Crisis or Recovery in Japan
State and Industrial Economy

Crisis or Recovery in Japan
State and Industrial Economy

Crisis or Recovery in Japan
State and Industrial Economy

The collapse of the so-called ‘bubble economy’ in Japan in the first part of
the 1990s saw a sharp drop in the rate of annual GDP growth between 1991
and 1992 followed by several years of stagnation, several years of recovery,
and then a precipitous dip into recession – ‘the worst since the Great
Depression’ (Gilpin, 2000: 278) – between 1997 and 1998; this was followed
by a further period of stagnation marked alternately by hopes of an imminent
and definitive
revival
and the fear of
calamity. At the time of writing
the Bank of Japan has just raised interest rates from a floor value of zero,
based on a historically modest period of expansion in the national
economy and the mildest of inflationary price rises. Whether this turns out
to signal a definitive break from a difficult period as measured against main
macroeconomic indicators, or another false dawn, remains to be seen. But
however events subsequently unfold, Western perceptions of the efficacy of
the Japanese economic machine have been indelibly marked: if the extent
of Japanese exceptionalism and the causal forces supporting the Japanese
‘economic miracle’ was a hot topic for debate in the 1980s, by the close of
the century – and notwithstanding the momentous and undisputable
achievements of Japan in the field of economic development – debate had
swung heavily to consider instead the extent of the Japanese malaise and
the institutional factors sustaining it: ‘Japanese, American and other
experts’, in the words of one eminent Western commentator on international
affairs,
now saw ‘dire economic problems’, and the need not only to
take measures to stimulate the economy but also to institute wholesale economic
reforms
(ibid.:
279–82).

David Bailey, Dan Coffey and
Philip R. Tomlinson