ABSTRACT
Japan ranks third in the world for annual defense spending, her defense industry is minuscule in size and importance to the economy compared to those of major North Atlantic Treaty Organization nations. A powerful defense industry establishment—based upon interlocking interest groups with close ties to the Self-Defense Forces, government, and private industry—simply has never evolved. The chapter briefly examines the origins of Japan's defense industry to understand how defense procurement evolved after World War II and how the defense industry became so tightly regulated. When Japan's defense industry is viewed in historical perspective, the spending for weapons has been minuscule in comparison to their importance for the economy in the pre-World War II period. One indicator to evaluate defense industry activity is how much defense spending goes to research and development (R & D). Modern states allocating a lot of spending for military R & D usually innovate and have large defense budgets.
