Industrial Policy in East Asia: The Challenge of Globalisation

While industrial policy is often regarded as one of the pillars of the economic success story of East Asia in the past, the question remains whether industrial policy can be successfully applied in the era of increasing globalisation. Japan and South Korea are facing increasing structural challenges and need to find new strategies to meet the forces of global integration. Moreover, even if globalisation may put limits to the application of industrial policy in the advanced economies in East Asia, developing countries could still learn useful lessons from the East Asian approach to industrial policy. These questions are scrutinised by applying the Theory of Economic Policy as developed in the German tradition of economic science, as well as Institutional Economics. Moreover, Japan and Korea are treated in parallel in order to reduce the danger of over-emphasising national idiosyncrasies. This work is not only of interest to students and experts in East Asian economics but also to policy-makers concerned with issues of economic development. The author has been working as an economist on East Asian issues for years. Results from field studies in Japan and South Korea have strongly contributed to the findings.