ABSTRACT
It has long been the conventional view that Japan must change its developmental institutions and policies to be competitive in an increasingly globalized economy. Clearly, globalization-the integration of input, factor and product markets across the world-is putting tremendous pressure on Japan to make its financial and distribution systems more efficient and to source materials from the best supplier regardless of nationality (Berger and Dore, 1996). How are the Japanese government and firms coping with this challenge? Are they responding by converging with the West in terms of relying primarily on market forces to determine the allocation of resources? How do Japanese government officials, business people and citizens view the challenge? What does their response tell us about the changing role of the state in industrial development, about state-society relations, and about the traditional market versus the state dichotomy that provides the core of much political economy literature?
