Introduction: globalization, institutional reform, and government structure
Trade, investment, information, and communication intrinsically link the Japanese and international economies. As rules and norms in the international economy change, the Japanese economy is pressured to make the appropriate institutional adjustments to remain globally competitive. The public policy reforms, which have dominated Japanese national politics from the mid-1990s to the present, are attempts to make large-scale institutional adjustments to an economic system that was becoming inefficient and less competitive under the globalizing liberal economic order. Adjustments have meant institutional reforms in Japan’s post–World War II politico-economic system, including the beliefs held by politicians, bureaucrats, and private economic agents about the role of government in the market and the resultant behavioral changes. From the reformers’ perspectives, an adjustment should improve Japan’s overall economic efficiency and outweigh the coordination costs, which some segments, especially inefficient sectors, would incur. With these expectations, the reformist political leaders, most notably Prime Ministers Hashimoto, Koizumi, and Abe of the Liberal Democratic Party (LDP), initiated profound public policy reforms in the financial system, labor markets, and postal services in the late 1990s and the early 2000s. However, these reform movements faced some stumbling blocks.