Education About Asia: Online Archives

Japan–The System That Soured: The Rise and Fall of Japan’s Economic Miracle

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The main thesis of Japan: The System That Soured is, as the title implies, that while Japan’s economic system was instrumental in helping the country during the catch-up phase of its industrial development, “it turned into a terrible system once Japan had in fact caught up.” Richard Katz, Senior Editor at the Oriental Economist Report (a monthly English language newsletter about Japan), argues that the Japanese economic model is not a different form of capitalism but an earlier stage of it. Japan’s mistake was in continuing to use “the same economic tactics of protection and promotion in the 1970s and beyond” that it had used during its postwar development stage. The result is “a dysfunctional hybrid of super-strong exporting industries and super-weak domestic sectors.”