy.

China the Broker

Instead of challenging the system, China is simply building a new, non-threatening one. Although the web of the liberal world order reaches into many corners of the world, it does not reach all of them. Some of that has been intentional, liberal states excluding certain authoritarians, sponsors of terrorism, communists, and other unsavory or illiberal regimes. Over time, the constraints of the established web have also left many of its nodes feeling used or discontented. It’s among these nodes—the alienated, the disgruntled, and the excluded—that China spins its new web.

China’s power increases when it “possesses exclusive ties to otherwise marginalized or weakly connected nodes or groups of nodes.”[19] China has many of these kinds of connections. Some of them are ideological holdovers from China’s original revolutionary days—Cuba, Cambodia, and North Korea come to mind—while others are longer term, strategic friendships like Pakistan and Myanmar. Most of them, however, are relatively new.

China came late to the globalization game and found few regions left for easy investment or resource exploitation. As a result, China at first had to turn to dangerous, unstable, or otherwise undesirable places for friendship and trade. Since the 1990s, China has been building its links to countries like Sudan, Zimbabwe, Venezuela, and Kazakhstan as it sought out alternative partners for development and friendship.[20] What began as a smattering of partnerships with the estranged has morphed into something new as more and more nodes joined China’s network. Chinese aid, investments, and workers have poured into these countries and materials have poured back into China. Unlike the liberal world order, Chinese money (or guns) doesn’t come with strings attached, and rather than an ideology of democracy and humanitarianism, China promises a world of mutual non-interference in internal affairs.[21] What you do in your border is your business, China says; let’s get richer together. By 2013, those partnerships and projects dotted across the world got a new brand: the One Belt, One Road project, now called the Belt and Road Initiative. Originally envisioned as a “new silk road” of railways, energy pipelines, and highways running from Southeast Asia and China, through the former Soviet Republics to Europe, BRI has grown and transformed over time. BRI now how infrastructure, trade, and investment links with 65 other countries that collectively account for 30 percent of global GDP, 65 percent of world population, and 75 percent of known energy reserves.[22] As China has demonstrated its willingness and ability to provide an alternative to the liberal world order, states, especially globalization’s “losers” in Africa, Asia, and Latin America, have eagerly wrapped themselves into China’s web.

Additionally, Beijing has begun to build parallel institutions to those in the liberal world order, including the New Development Bank (formerly the BRICS Development Bank), the proposed Regional Comprehensive Economic Partnership Trade Agreement, and the Asian Infrastructure Development Bank, through which many of China’s BRI projects are financed.[23] It is also involved in building a series of ports linking China to East Africa and to the oil-producing Middle East. With those ports in can enhance its investments, protect its trade routes, and contest the very United States’ maritime preeminence under which China has risen to global power.[24]

The result is a growing, parallel, Chinese-dominated order from which China can mobilize resources, call upon allies, and within which it can restrict United States influence. The resources it draws from this parallel network will be even more important. If China’s bet pays off and African and Latin American countries take over from China as the next “factory of the world,”[25] they will produce cheap goods for China’s domestic consumption, provide attractive outlets for Chinese investment, and power not only China’s economy but also the economies of important partners throughout the Chinese-built international web. Everyone will get richer together, especially China. Because “brokerage positions decrease the cost of acting outside the system,” [26] if Chinese links to Africa and Latin America bear economic enough fruit, China will be able to challenge the liberal world order from both within and without.

A Bridging Revolutionary

With its unique position between the liberal world order network and its growing, parallel Chinese-led network, China is becoming what Goddard calls a “bridging revisionist,” a state with both high access power and high brokerage power. It is deeply embedded in the existing international order, while also developing strong and largely exclusive relations within its own network. As a limited-revisionist with high access power in the liberal world order, China can benefit from existing trade networks and draw on social capital to legitimate its challenges to existing international rules and arrangements. As a revolutionary revisionist, on the other hand, China can use its brokerage power in its alternative network to get “access to new allies, alternative economic ties, and diverse cultural resources, all of which the revisionist can mobilize in support of its revisionist goals.”[27]

The result will probably be a slow-moving “rule-based revolution.”[28] It will likely be decades, if not longer, before China has the hard power to directly challenge the United States in a hegemonic transition.[29] Instead, because of its bridging network position, China will be able to simultaneously edit and create global rules to pursue its revisionist aims. “Bridging positions lower the costs, and may even increase the benefits, of challenging the institutional order,” Goddard writes. “Bridging positions open up new opportunities for mobilization outside of the system.” As a bridge, China can pursue both limited-aims revisionism and revolutionary revisionism, whichever works best to achieve a given goal. The United States can no longer afford to exclude China from the world order because of its importance to the global economic system, so China’s limited-aims revisionism will continue rewrite the rules of the liberal world order to its own advantage. At the same time, the United States no longer has the power to tightly bind China to existing rules because China has a whole new network of ties to actors it can mobilize to “slip the leash” of the liberal world order. As that network grows and strengthens, it will empower China’s revolutionary revisionist aims and provide an increasingly attractive alternative—not only to marginalized states but even to key members of the liberal world order.[30] If a global calamity like the 2008 financial crisis shakes the liberal world order again, a solid, Chinese-built order might just take its place.

China is rising, to be sure. As importantly, it is branching out.

[1] John Ikenberry Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order (Princeton University Press, Princeton: 2011).
[2] David Rapkin and William R. Thompson “Power Transition, Challenge, and the (Re)Emergence of China” in International Interactions, 29:4 (2003), 317.
[3] Randall Schweller “Managing the Rise of Great Powers” in Engaging China: The Management of an Emerging Power edited by Alistair Ian Johnson and Robert S. Ross (Routledge: New York, 2003)
[4] Ibid.
[5] Stephen G. Brooks and William C. Wohlforth, “The Rise and Fall of the Great Powers in the Twenty-First Century: China’s Rise and the Fate of America’s Global Position,” International Security 40 (Winter 2015/16): 7-53
[6] Emilie M. Hafner-Burton, Miles Kahler, and Alexandra H. Montgomery, “Network Analysis for International Relations” International Organization 63 (Summer 2009), 561.
[7] Stacie Goddard, “Embedded Revisionism:  Networks, Institutions, and Challenges to World Order.”  International Organization 72 (Fall 2018):  767.
[8] Hafner-Burton, Kahler, and Montgomery, “Network Analysis for International Relations,” 574.
[9] Ibid, 561.
[10] Goddard, “Embedded Revisionism,” 768.
[11] Ibid, 769-772.
[12] Ibid, 771.
[13] Ibid, 771.
[14] Goddard, “Embedded Revisionism,” 768.
[15] John Ikenberry and Darren Lim, “China’s Emerging Institutional Statecraft: The Asian Infrastructure Investment Bank and the prospects for counter-hegemony” (Brookings Institute, April 2017).
[16] Yan Xuetong, “The Age of Uneasy Peace: Chinese Power in a Divided World.” Foreign Affairs 98 (January/February 2019), 40-46.
[17] Ibid.
[18] Goddard, “Embedded Revisionism,” 770.
[19] Hafner-Burton, Kahler, and Montgomery, “Network Analysis for International Relations,” 574.
[20] The Diplomat, “Sudan: China’s Original Foothold in Africa,” (June 14, 2017).
[21] Ministry of Foreign Affairs of the People’s Republic of China, “China’s Initiation of the Five Principles of Peaceful Coexistence”, fmprc.gov.cn, (https://www.fmprc.gov.cn/mfa_eng/ziliao_665539/3602_665543/3604_665547/t18053.shtml, accessed March 27, 2019)
[22] The World Bank, “The Belt and Road Initiative” (https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-initiative) accessed April 29, 2019.
[23] Ikenberry and Lim, “China’s Emerging Institutional Statecraft.”
[24] Li Jiachiang “Developing China’s Indian Ocean Strategy” in China Quarterly of International Strategic Studies, Vol. 3, No. 4 (2017), 481–497.
[25] Irene Yuan Sun, The Next Factory of the World: How Chinese Investment is Reshaping Africa (Harvard Business Review Press: Brighton, Massachusetts, 2017).
[26] Goddard, “Embedded Revisionism,” 771.
[27] Ibid, 773-774.
[28] Ibid, 765.
[29] Brooks and Wohlforth, “The Rise and Fall of the Great Powers in the Twenty-First Century,” 7-53.
[30] Goddard, “Embedded Revisionism” 774.

Oh… Canada?

/ Jim Sojourner / Leave a comment

America’s northern neighbor could be the next great power

The land is broad and open, riven and pocked with fresh water, studded by trees, and shot through with veins of oil, coal, and precious rocks. Today, Canada is comfortable and safe, a thriving but middling nation with long shores, often overlooked in the shadow of the United States. Internationally, it is seen as benign and mostly harmless. And yet, because of its natural features, Canada could someday soon be one of the world’s great powers.

Much these days is made about the rise of China and the potential of India, all of it set against the backdrop of diminishing American power. “China will rule the world!” some declare.[i] “Is this the Asian century?” others ponder.[ii] But given the realities of geography and climate, demographics and institutions, the truth is probably neither. The future of global power lies to the north. Given the condition of Canada today and the likelihoods of the world tomorrow, should it choose to do so, Canada could rise to become one of the world’s great powers. Canada owns excellent geography, abutting not two but three oceans and bordering on land one (currently) friendly, wealthy country. Canada has well-established and high-functioning institutions along with a rich, educated, and relatively small population, factors that will become even more significant as natural resources diminish worldwide. Perhaps most importantly, as those global resources deplete under the dual pressures of bloating population and soaring temperatures, Canada will have the vast natural resources other nations covet: petroleum, minerals, trees, space, and most critically, fresh water. With those resources, Canada can feed its people, rev its economic engine, and stoke the fires of a war machine to keep it all secure. Forget the Asian century. Unless a great power war or quantum leap in technology rewrites history in unforeseen ways, the future may very well belong to Canada.

Before the end of the 19th century, Captain Alfred Thayer Mahan gazed upon the ocean and saw a “great highway” and a “wide common.”[iii] Control over the watery lanes and fields, he realized, enables the rise of great powers. Great Britain rose to dominance with her mastery of the oceans. Insulated, unlike continental France or Holland, from the European continent and its wars, Britain developed its sea power. It built a roaring and revolutionary industrial economy on the trade enabled by maritime supremacy.[iv] Centuries later, the United States—like England separated by water from Eurasian conflict—rose out of its Civil War to do much the same. Americans poured agricultural and industrial products out along the Atlantic and Pacific “highways” to rule the global economy, the wide common, and then the world.[v] Canada could be next. At more than 200,000 kilometers, Canada’s total coastline far exceeds any other country. It runs 10 times longer than that of the United States and offers Canada easy and unblockable access to the ocean highways and commons. Isolated as it is by ice and water and bordered by the formidable but friendly United States, Canada should also remain relatively untangled from wars that might cripple other parts of the world. While Canada’s northern coastline currently hides under the arctic ice for much of the year, shrinking sea ice due to climate change is opening up arctic sea lanes and ports, giving Canada access not only to the Atlantic and Pacific Oceans but also to the north. Shorter travel distances and cheaper shipping on those northern routes will enable Canada to truly capitalize on its geographic advantages, especially given its dominant position over the Northwest Passage, which skirts through Canada’s northern islands and will link Canada to a thriving northern Europe.

But Geography alone can’t build a great power. Canada will need to cash in on its natural resources, exporting raw materials and industrial products at premium prices to resource-starved countries across the world. Canada has some of the most abundant natural resources on earth, including petroleum (third largest reserves in the world), coal (fifth largest), iron ore (seventh largest), potash for fertilizer (30 percent of world production), and timber (nine percent of the world’s forests).[vi] Extracting those resources and converting them into energy and industrial products won’t slow global climate change, but that won’t matter much for Canada, which is poised to benefit from a warming climate. According to one major study, in economic terms alone, by 2100 climate change will have added to 247 percent to Canada’s already top-10 gross domestic product; only Russia and some of the Nordic countries are poised to do better.[vii] As the Yangtze, Indus, and Mekong run dry and spark potentially catastrophic conflict among nuclear-armed powers in Asia, Canada’s rivers, lakes, and aquifers—making up some 20 percent of total global fresh water—will provide the lifeblood of Canada’s great power rise. While the drying world scorches under higher temperatures that reduce arable land to deserts, Canada’s frozen forests will transform (partly because of ferocious wildfires) into productive agricultural prairie just as its arctic ports open up. As it has throughout history, the pace of uneven economic growth enabled by these changes will have a large and positive long-term impact on Canada’s relative power. Furthermore, contrary to accepted wisdom, Canada’s diminutive population could also multiply its economic advantages. Small enough to not tax an already-stressed natural environment, Canada’s population size and open landscape also allow room to accommodate immigrants who can contribute to Canada’s economy and add their expertise to its intellectual and technological development. As a result, Canada should have much more than an abundance of resources; it will have the bountiful brainpower with which to engineer and manufacture the machines of industry, agriculture, trade, and war.

It will likely need those machines, too, not only to link its ports to the world and power its economic engine. Canada will need to fight off jealous, resource-hungry competitors. Canada currently spends only about 1 percent of its $1.65 trillion GDP on the military. But with practical experience in recent wars and some of the world’s most advanced equipment, observers still rank Canada’s military among the world’s top 20,[viii] despite the government spending much less on guns and much more on butter. The result is a serviceable military and a prosperous state managed by some of the least corrupt institutions on earth.[ix] Those functional institutions set up Canada to take maximum advantage of the future economic growth and allocate its cornucopia appropriately, balancing the needs of the population with the needs of the military. Although Canada’s armed forces don’t currently cause potential rivals to quake, history shows that the rise of great powers—and the outcome of great wars—depends less on current military power, and more on  potential productive capacity.[x] Just as Britain outdid France and Germany, and America outpaced Japan and the Soviet Union, Canada will have the resources, the productive capacity, the know-how, and the well-oiled institutions to rapidly transform its military into a potent force. The future distribution of military power will follow the shift in the productive balances. Canada, with greater productive capacity than its rivals because of its geography, natural endowment, and beneficial effects of climate change, should be able to win a great power war and survive the struggle for resources and power.

In a world of constantly shifting relative power, the future is never certain. Wars, catastrophes, and technological leaps reshape the world in unpredictable ways. But if the past is a guide and forecasts about the effects of climate change hold true, Canada will have the geography, resources, institutions, and productive capacity to leapfrog to great power status. It simply must have the chutzpah to do so. Global policymakers should take note: The future belongs to North America.

[i] Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order (Penguin Books: New York, New York, 2012).
[ii] Jong-Wha Lee, Is This the Asian Century? (World Scientific Publishing Company: Singapore, 2017).
[iii] A.T. Mahan, The Influence of Sea Power Upon History (Little, Brown and Company: Boston, 1890), 25.
[iv] England’s industrial output made up nearly 20 percent of the world total in 1860.
[v] American national income ($37 billion) was three times larger than its nearest competitors, Germany ($12 billion) and England ($11 billion), in 1914.
[vi] Government of Canada, “Natural Resources Canada”, https://www.nrcan.gc.ca/home.
[vii] Marshall Burke, Solomon M. Hsiang, and Edward Miguel, “Global, non-linear effect of temperature on economic production,” Nature (Oct. 15, 2015).
[viii] Global Firepower, “2019 Global Firepower Rankings,” https://www.globalfirepower.com/
[ix] Transparency International, “2018 Global Corruption Index”, https://www.transparency.org/cpi2018
[x] Paul Kennedy, The Rise and Fall of the Great Powers (Random House: New York, 1987).