Japan: Asia's Disintegrating Colossus
It is generally conceded that Japan is the third superpower in the late twentieth century's tripolar economic world. 1 Indeed, Japan's is the second largest national economy in the world (if one doesn't treat EU member states as a unit). But Japan hasn't looked so "super" of late. In a short ten years, the Japanese system has gone from being the envy of other nations to a global pariah. 2 What happened to "Japan, Inc.," and can it be corrected?
Japan provides the third of the four economic models explored here; a micro-managed economy. It is the prototype for the "Little Tiger" economies in Southeast Asia ( Hong Kong, Singapore, South Korea and Taiwan) that hoped to achieve economic success by modeling themselves after Japan. The other dominant model in the region is China, a state-managed, communist system. It too is reflected in smaller Asian economies.
After the conclusion of World War II, a generation of Japanese committed themselves to rebuilding their war-ravaged nation and restoring its influence. This required a coordinated strategy that saw to it that the elements of production--capital, labor and know-how--were efficiently allocated. The strategy closely linked government and business (to manage the recovery), a cooperative and dedicated workforce (to drive the economy), and a willingness to sacrifice present consumption for future gains. That is how the Japanese economic "miracle" came about. Japanese businesses and workers focused their attention on making goods for export, beginning with toys and apparel and ending up with products like automobiles, cameras and consumer electronics. The domestic market was carefully regulated in order to keep export prices low. Competition, particularly from foreign goods and services, was tightly controlled. Furthermore, Japanese workers made legendary sacrifices to ensure the success of the various ventures, working long