The wireless telecommunications markets of both Japan and South Korea developed rapidly, offering extremely sophisticated and advanced wireless services. Yet, their fortunes in international markets diverged significantly: while Japanese handset manufacturers retreated to become virtual nonplayers, Korean firms gained global prominence. This paper argues that the politics of standard-setting and liberalization, set in motion by differences in initial conditions that created distinct domestic market dynamics, are critical in explaining this divergence. The Korean government, seeking independence from foreign equipment, actively sought to build domestic technological capacities through 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 an exclusive focus on the domestic market.