CIAO DATE: 10/5/2007

The Political Economies of Wireless in Japan and South Korea: The Politics of Standard-Setting and Liberalization

Kenji Kushid

August 2007

Berkeley Roundtable on the International Economy

Abstract

The wireless telecommunications markets of Japan and South Korea both developed rapidly, offering extremely sophisticated and advanced wireless services. Yet, their fortunes in international markets diverged significantly, with Japanese firms retreating from relative success in the 1980s to become virtual non-players, while Korean firms stormed into global handset markets since the late 1990s.

This paper argues that the politics of standard-setting and liberalization, set in motion by differences in the initial conditions of each sector, are critical in explaining this divergence. The Korean government, seeking independence from foreign equipment, sought to actively build domestic technological capacity in choosing its standard that would advantage domestic firms in international markets. Fortuitous policies from unexpected sources ended up aiding Korean market players’ focus on international markets. In contrast, the Japanese government was not focused on international markets in its early policymaking, making it more difficult later on to shift the terms of market competition away from an exclusive focus on the domestic market. In addition, some of Japan’s strategic policymaking aimed at global markets was partly undermined by unexpected shifts in international market conditions.

Full Text (PDF, 45 pg, 225KB)