Historical Sources of Institutional Trajectories in Economic Development: China, Japan, and Korea Compared

Masahiko Aoki
JEL codes: 
ADBI Working Paper Series

This essay provides a game-theoretic, endogenous view of institutions, and then applies the
idea to identify the sources of institutional trajectories of economic development in China,
Japan, and Korea. It stylizes the Malthusian-phase of East Asian economies as peasant-based
economies in which small families allocated their working time between farming on small plots—
leased or owned—and handcrafting for personal consumption and markets. It then compares
institutional arrangements across these economies that sustained otherwise similar economies.
It characterizes the varied nature of the political states of Qing China, Tokugawa Japan, and Yi
Korea by focusing on the way in which agricultural taxes were enforced. It also identifies
different patterns of social norms of trust that were institutional complements to, or substitutes
for, political states. Finally, it traces the path-dependent transformations of these state-norm
combinations along subsequent transitions to post-Malthusian phases of economic growth in the
respective economies.