Japan's Bubble Research Articles

Development-Procedure Law in Japan: Its Operation and Effects on Law and Economy

ARTICLES DEVELOPMENT-PROCEDURE LAW IN JAPAN: ITS OPERATION AND EFFECTS ON LAW AND ECONOMY Byron Shibatat INTRODUCTION The land market in Japan has been the subject of increased scholarship since the collapse of Japan's bubble economy in the early 1990s. Many observers have focused on taxation and other financial aspects of land regulation, a focus justified by the fact that the land market played a large role in precipitating the rise and fall of the Japanese bubble economy.' Likewise, Japa- nese administrative procedure has also been the focus of interna- tional attention, in light of its significance as a structural trade f B.A., University of California at Los Angeles; J.D., William S. Richardson School of Law, University of Hawai'i; Member, State Bar of California. The author would like to thank the many people who generously consulted and assisted the author. Despite their own very demanding work schedules, individuals who helped the author multiple times include (in alphabetical order) Fred Bos- selman, David Callies, Martin Jaffe, Benjamin Kudo, John Mixon, Satoshi Murano, Norihide Okazaki, and John Tofflemire. Other experts who graciously helped the author were Dan Davidson, John Diefenbach, Stuart Ho, Yoichi Homma, Mel Kaneshige, Masahiko Kawakami, Allen Largent, Stuart Meck, Thomas Smith, Seth Sulkin, Kenji Sugo, Jan Sullivan, Kazuhisa Takabatake, Julie Tappendorf, and Shel- don Zane. Members of the Law Faculty of Ritsumeikan University also provided advice: Professors Norio Yasumoto in Japanese land-use law; Syugo Hotta in legal linguistics; and Yuichi Ohira in legal history. Research assistant Takahiko Watanabe gave expert-level research and insights. Members of the Law Faculty of Ritsumeikan University also provided advice: Professors Norio Yasumoto in Japanese land-use law; Syugo Hotta in legal linguis- tics; and Yuichi Ohira in legal history. Research assistant Takahiko Watanabe gave expert-level research and insights. 1. See, e.g., Koichi Mera, The Making of Japan's Failed Land Policy, in UN- LOCKING ECONOMY THE BUREAUCRAT'S KINGDOM, DEREGULATION 178-203 (Frank Gibney ed., 1998). AND THE JAPANESE

The Effects of Monetary Policy in Japan

This article interprets time series facts regarding the sources of business fluctuations in Japan and attempts to uncover possible characteristics of the effects of monetary policy over the last two decades. It argues that given the institutional features of the Bank of Japan's operating procedures, a simple recursive vector autoregressive (VAR) model that consists of interest rates, money, stock prices, and output, all in first differences, may serve as a useful benchmark for Japan. The main finding is that monetary policy shocks in fact have a persistent effect on real output especially in the rise and fall of Japan's bubble economy in the late 1980s.

Who triggered the Asian financial crisis?

The Asian financial crisis was triggered by Japanese commercial banks who reduced their exposure to Asia in response to emerging troubles in Thailand and South Korea. Japanese banks had been severely weakened by the collapse of the real estate and stock market bubble in Japan in 1990. As the largest lenders in Asia and the key creditor in Thailand, Japanese banks signalled the change in sentiment to other foreign commercial banks who also withdrew their loans. These capital outflows triggered a devaluation in Thailand in mid-1997, but not in Korea until late 1997, due to the different exchange rate regimes in these countries. Despite the devaluation and outflow of bank loans, bond investors continued to provide capital to Asian borrowers until November 1997, at spreads which did not reflect the risks involved. By 1998, foreign equity investors were returning to these markets in search of bargains. Rather than rushing to the exits in a herd-like fashion, institutional investors made investment decisions which created off-setting private capital flows. This analysis suggests that more attention should be paid to the incentives facing institutional investors and the design of domestic institutions, rather than to the need for a new financial architecture.

A Study of the Relation Between Social Conditions and Appropriations as Involving Local Government

The decline in local governmental tax revenues caused by the collapse of Japan's bubble economy and other factors has had a significant impact on the activities of local governments. This is particularly true of subsidies for cultural activities and outlays for cultural facility construction.These expenditures were a result of the growth in tax revenues and the wishes of local residents. There have been significant changes in appropriations for cultural affairs, however, due to the need to balance citizens'daily circumstances with economic conditions. This is reflected in the reduced outlays of local governments for cultural activities over the past five years, owing to the lack of political motivation and the nature of cultural affairs as nonessential administrative issues of secondary importance.This is a report on a follow-up survey of the culturally related budgetary expenditures by local governments in the 40 years since 1960, based on data obtained from questionnaires sent to local governments, and from the national government. Also included is an analysis of the changes resulting from balancing the desire for these expenditures with social conditions.

Specimens of Families

Naturalized Families According to a friend of mine, a freelance writer, about five thousand Korean residents of Japan get naturalized every year. Sang Chung was a long-distance truck driver. When I was small, I used to enjoy getting into his oversized truck. With his strong shoulders, he would hoist me into the cab, and my heart would thump as if I were going on a ride in an amusement park. He eventually married the daughter of the president of the transport company and was naturalized as a Japanese citizen. Later, he came to hate his Korean name. Once during a summer vacation, my mother and I visited Sang Chung's home in Hachioji and stayed overnight. There was a pond in the large yard. Standing on a bridge, Sang Chung would clap his hands, and colored carp worth several thousand dollars each would rise to the surface of the pond. mother would heave sighs of envy, saying, How wonderful! At dinnertime, seeing the cutlass fish being served, I said, Oh, it's Sang Chung put his forefinger to his lips, saying, Hush. should say tachiuo. You never can tell when someone might overhear you speaking Korean, he said, knitting his brows and spreading spicy Korean miso over his kalchi. The day after we left, Sang Chung called, and Mother picked up the phone. Did you speak Korean in public somewhere? he asked. People in our neighborhood have been passing me with a funny look in their eyes since you were here. We never did, Mother said. Ask your kid about it. My kids can't speak Korean-you know that, Mother retorted sharply. Then Sang Chung said accusingly, It's because you came to our place dressed like a barmaid. I haven't visited Sang Chung's home since then. No sooner had Japan's bubble economy collapsed than Sang Chung's company went bankrupt. He sold his home and moved into a one-room apartment smaller than nine feet square. In order to pay back his debts of nearly eleven million yen, he and his wife opened a ramen stall. Another story about a family that was naturalized:

Entering the Japanese Market: A Reassessment of Foreign Firms' Entry and Distribution Strategies

Business executives outside of Japan have complained for decades that Japan's distribution system is essentially closed and does not permit easy access. The Japanese government and Japanese business executives, in turn, highlight the continuous introduction of distribution opening measures in their efforts to appease foreign critics. Globalization has made major inroads in distribution activities of firms, and the burst of Japan's bubble economy and the subsequent Asian crisis have brought major changes to the business environment. In follow-up to a 1991 meeting, in 1998 we reconvened the leading distribution thinkers and doers in the policy, business, and research communities from 12 countries. In this meeting, 70 participants with a high level of distribution expertise, held, for three days, discussions that focused on the complexity of distribution and trade practices, on impending changes and on future opportunities.

The task and challenge for Japan in the 21st century: An introduction

Since the collapse of an asset-inflated economic bubble in Japan started in the second half of the 1980s, it has brought about an entirely different assessment of this country. For all admiration claimed for it, the Japanese economy proved to be subject to Newton's law of gravitation. Opinions were beginning to divide over Japanese technology, too, after it was once believed to be leading the world. In fact, Japan has a big task to solve in the years before the 21st century. How will the Japanese face up to upheavals in the world, or how will they respond to their domestic problems such as demographic and rigid structures? Few messages from Japan have so far been available with regard to these questions. The world is left in a puzzle over the questions. Our task in this issue is to make clear what the Japanese are thinking and preparing to do in the years before the 21st century, and “what it is that they have to produce an influence on the world.” Specifically, discussions center on moves toward a knowledge-based society, research and development projects, manufacturing technologies, business strategies, industrial ecology, and the possibilities of a trilemma. In this article, I make some observations as a background to those subjects.