[VIEWPOINT]Seoul, Tokyo Need Good-Neighbor Policy

We are always affected by our neighbors. Sometimes, our neighbors' actions can have a direct impact on our income － for example, if a factory is built nearby, causing house prices to fall. But our neighbors' actions can have more subtle effects. A well-kept garden in the neighborhood can bring a little pleasure into the lives of many.

But a new car in the neighborhood can make our car look older and hurt our family's pride － or inspire us to work harder to buy a new car. If our neighbor provides a good education to their children and teaches them to be good citizen, it will benefit our neighborhood, our nation and all of the society of mankind and make us feel happy.

In economics, the benefits or disadvantages that an economic subject passes on to his neighbors in pursuit of his own good are termed the "External Effect," or the "Neighborhood Effect." If we apply this concept to the relationship between neighboring countries, we see that Korea and Japan must have a "Neighborhood Effect" on each other since they are geographically very close.

Looking at history, we can show that Korea, a peninsula, acted as a bridge between the islands of Japan and the Asia continent, and up until recently passed along to Japan benefits of such neighborly nearness in various areas, such as politics, economy, society and culture.

This almost completely one-way flow of academic scholars and craftsmen, such as potters, and cultural resources through regular government-level delegations was offered to Japan.

But we have to acknowledge that we have benefited considerably from the "Neighborhood Effect" too. After reviving its economy after World War II, Japan for the first time became a role model for Korea in how to establish strategies for economic development, demonstrating for Korea how to adopt and implement effective industrial policies and rules. This saved us from costly trial and error. Also, a rapidly advancing Japan made us resolve to catch up － especially with Japan － which was also beneficial.

Speaking of the "Neighborhood Effect" is not an attempt to put a value on benefits gleaned from our neighbor. Put simply, as Korea and Japan have to continue to live with the "Neighborhood Effect," they must accept the realities of history and try to become even better neighbors.

The textbook issue － the distortion of history in Japan's textbooks － is a matter that will influence relations between the two nations for the next generation. Appropriate education that prevents wars, thus avoiding the sacrifice of innocent people and enormous damage to nations, is beneficial for Japan and neighboring countries. So, Japan must understand that it is very natural for us to pay special attention to this issue.

The global community we live in at the moment means we have to worry about the negative impact of Argentina's economic woes, despite the fact that the country is on the other side of the world and does not have much of an economic relationship with Korea. Many countries in the world are trying to strengthen economic ties with neighboring countries to reduce economic instability. Of course, Korea and Japan cannot be an exception from this trend. So, the restoration of mutual trust, a basis for economic cooperation between the two countries, is more necessary than anything else.

Japan must confront problems in its interpretation of history, which have been the root of the distrust and emotional confrontation between the two countries, as soon as possible. And, calmly and maturely, we both need to address the problems with patience.

An individual can move away if he does not like his neighbors, but countries do not have that option. For a bright future for relations between Korea and Japan, permanent neighbors, it is time for the two countries to make mutual concessions and practice self-control.

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The writer is chairman and CEO of the Institute for Global Economics.

by Sakong Il