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Japanese Institutions in Korea: Imitation, Evolution, and Response to Crisis


  • Lee, Chung

    (University of Hawaii-Manoa)


Japan has been slow in carrying out economic reforms that many astute observers of the Japanese political economy believe are needed but have been blocked due to the opposition by powerful interest groups. In contrast, South Korea undertook speedy economic reforms soon after the 1997-98 crisis. The difference in reform experience between the two countries may be due to the fact that, in comparison with Korea, Japan is a rich country and is suffering from an economic malaise, not a severe economic crisis. This paper argues that there is an additional, rather critical, factor that accounts for the difference: it is that for a country to change its institutions it, at least those advocating the change, must have a model of institutions that they and the society at large can accept as superior to the extant institutions. It argues that Japan has yet to find such a model whereas Korea has had one since the early 1980s. Japan is now in a paradigmatic crisis, a crisis in the beliefs held by many Japanese about their own political-economic system, and is in need of finding an alternative paradigm that the people can accepta process that inevitably takes a long time. By contrast, in Koreaeven before the crisis of 1997-98, there was a strong move to establish a liberal economic order and the crisis served as a catalyst for reform.

Suggested Citation

  • Lee, Chung, 2004. "Japanese Institutions in Korea: Imitation, Evolution, and Response to Crisis," EIJS Working Paper Series 204, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0204

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    References listed on IDEAS

    1. Posner, Richard A, 1997. "Social Norms and the Law: An Economic Approach," American Economic Review, American Economic Association, vol. 87(2), pages 365-369, May.
    2. Goto, Akira & Odagiri, Hiroyuki (ed.), 1997. "Innovation in Japan," OUP Catalogue, Oxford University Press, number 9780198289852, June.
    3. Milgrom, Paul & Roberts, John, 1994. "Complementarities and systems: Understanding japanese economic organization," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 9(1), pages 3-42.
    4. Kato, Takao, 2001. "The End of Lifetime Employment in Japan?: Evidence from National Surveys and Field Research," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 489-514, December.
    5. West, Mark D, 2001. "Why Shareholders Sue: The Evidence from Japan," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 351-382, Part I Ju.
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    More about this item


    Japan; institutional change; Korea; economic reform; banking crisis; paradigmatic crisis; political economy;

    JEL classification:

    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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