ABSTRACT
This chapter analyzes the contribution of systemic support to Japan’s rapid economic growth, examines why and how the characteristics of systemic support have changed since the 1990s, and discusses growing contradictions to systemic support. Prior to the bursting of the bubble economy and the fall of the LDP in the early 1990s, systemic support justified the legitimacy of administrators’ dominance in Japan, while the great majority of Japanese people were protected both directly and indirectly by such support. Although the exchange of systemic support for loyalty was not the sole driver for Japan’s post-war rapid economic growth, it successfully drew a strong commitment from Japanese workers to their jobs, contributing to the expansion of Japanese firms from the 1950s until the 1980s. Market inefficiency associated with domestic systemic support in Japan was partly compensated for by the US hegemonic support for Japan during the Cold War.
