Chapter 1: Theory of institutional reform and government structure
As noted in the Introduction, globalization entails a controversy over the appropriate policy authority allocation between bureaucratic delegation for adaptation and political command for coordination. The controversy has resonated in the terrains of Japanese politics and political science. Because Japan is a state with limited natural resources, it is highly dependent on international commerce for its economic prosperity. Consequently, Japan is extremely sensitive to the problem of adjustment to the international order that regulates cross-border economic transactions. Due to its non-liberal legacy, adjustment to a liberal international order has been and continues to be a major policy and political problem for Japan. Until recently, many studies on the Japanese political economy (Patrick and Rosovsky, 1976; Aoki, 1983; Aoki and Dore, 1994) analyzed institutional stability and maintenance by focusing primarily on cooperation among relevant economic actors in supporting the existing economic institution, which is known as the Japanese-style coordinated market economy (CME). It is widely acknowledged that the Japanese-style CME generated remarkable economic growth with stable employment during the post–World War II period from the early 1950s through the late 1980s. However, since the early 1990s, it has not fared well under the neoliberal global economic order where the keys to prosperity are competition, openness, and innovation as opposed to cooperation, control, and fine-tuning.