A comparison of industrial policies between Japan and Korea: The roles of MITI and EPB in heavy and automobile industries promotion

This study is to attempt to explain limits of the Korean authoritarian state in economic progress and transformation, comparing and contrasting with the Japanese state. My comparative research focuses on how the Japanese and South Korean states participated or intervened differently into society through economic-bureaucratic institutions, namely the Ministry of International Trade and Industry (MITI) and Economic Planning Board (EPB). Comparing and contrasting two countries' industrial policy making institutions with business and labor I will explain why the Japanese MITI was successful to achieve autonomy of industrial policy making over business and labor, while the Korean EPB failed to implement dynamic industrial policy.;After I review six major arguments in literature, namely historical legacy and colonialism, "Potemkin village," neo-culturalism, neo-classical, and statism, I argue that the failure of the Korean EPB's dynamic industrial policy making is mainly due to "over-active" authoritarian state's coercive and pervasive interventions into economy. In my historical and comparative case studies of the state's role of heavy and chemical industry and automobile industry promotion I criticize a popular argument that the Korean state intentionally "got relative prices wrong" in order to build a nation, and acted in "market conforming and market augmenting" ways. Although I agree that the Korean state was a protagonist, I criticize a Alice H. Amsden's thesis, arguing that the Korean state got relative prices wrong too much in a market distorting way. My case studies of heavy and chemical, and automobile industries are exemplars.