ABSTRACT

In the two decades since the end of the Cold War Japan has been transformed from a country that was seemingly on the cusp of supplanting the United States as the world’s leading economy to a country that is seemingly gripped in a downward cycle of relative decline. The decline is encapsulated in the fall of Tokyo’s Nikkei Stock average from its all-time high of 38,915.87 on 29 December 1989 to its post-bubble low of 7,054.98 in 2009. In mitigation of this image of drastic decline, it should be noted that the immensity of the asset bubble that burst in 1991 (when the value of Tokyo’s real estate was said to exceed that of the whole of the US) exaggerates the steepness of the decline. In fact real GDP rose by 25 per cent between 1990 and 2008. Nevertheless the Japanese economy did experience relative decline, as may be discerned from the comparison with the United States, whose GDP grew by 84 per cent in the same period.1 Indeed, writing in July 2010 a former vice-minister of the once acclaimed MITI (Ministry of International Trade and Industry), pointed out that Japan’s share of global GNP had fallen from 14.3 per cent in 1990 to 8.9 per cent in 2008 and that it was due to sink below that of China. He further lamented that Japan had lost its top positions in the production of traditional industrial goods to China, one after another, and that Japanese manufacturers lag behind South Korean and Taiwanese makers of LED, 3D and other high-tech products.2