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Arthritic Japan

The Slow Pace of Economic Reform

Edward J. Lincoln

Publication Year: 2001

In the late 1980s, Japan's strong economic performance put it on a the verge of becoming a major player in regional and global affairs. But nearly a decade of economic stagnation, a mounting of bad debts, and a continuing stream of scandals have tarnished the country's distinctive economic model. At the turn of the millennium, the Japanese economy remained mired in a pattern of stagnation. As this disappointing condition dragged on, the government pursued policies to restore economic health. Yet Japan has been slow to embrace the systemic reform on which a robust economic recovery depends. In Arthritic Japan, Edward J. Lincoln examines the causes and implications of this weak response. Concluding that Japan is unlikely to pursue the vigorous reform necessary for economic growth, Lincoln warns of serious consequences: a stumbling economy bedeviled by recession and financial crisis, eroding leadership in economic and security issues, a continued defensive trade posture, and a disgruntled population that could turn a more nationalistic stance in foreign policy.

Published by: Brookings Institution Press

Title Page

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Copyright Page

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pp. vii-ix

As ambassador to Japan at the end of the 1980s, I was involved in a dialogue between the United States and the Japanese government about structural economic reform. The Structural Impediments Initiative (SII), which was primarily concerned with features of the domestic economic system that impeded ...

Table of Contents

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pp. xi-xii

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Chapter 1: Introduction

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pp. 1-15

At the turn of the millennium, the Japanese economy remained mired in a pattern of stagnation that had continued since the early 1990s. As this disappointing condition dragged on, some in Japan called for systemic reform as a central part of policies to restore economic health. Beginning in 1994, the government ...

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Chapter 2: The Postwar Economic System

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pp. 16-55

Japan is a capitalist nation in the most basic sense of the word. That is, the means of production for goods and services are largely in the hands of the private sector rather than the government, and economic transactions take place mainly through private markets and contracts rather than through the government. ...

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Chapter 3: The Argument for Change

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pp. 56-93

Reform to reduce the economic role of government, motivated by public dissatisfaction with economic performance, has been a dominant story in many countries over the past quarter century. Heavy-handed government involvement in the economy eventually failed to enhance economic growth and led to ...

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Chapter 4: Vested Interests

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pp. 94-120

Vested interests can be a problem for change in any society. Some individuals, groups, and organizations profit from the current configuration of rules, regulations, taxes, and other aspects of the framework for the economic system. If changing that framework would hurt their economic interests, they have no reason ...

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Chapter 5: Consistency with Society

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pp. 121-152

The Japanese and American economies have many of the same economic institutions—corporations, industries, banks, securities firms, households, and government agencies. Those institutions have often behaved quite differently in the two countries, however. Differences in economic factors, unique historical developments ...

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Chapter 6: Weak Outcomes

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pp. 153-200

Previous chapters have laid out the argument for systemic reform and the variety of factors that work against its accomplishment. This chapter considers the outcome of such reform. Since the mid-1990s some economic reform has proceeded in both the government and the private sector. ...

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Chapter 7: Implications for American Policy

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pp. 201-222

Aquarter century ago a number of nations began unwinding government involvement in the economy. Government-owned corporations have been privatized. Management of market outcomes through regulation or manipulation has eased or been abandoned. In the United States the process of deregulation is a continuing story. ...


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pp. 223-238


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pp. 239-247

E-ISBN-13: 9780815798712
E-ISBN-10: 0815798717

Page Count: 254
Publication Year: 2001

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