Chapter 11 - The Japanese Economy: Successes and Challenges

Abstract

One must first study the Japanese economy in order to understand the economic success of East Asia. This chapter summarizes the major issues in Japan’s economic success since the end of the Second World War, identifying the various causes and ingredients in its economic drive to become a superpower. There is much to learn from the Japanese experience, and one can contrast Japan with China’s postreform development, especially in their response to the international community. Being a medium-sized country, Japan’s industrial full capacity, the pursuit of inappropriate economic policies, and the hypothesis of the “lost decades” have deterred growth considerably since the early 1990s. Given its mature institutions, Japan’s economy has not come to a dead end. The chapter concludes by suggesting a path for economic revival that can lift the Japanese economy to become a key industrial player in the global economy.