Struct. Change Econ. Dyn.

The purpose of this article is to analyze the revival of industrial policies from the late 2000 s in Japan and Korea and their limitations. Our approach has two major characteristics. First, we adopt the perspective of historical institutionalism to focus on the relation between IPs and financial systems and study their evolution over the last 40 years. Second, by mobilizing the concepts of institutional complementarities and hierarchy, we discuss the limits of this revival in a context of liberalized financial systems, to which government entities in charge of industrial policies have contributed. Our major result is that, in the context of financialization, past complementarities of the developmental state have weakened and contradictions have arisen. It resulted in a restructuration of state capabilities to design and implement industrial policies, and to its inability to subordinate finance to its goals, despite the discourses and ambitions of governments. However, and this is our second result, comparison between Japan and Korea also allows us to identify some significant differences in the initial institutional arrangements and in the process of institutional change, which are analyzed as sources of greater state capabilities in Korea than in Japan in the current period