On the Heels of Developmental State: Diverging Paths of Joining Bilateral Investment Treaties between Japan and South Korea



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Japan and South Korea have been viewed as sharing a common developmental strategy as developmental states. However, the two countries have shown vastly differing strategies in joining Bilateral Investment Treaties (BIT’s). As of 2018, while South Korea signed BIT’s with 99 countries, Japan only signed with 33 countries. The pattern of South Korea entering BIT’s starts diverging from Japan in the late 1980s with the largest gap revealed in the 1990s. During this period, I suggest South Korea has developed its own economic strategy apart from Japan especially regarding economic liberalization. While the Japanese government led liberalization by effectively controlling private sectors, the Korean government handed a leading role of economic liberalization over to the newly grown chaebol. This research explains why Japan and Korea start having different strategies by focusing on the two countries’ institutions. I study institutional change and continuity as an evolving process, along with the theoretical framework of historical institutionalism. By stressing Korea’s divergent pathway of liberalization from Japan, this research reassesses a Korea’s developmental path as the developmental state and defines Korea’s different economic strategy and approach.