In this fine paper, Marcus Noland (2007) marshals a large body of literature and statistics. He develops a clear and coherent argument, with a carefully developed analytical framework, judicious commentary, and nuanced political economy. Noland appropriately focuses on the major analytical puzzle, of an economy experiencing extraordinarily rapid economic growth for almost four decades, followed by a sharp slowdown and protracted period of stagnation. This decline in growth momentum reflects “. . . macroeconomic policy errors, compounded by the difficulty of transitioning from a strongly state-influenced model of economic development geared toward catch-up to a more market-driven decentralized approach . . .” The key conclusion is that Japan succeeded in spite of, not because of, industrial policy interventions. Section 1 reviews Japan's extended growth episode. Its export performance was remarkable, its share of the world total rising from 1% in 1950 to nearly 11% in 1986. There was also rapid catch-up in income per capita relative to the USA, from 22% in purchasing power parity in 1950 to 85% in 1991. Japan started this growth period with a low physical capital stock, but very strong human capital. These initial conditions, combined with very limited natural resources (per capita) and very high investment rates, shaped the development trajectory. Public policy over this period remains a subject of controversy. All parties to the debate recognize the importance of conventional factors, such as strong human capital and support for research and development (R&D) as incomes rose. But there have also been significant departures from what may be termed “orthodoxy”: the rather closed foreign investment regime, subsidized credit, and an interventionist industrial policy. Protection clearly favored declining and/or uneconomic sectors, such as mining, petroleum, and coal products. Not surprisingly, therefore, attempts to model the intersectoral effects on total factor productivity growth do not point to any consistent pattern, except perhaps a negative relationship between assistance and subsequent performance. In addition to this support, sectors and firms have been protected by lax competition laws and restrictions on foreign investment and import barriers. There has also been “informal administrative guidance,” although the literature casts doubt on its importance. One puzzling feature to which the author draws attention in footnote 6 is that empirical documentation of Japanese trade policy interventions is weak. One would want to know a little more about this lacuna. Analytical ammunition (i.e. which sectors gain and lose from protection) is surely a prerequisite for reform. In the second half of the paper, the author investigates what he provocatively refers to as the “political economy of ineffectiveness.” Much of the discussion is concerned with the difficult transition from catch-up industrial policies to successful innovation. Here the argument is that Japan lags in most areas where progress is important, apart from basic education, and even here the system is said to lack creativity-based learning. There is little professional mobility between academia, the private sector, and the bureaucracy. Foreign investment remains low, and the labor market rather isolated. Institutions, the capital market, and the legal system apparently do not support entrepreneurial activity. I find the paper persuasive, and have little of substance to comment on. One is still left wondering a bit just how a system could be fantastically successful at catch-up, and apparently rather weak at managing growth once the frontier was hit. Can things be quite this bad? Why wasn't Japan's political economy better able to adjust to changing circumstances? Or was it just that the macro/financial problems were so serious that any system would have had difficulty coping? Moreover, although the intersectoral effects of intervention are questionable, could there have been cases of success, even if only by accident? That is, did policy-makers occasionally manage to identify and foster some positive externalities, especially in R&D promotion, some of which is inevitably sector specific? On industry policy, I personally tend to subscribe to the adage that “governments may not be good at picking winners, but losers are good at picking governments.” But are there cases where Japanese policy intervention worked? Presumably the R&D investments were important, even if much of it in reality occurred in-house in the private sector. In addition, it might be useful to know a little more about the success stories, and how and why they endured the long stagnation. For example, the Toyotas of the world, and why there aren't more of them. In the discussion of industry assistance, the emphasis is on industries, but presumably there has also been a good deal of firm-specific assistance that perhaps deserves comment. One wonders whether it is worth discussing a bit more any macro–micro interactions in industrial policy. For example, has the exchange rate impacted on industrial policy outcomes? Presumably not, since the weak yen for most of the high growth period and the strong yen towards its end and into the stagnation era did not evidently trigger any shift in protection policies. Perhaps there ought to be a little more on the effects of the restrictive foreign direct investment (FDI) policies. Why didn't it hold growth back more in the catch-up period? Presumably Japan was able to run such a regime while still achieving high growth for three reasons: its exceptionally strong human capital base, its always open policies towards technology policy (including the legendary imitation/copying stories), and a willingness to allow FDI when it really mattered and was the only way to access the technological expertise it embodied.