Japan and Globalization: From Opportunity to Constraint

There is a vigorous debate in Japan over the benefits and dangers of globalization. Vulnerability is the chief concern, such as the dangers of corporate restructuring for Japanese workers, the possible destruction of long-term patterns of economic behavior, and the importation of volatility from global financial markets. Despite resistance to the idea of globalization, global forces have already had decisive effects, particularly in the area of finance. Recent years have seen the adoption of global standards and substantial foreign penetration of Tokyo financial markets. Even Japanese-owned financial institutions are transforming their behavior to resemble more closely those of the global industry leaders. Meanwhile, in addition to grudging acquiescence, attempts to insulate Japan from the negative effects of globalization have remained on the policy agenda. These include efforts to “internationalize” the yen, and to support more elaborate regional and global regulatory regimes. While Japan has not yet been able to realize major change in these areas, these efforts constitute a serious attempt to dampen the volatility that is associated with globalized finance.