This book is a welcome addition to the literature. Based on the works and raw data published in Korean and Japanese, the author studied the heritage of the Korean economy in the traditional and transition periods and concluded that “had Korea remained an independent country, its economy would probably have developed eventually, but at a later date, at a slower rate of growth, and with greater economic sacrifices to Korean people (in order to save more to make up the foregone Japanese investment).”

The book consists of ten chapters. Chapter 1 is the introduction, which lays out the plan of the book. In chapter 2, the author discusses and evaluates economic conditions and different forces that affected capital formation and economic development in traditional Korea in the 1870s. The reasons for Korea's underdeveloped economy included the low education level of the people; low propensity to work and produce; the lack of savings (due to the high propensity to consume); the lack of capital; and the ineffective and oppressive Korean government, which controlled tightly the commerce and industrial sectors.

In chapter 3, the author discusses how the outside world affected the traditional economy of Korea, Korea's response to the incursions, and the impact of these changes on Korean investment and economic transformation between 1876 and 1904. This was the period when foreign goods and foreign (mainly Japanese) investments were introduced to Korea. The foreign goods and foreign investments opened the eye of the Koreans and made some fundamental, although small, changes in the Korean economy.

Korea became a Japanese protectorate in 1905. In chapter 4, the author discusses economic reforms and investment under the 40 years of Japanese rule (1905–1945). When Japan took control of Korea, it instituted numerous reforms to transform the backward and traditional economy into one that served the needs of the colonial power. It removed numerous obstacles and established infrastructure to accommodate the workings of a government-controlled but market-oriented economy. The reform measures not only involved changes in the physical environment, they also altered public attitudes and beliefs toward business investment and savings. Western-style education and practical training were provided to Korean workers.

In chapter 5, the author discusses the motivation for investment under Japanese rule. The unique features and patterns of investment differed for segments of the economy, between public and private sectors, and between nationalities. In general, most of the investment came from the Japanese, and the colonial government played a crucial and unique role in investment in Korea.

In chapter 6, the author examines how the colonial government promoted capital formation and transformed the Korean economy from a transitional economy to a modern one. The colonial government used policies such as low taxes, generous subsidies, and financial loans to strategic industries to induce private investors to invest in new sectors that Japan promoted. Although the government polices in general had positive effects, the excessive intervention of the government led to a high incidence of bad loans, and often shifted spending away from socially beneficial investments toward the building of a wasteful military-industry infrastructure, which helped Japan prepare for the war effort. It thereby caused inflation, inhibited economic growth, and ultimately constrained the improvement of living standards of the people. It also tended to aggravate income inequalities and poverty and reduce domestic savings while discriminating against Korean and foreign businesses.

In chapter 7, the author examines the mobilization of savings and resources of both foreign and domestic sources for financing investment in Korea.

In chapter 8, the author shows that there were substantial gains in the production of goods and services during the period when Korea was under Japanese rule. During this period, the Korean economy changed from a predominantly agrarian to a semi-industrial economy oriented toward serving the needs of Japanese empire. Additionally, the industrial sector expanded more rapidly than the primary sector, and the heavy and chemical industries became as important as the light industries.

In chapter 9, the author examines the impact of capital formation, economic development, and structural changes on income distribution, consumption, and saving for investment under Japanese rule. The author shows that the gain from economic growth was not shared equitably. Although farm income increased modestly, most of the gain went to the landlords and the Japanese farmers. Just like the local farmers, the Korean workers also had only modest gains. In the labor market, the Japanese held most of the well-paying, white-collar, managerial, professional, and skilled positions, and the Korean workers typically held most of the low-paying positions. The most important findings of this chapter is that while the standard of living for some upper-strata Koreans improved, the majority of Koreans did not really benefit much.

As a whole the author has done a good job. The literature written on this period by the Japanese tends to conclude that it was the Japanese colonial government that modernized the Korean economy, whereas the literature written by the Koreans focused on the negative effects of the oppressive colonial government. The author is quite successful in providing an objective study of the economic policies and development process during the colonial period. Nonetheless, the study is not without defects. Most of the data (except per capita GDP) were provided in current value. As inflation was a problem especially during the 1930s and 1940s, data without adjustment for inflation were quite difficult to interpret. Also, while most of the data were in yen, some were in won. It makes it difficult to comprehend. On top of these, it would be better if the author could discuss briefly how the political environment under the Japanese rule affected the people, as to a certain extent this would affect the economic decisions of the Koreans.

As a final remark, anyone who wishes to understand the pre–World War II Korean economy should read this book.