Institutional changes and the transformations of the growth regime in the Japanese economy

The Japanese economy experienced institutional changes after the prolonged recession of the 1990s, and started to show a new growth pattern in recovery in the early 2000s, in the face of increasing international interdependence with other Asian economies. ¹ In particular, there have been changes in investment behaviors owing to financial liberalization and increasing Japanese foreign direct investment in Asian countries. The coordinating mechanism of wages has also changed to one that is more market-oriented. Furthermore, the industrial structures have shifted in favor of the high-tech manufacturing sector and the service sector, influenced by the development of the international division of labor and the increasing interdependence with other Asian economies. Subsequently, the Japanese economy was hit by the subprime crisis in 2008.