ABSTRACT
Japan's tightly-held regional political economy in Northeast Asia, and its industrialization of the region, were primarily the results of the crisis of the 1930s depression. The evidence also strongly suggests that a hegemonic system is necessary for the functioning of the regional political economy: unilateral colonialism until 1945, United States hegemony since 1945. Agricultural growth was stronger in Taiwan than in Korea; colonial administrators remarked that what could be done with economic incentives in Taiwan required coercion in Korea. In July 1949, the Central Intelligence Agency asserted that the US has "an important interest" in "retaining access to Southeast Asia, for its own convenience and because of the great economic importance of that area to western Europe and Japan." All in all the BAIR model provides a potent mix, fusing state and economic power in pursuit of comparative advantage in world markets.
