Capitalism, Control, and Conglomerates: The Developmental States of Japan and Korea

Abstract

Japan and South Korea, two quintessential examples of Chalmers Johnson's “developmental state,” have followed remarkably similar trajectories of economic growth, with parallels extending even to their modern economies. Both countries have adapted distinct business models evolved from the prewar zaibatsu—the powerful, family-owned conglomerates of Japan’s Meiji era. In this thesis, I explore the emergence and evolution of Japan's keiretsu and South Korea's chaebol, examining their organizational characteristics, financing mechanisms, diversification strategies, and integration into their respective economies. I find that the more intertwined and directive state-business relationship in South Korea has nurtured a more powerful and aggressive conglomerate system, one that represents both a source of international competitiveness and systemic vulnerability. However, I contend that Korea, with its institutional capacity for decisive action and a dynamic private sector attuned to state guidance—two legacies of its authoritarian model of development—is positioned to effectively navigate its contemporary challenges and avert the prolonged economic stagnation experienced by Japan during its “Lost Decades.”