ABSTRACT
Japan has been under fire for some time for bringing about changes too slowly, in particular relative to the United States, which tends to move rapidly in response to changing economic and political conditions. We argue in this book that while the criticism may be valid on some levels, Japan has been in transformation. What has happened in Japan has been overshadowed by what has happened elsewhere in Asia, where there have been immense changes both economically and politically. The rise of China, the financial crisis in South East Asia in 1997 and North Korea’s development of nuclear weapons are just a few examples of these dramatic changes. But has Japan, the world’s second largest economy, only been muddling through? History tells us that Japan has been most capable of making radical changes in desperate times, for this occurred both during the Meiji Restoration as well as after World War II. The argument of this book is that Japan has been changing in tandem with regional and global forces. Some thought the bursting of the realestate bubble in Japan in the early 1990s had awoken the government and business leaders to the realities of a post-developmental state and globalized economy.1 Others interpreted the lack of action as an end to the Japanese model (or models) of export-led economic growth.2 We maintain that Japan has been in transformation due to pressures both internally and externally. On the domestic level, Japan’s former governing party, the Liberal Democratic Party (LDP), was in trouble after losing its majority in the Upper House, which caused it numerous difficulties in passing legislation through the Diet. However, the former government did take some concrete steps forward. Prime Minister Taro Aso announced a number of stimulus packages, including one with record-breaking actual spending of JPY 15.4 trillion, or approximately 3 per cent of Japan’s GDP, to stimulate domestic demand and improve the overall economic picture.3
