Japan’s Troubled Economy: The Impact on East Asia

This article reviews several aspects of Japanese economic troubles today: lingering stagnation, financial vulnerabilities, weak corporate governance, fiscal deficits, aging population, policy measures, and political leadership. Then the paper looks back in to three policy mistakes of the latter half of 1980s as a turning point. After a brief consideration of the Japanese- Asian development model, the paper studies some transmission channels of Japanese troubles to neighboring economies and examines regional financial cooperation and development strategy.