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Economic Development and Business Groups in Asia: Japan’s Experience and Implications

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  • Masao Nakamura

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Abstract

Large, extensively diversified pyramidal business groups of listed firms dominate the histories of developed economies and the economies of developing economies. While such groups (called zaibatsu in Japan) are thought to have provided coordination for big push growth successfully in pre-second-world-war Japan after a state-run big push failed, it is still being debated whether such a pyramidal business group driven big push coordination exists in developing countries elsewhere in Asia. We hypothesize that pyramidal business groups can be private-sector mechanisms for coordinating big push growth, provided that first, competition between rival groups induces a sufficiently high level of coordination efficiency, and second, conditions exist for maintaining economic openness and basic infrastructure and legal institutions. Another condition that must be satisfied for a country to sustain economic growth after its big push phase is complete is a timely demise of business groups. Where these criteria are not met, growth stalls and the few pyramidal business groups become too powerful to dislodge. Copyright International Atlantic Economic Society 2015

Suggested Citation

  • Masao Nakamura, 2015. "Economic Development and Business Groups in Asia: Japan’s Experience and Implications," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 81-103, March.
  • Handle: RePEc:kap:iaecre:v:21:y:2015:i:1:p:81-103:10.1007/s11294-014-9508-6
    DOI: 10.1007/s11294-014-9508-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic development; Economic history; Japan; Privatization; Business groups; Asia; O1; O5; L33;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • A - General Economics and Teaching

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