Financialization and Industrial Policy. Comparing Japan and Korea

The purpose of this article is to analyze the revival of industrial policies from the late 2000s in Japan and Korea and its limits. Our approach has two major characteristics. First, we adopt the perspective of historical institutionalism to focus on their relation to financial systems and to study their evolution over the last 40 years. Second, by mobilizing the concepts of institutional complementarities and hierarchy, we show the incoherence and the contradictions of this revival in a context of liberalized financial system. Our major result is indeed that “new” industrial policies in Japan and Korea are weak in their effects and inappropriate considering the increasing corporate diversity, because they are unable to subordinate finance to their goals despite discourses and ambitions typical of developmental states. However, and this is our second result, comparison between Japan and Korea also allows us identifying some significant differences that may explain the diverging trends in terms of deindustrialization and internationalization of these two economies.