This paper analyzes and compares the distribution of the state functions between the central and local governments of Japan and Korea in the 1980s and the 1990s. The public choice and the dual state models are applied. The former explains the functional allocation between different tiers of government in terms of the self-interested behavior of related rational actors, while the latter explains it in terms of the structural solving of the different and contradictory roles of the modern capitalist states. The Japanese data prove the relevance of the public choice model: e.e., the expenditure for allocational policy was conducted mainly by local governments, while redistributive policy was conducted by the central government. The Korean data show the opposite case, which does not fit into the propositions of the public choice model. Instead, the Korean data proves the relevance of the dual state model: i.e., the expenditure for social consumption was conducted mainly by second-tier local government, while those for social expenses and social investment were conducted mainly by the central and first-tier local governments. The Japanese case did not support the dual state thesis: i.e., more than 60% of Japan's social consumption spending was conducted by the central government. The differences between Japan and Korea can be explained by the different paths of institutionalization of local autonomy in the two countries.
Transaction Costs and the Normative Elements of the Public Choice Model: An Application to Constitutional Theory
