ABSTRACT
Nordic economies have actively promoted globalization and innovation. However, they were able to keep inequality low because of the large government they had. Large government in this context does not necessarily mean the size of government expenditure. Rather, it is about how they collected and used the financial resources, and how they intervened in the labour market. The experience of the Nordic economies as well as those of the United States and Japan suggest the existence of the “Growth-Equity-Small Government Impossible Triangle”. It implies that, if Japan is to pursue economic growth by promoting globalization and innovation, it has to choose one from either maintaining an equal society or retaining a small government.
