Financialization and industrial policies in Japan and Korea: Evolving institutional complementarities and loss of state capabilities


The purpose of this article is to analyze the revival of industrial policies from the late 2000 s in Japan and Korea and their limitations. Our approach has two major characteristics. First, we adopt the perspective of historical institutionalism to focus on the relation between IPs and financial systems and study their evolution over the last 40 years. Second, by mobilizing the concepts of institutional complementarities and hierarchy, we discuss the limits of this revival in a context of liberalized financial systems, to which government entities in charge of industrial policies have contributed. Our major result is that, in the context of financialization, past complementarities of the developmental state have weakened and contradictions have arisen. It resulted in a restructuration of state capabilities to design and implement industrial policies, and to its inability to subordinate finance to its goals, despite the discourses and ambitions of governments. However, and this is our second result, comparison between Japan and Korea also allows us to identify some significant differences in the initial institutional arrangements and in the process of institutional change, which are analyzed as sources of greater state capabilities in Korea than in Japan in the current period.

JEL classification: 025, 053, P110, P16, P51


  • Sébastien Lechevalier, corresponding author, Ecole des hautes études en science sociales, France
  • Pauline Debanes, Ecole des hautes études en science sociales, France
  • Wonkyu Shinb, Kyung Hee University and Center for International Development of the Korea Development Institute, Republic of Korea


Structural Change and Economic Dynamics, Volume 43, In Progress (December 2017), Elsevier (Available online 18 August 2017)

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Sébastien Lechevalier and Pauline Debanes wish to acknowledge the financial support from the GDRI program “institasie” (CNRS) and from the RISE Marie Curie program “INCAS”. This work was also supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2015S1A3A2046224). We are grateful to Jun Suzuki, Tetsuji Okazaki and Keun Lee for their advices, to Ilcheong Yi and Keiran Macrae for their helpful comments, as well as to two anonymous referees for their critical and constructive suggestions, which help us to clarify the core of our argument. Usual caveats apply.

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