Abstract
In the late 2010s, Japan slowly revived its economy. As of 2020, Japanese companies have become key players in cutting-edge technologies for the digital transformation, occupying dominant market shares in hundreds of critical input products. This chapter how Japan revived its economy in the mid-2010s through a statist coordination model. Throughout the two lost decades, Japan made reform attempts but delayed fundamental changes due to the resistance of vested interests. However, the second Abe administration initiated and implemented fundamental changes based on long-term development plans, with stable power centralized in the Prime Minister’s office. The Abe administration transformed the Japanese economic model of closed circles of insiders into an “open innovation” system. This chapter tracks the politics of change by focusing on how Japanese capitalism changed in the 2010s, and why Japan developed a new statist system rather than an American-style free market system.
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Notes
- 1.
The concept of “open innovation” was first proposed in 2003 by Professor Henry Chesbrough of Harvard University, and was noted as a new paradigm for innovation that intentionally distributes and utilizes ideas and technologies not only inside but also outside the company (Chesbrough 2003 “Open Innovation: The New Impact for Creative and Profiting Technology”).
- 2.
Reform of Japan’s finance system does not lead to Anglo-Saxon-style free-market, in contrast to many neoliberals’ expectation. Credit financing, particularly for SMEs, continues (Aoki, Jackson, and Miyajima 2007). Most companies rely on self-financing, rather than on stock market. There also is some revival of cross-shareholding (Nitta 2009; Lechevalier 2016: 79).
- 3.
For list of specific venture startup companies, see Kushida (2017: 21–22, Fig. 3).
- 4.
The Abe administration strengthened labor market flexibility, allowing workers to change jobs seamlessly, with a focus on training in IT-related technologies, including cybersecurity (Kushida 2018a: 21). With many foreign companies able to enter Japan due to regulatory reform, paths have opened for elite university graduates to demonstrate their entrepreneurship, creating an environment in which new innovative venture companies can be activated. As of 2015, the majority of innovative startups were established by graduates of elite Japanese universities (Kushida 2017, 2018a: 21).
- 5.
Ulrike Schaede stipulates that 1998 to 2006 was the time when Japan’s policy and corporate-level reform became a “strategic inflection point” (Schaede 2008: 1–2).
- 6.
Keidanren is a comprehensive economic organization with a membership comprised of 1,512 representative companies of Japan, 107 nationwide industrial associations and the regional economic organizations for all 47 prefectures.
- 7.
Treasury officials provided selective benefits and treatment to financial institutions, while receiving drinks and dinner entertainment in return. As this scandal made headlines, five senior Treasury officials were arrested, and the Minister of Finance resigned, which weakened the power of the Ministry of Treasury.
- 8.
New York Times (July 19, 2007) “Murakami gets two years in jail in Livedoor scandal”; Japan Times (June 6, 2006) “Murakami arrested over insider trading”; The Wall Street Journal (October 29, 2010) “Japan Insider Trading Flashback: Murakami and Livdoor.”
- 9.
This is equivalent to the Blue House in Korea or the White House in the U.S.
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© 2024 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.
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Kwon, Hk. (2024). Transformation of Japanese Political Economy. In: Openness and Coordination. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-97-3352-1_6
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DOI: https://doi.org/10.1007/978-981-97-3352-1_6
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