Chapter 1: Before Stagnation: Legacies of the High-growth Period
The contrast between Japan’s ‘bubble’ years of the mid-to-late 1980s and the recession and stagnation experienced during the 1990s is fast becoming as legendary as its ‘miracle’ growth in the early 1960s. Japan had stunned both itself and the outside world by its capacity to mount a serious challenge to American hegemony, within just a few decades of wartime defeat. However, once the impulses of catch-up growth and the good fortune of an accommodating international environment faded, Japan appeared incapable of fully adjusting to shifting economic circumstance, with doleful consequences. To outside observers, Japan seemed almost mesmerized by its earlier success. It appeared to be wedded to a form of political economy better ﬁtted to the exceptional needs of post-war reconstruction and economic convergence than to the demands of a rapidly globalizing world. However, success with pragmatic adjustment in the past (such as followed in the wake of the oil crisis in the early 1970s), the cementing of relational ties that had sustained economic, political and social order during the high-growth period, and a fear of alternative, essentially Western, forms of political economy helped to underwrite a continuing belief amongst the Japanese authorities during the troubled 1990s that the country possessed a distinct and superior form of economic management that only needed the return of benign growth to give it renewed legitimacy. A recurring theme in this book is that the institutional and ideational matrix constructed to deliver catch-up growth down to the early 1970s affected the content, direction and...
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