Columbia International Affairs Online: Working Papers

CIAO DATE: 12/2008

The Domestic Trap verses the Launchpad: The Political Economies of Wireless Telecommunications in Japan and South Korea

Kenji Erik Kushida

March 2008

Berkeley Roundtable on the International Economy


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 - while Japanese firms retreated to become virtual non-players, Korean firms became top global handset manufacturers.

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 a standard that would advantage domestic firms in international markets. In contrast, the Japanese government, independent from foreign technology, was not initially focused on international markets, making it difficult later on to shift the terms of market competition away from exclusive focus on the domestic market.