Table Of ContentTHE STRUCTURE OF THE JAPANESE ECONOMY
STUDIES IN THE MODERN JAPANESE ECONOMY
General Editors: Malcolm Falkus, University of New England, Armidale, New South
Wales, Australia; and Kojiro Niino, Kobe University, Japan
An understanding of the modern Japanese economy remains both important and
elusive. Its importance needs little stressing. Since the 1950s Japan's economy has
grown at a rate unparalleled elsewhere and. despite predictions that such success
could not last, the economy remains strong. dynamic and sustains full employment.
Yet an understanding of the many unique features of Japan's economic and social life
is essential if we are to appreciate the Japanese achievement. but on the other hand
this very uniqueness makes communication difficult. Straightforward translations of
Japanese works frequently mean little to Western readers because the underlying
attitudes and assumptions are so unfamiliar.
This series has been planned in the belief that there is an urgent need for scholarly
studies on the modern Japanese economy which are written by experts (both Japanese
and Western) and aimed at Western readers. Accordingly. we have planned a series of
books which will explore all the major areas of Japanese economic life. The books
will present up-to-date material. and, where necessary. they will place Japan in its
wider international context.
Published tirles include:
Yujiro Hayami
JAPANESE AGRICULTURE UNDER SIEGE
KazuoKoike
UNDERSTANDING INDUSTRIAL RELATIONS IN
MODERN JAPAN
Ryoshin Minami
THE ECONOMIC DEVELOPMENT OF JAPAN
Mitsuaki Okabe
THE STRUCTURE OF THE JAPANESE ECONOMY
Yoshitaka Suzuki
JAPANESE MANAGEMENT STRUCTURES, 1920-80
Seiichiro Yonekura
THE JAPANESE IRON AND STEEL INDUSTRY. 1850-1990
The Structure of the
Japanese Economy
Changes on the Domestic
and International Fronts
Edited by
Mitsuaki Okabe
Professor, Faculty of Policy Management
Keio University
Japan
Palgrave Macmillan
ISBN 978-1-349-23723-4 ISBN 978-1-349-23721-0 (eBook)
DOI 10.1007/978-1-349-23721-0
© Mitsuaki Okabe 1995
Softcover reprint of the hardcover 1st edition 1995 978-0-333-61773-1
All rights reserved. For information, write:
Scholarly and Reference Division,
St. Martin's Press, Inc., 175 Fifth Avenue,
New York, N.Y. 10010
First published in the United States of America in 1995
ISBN 978-0-312-12219-5
Library of Congress Cataloging-in-Publication Data
The Structure of the Japanese economy : changes on the domestic and
international fronts I edited by Mitsuaki Okabe.
p. em.-(Studies in the modem Japanese economy)
Includes bibliographical references and index.
ISBN 978-0-312-12219-5
I. Japan-Economic conditions-1945-1989. 2. Japan-Economic
conditions-1989- 3. Japan-Economic policy--1945-1989. 4. Japan
-Economic policy-1989- 5. Japan-Foreign economic relations.
I. Okabe, Mitsuaki. II. Series.
HC462.9.S69 1995
330.952-dc20 94-17219
CIP
Contents
Preface ix
Notes on the Contributors XI
1 The Japanese Economy in Transition: Introduction
and Overview
Mitsuaki Okabe
XI
PART I
THE JAPANESE FIRM AND THE LABOUR MARKET
2 Long-termism and the Japanese Firm
Paul Sheard 25
3 Financial Structure and Managerial Discretion in the
Japanese Firm: An Implication of the Surge of
Equity-related Bonds
Akiyoshi Horiuchi 53
4 An Analysis of Labour Mobility in Japan
At.whiro Taki and Toshiaki Tachibanaki 81
5 Is the Tenure-Earning Curve Really Steeper in
Japan? A Re-examination Based on UK-Japan
Comparison
Giorf?io Brunella and Kenn Ariga 109
PART II
CONSUMPTION, SAVING, INVESTMENT
AND GROWTH
6 Consumer Behaviour in Japan under Financial
Liberalization and Demographic Change
Wataru Takahashi and Yukinobu Kitamura 135
v
vi Contents
7 Saving, Investment, and Capital Mobility: Lessons
from Japanese Inter-regional Capital Flows
Robert Dekle 168
8 High Economic Growth and Its End in Japan:
An Explanation by a Model of Demand-led Growth
Hiroshi Yoshikawa 203
PART III
THE FINANCIAL MARKETS, MONETARY POLICY AND THE
POLICY INSTITUTIONS
9 The Rise and Fall of the Bubble Economy:
An Analysis of the Performance and Structure
of the Japanese Stock Market
Fumiko Kon-ya 235
10 Bubbles, Bursts and Bail-outs: A Comparison
of Three Episodes of Financial Crises in Japan
Koichi Hamada 263
11 Evolution of the Main Bank System in Japan
Takeo Hoshi 287
12 Monetary Policy in Japan: A Perspective on
Tools, Transmission Channels and Outcomes
Mitsuaki Okabe 323
13 The Bank of Japan and the Federal Reserve:
Financial Liberalization, Independence, and
Regulatory Responsibility
Thomas F. Cargill 358
PARTlY
INTERNATIONAL ECONOMIC RELATIONS
14 Is Japan Establishing a Trade Bloc in East Asia
and the Pacific?
Jelfrey A. Frankel 387
Contents v11
15 Recent Balance of Payments Developments in
Japan: Is the Current Account Surplus Structural
or Temporary?
Mahito Uchida and Takashi Vi 416
16 Structural Changes in Japanese Long-Term
Capital Flows
Shinji Takagi 435
Index 459
Preface
The outstanding performance of the Japanese economy over recent
decades has invariably attracted the attention of economists and policy
makers around the world. No other economy has so often been cited
as such a typical example of an achiever of high growth and overall
stability, or as a model to be emulated by developing countries and
former centrally-controlled economies. And, in recent years, the Japanese
economy seems to have been associated increasingly with the image
of an incongruous member in the international economy because of
the largest trade surplus of all nations.
Despite the fact that the performance of the Japanese economy has
often been described in detail and the social and economic structure
has been increasingly subject to scrutiny by various academic disciplines,
there still appear to be many commonly-held stereotypes or exotic
perceptions about the way in which the entire economic system is made
up and how it functions. Moreover, it needs to be noted that the Japa
nese economic system, as with any other system, cannot be excluded
from undergoing its own evolution as a result of domestic circum
stances and policies as well as through external forces.
When one looks for a deep understanding, however, there does not
seem to be a readily accessible scholarly book providing both rigorous
analyses based on the mainstream of economics and a good coverage
of all the major aspects of the economy. This book, consisting of fifteen
research papers, intends to fill that gap. It aims to illuminate and analyze
the basic structure of, and the changes in, the contemporary Japanese
economy, both broadly and from the viewpoint of modern economic
analysis. The editor hopes that the book as a whole will provide new
insights and perspectives on the key issues in understanding the nature
of that economy.
This publication is the outcome of a research project at the Centre
for Japanese Economic Studies at Macquarie University, Sydney. In
this endeavour, the editor, as Director of the Centre, has benefited
enormously from the co-operation of many individuals. I am most grateful
to the contributors of this volume, all of whom are leading researchers
in their respective areas, for initiating their research for this book, bringing
their draft papers to the conferences and seminars in Sydney, and finally
jointly producing this volume. My heartfelt appreciation is extended
IX
X Preface
to Vice-Chancellor Professor Di Yerbury of Macquarie University for
her continuous encouragement of this project. Also, I must mention
my indebtedness for the support and advice of my colleagues at Mac
quarie University, including Eddie Oliver, the late Victor Argy, Leslie
Stein, John Purcal, Richard Braddock, Misuzu Chow and Bill Norton;
to many senior members of the Bank of Japan, including Governor
Yasushi Mieno, Kazuho Sawamoto, Kagehide Kaku; to my mentors
Yoshio Suzuki (Nomura Research Institute) and Kumiharu Shigehara
(OECD); and academic friends, including Peter Drysdale (Australian
National University) and Malcolm Falkus (University of New Eng
land); and to Setsuya Tabuchi of Nomura Securities for proving the
initial funds to establish the Centre. Helen Smith assisted me enor
mously in the editorial work, as did Glennis Yee in organizing sem
inars and conferences. Tim Fanniloe of Macmillan has energetically
encouraged me and assisted with the publication. Without the support
of these individuals, this book would not have been produced.
March 1994 MITSUAKI 0KABE
Sydney
