chapter  5
21 Pages

Industrial policy, transnational corporations and the problem of ‘hollowing out’ in Japan: Keith Cowling and Philip R. Tomlinson


During the 1990s, Japan’s domestic manufacturing industry lost over 2 million jobs and recorded a decline in real output of over 10 per cent ( Japanese Statistical Yearbook 2001). There was also a significant and unparalleled rise in business failures and bankruptcies, particularly among Japan’s important small firm sector (Nikkei Weekly 19 October 1998). For Japan’s traditional industrial regions, it has undoubtedly been an exceptionally difficult period.As the decade came to a close, both Japan’s Ministry of International Trade and Industry (MITI)1 and economic commentators were seriously concerned that Japanese industry was ‘hollowing out’ (ku¯doka). And yet, against the backdrop of Japan’s domestic economic problems, the 1990s also saw Japan’s large transnational corporations continue to expand their global position through further Foreign Direct Investment (FDI) and increased offshore production (see section on ‘The globalisation of Japanese manufacturing’).