Institutional Variety in East Asia

Institutional Variety in East Asia

Formal and Informal Patterns of Coordination

New Horizons in Institutional and Evolutionary Economics series

Edited by Werner Pascha, Cornelia Storz and Markus Taube

This illuminating book broadly addresses the emerging field of ‘diversity of capitalism’ from a comparative institutional approach. It explores the varied patterns for achieving coordination in different economic systems, applying them specifically to China, Japan and South Korea. These countries are of particular interest due to the fact that they are often considered to have developed their own peculiar blend of models of capitalism.

Chapter 4: Institutional Change and the Role of Government: Technology Policy in Japan and Korea

Tim Goydke

Subjects: asian studies, asian economics, economics and finance, asian economics, economics of innovation, institutional economics, innovation and technology, economics of innovation

Extract

Tim Goydke 4.1 INTRODUCTION Japan and Korea experienced an unparalleled economic development in the post-war era. This was accompanied by a fast development of technological capabilities. Japan has reached the top position in most fields of technology since the 1990s while Korea is among technological leaders only in a limited number of fields. Both Japan and Korea have been recognized for the strong role of the state in directing economic actors. This is also true with respect to technology policy.1 After a discussion of economic theories of institutions, institutional and technological change and technology policy, an overview of the development of technology policy both in Japan and Korea will be given, followed by an analysis of institutional change in the context of technology policy. 4.2 THEORETICAL FRAMEWORK 4.2.1 Institutions and Institutional Change ‘Institutions’ in the following will be understood as ‘the rules of the game in a society’ (North 1990: 3). Social actors, who congregate in organizations like companies, ministries, etc., play a ‘game’,2 whereas ‘organizations’ are groups of actors interconnected by institutions. Institutions may vary with respect to coherence, the level of integration, and whether they are mutually reinforcing, and, accordingly, whether more or less distinctive business systems develop (Gammeltoft and Sornn-Friese 2005). There are three major themes relevant from an institutional perspective: (1) transaction and information costs; (2) collective action problems;3 and path dependency. 73 M2649 - PASCHA PRINT.indd 73 23/06/2011 15:14 74 Institutional variety in East Asia 4.2.1.1 Transaction and information costs Transactions generally...

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