Lessons for Developing Countries
Edited by Mitsuhiro Kagami, Masatsugu Tsuji and Emanuele Giovannetti
Chapter 2: Beyond the IT Revolution: The Japanese Broadband Strategy
Masatsugu Tsuji 1. INTRODUCTION The remarkable recovery achieved in the early 1990s and the resulting prosperity of the US economy are founded on the development of information technology (IT). IT has brought the US economy to an entirely new stage, which is referred to as the ‘New Economy’, where not only have inventory cycles such as short-run economic fluctuations disappeared, but growth without inflation has also become possible by increased productivity. In early 2000, the stock prices of Net businesses or ‘dot.coms’ started to fall, and this was the beginning of the end of the Net bubble. Currently, approximately one-tenth of Net businesses in the US have met with bankruptcy. In Japan, on the other hand, the year 2000 marked the beginning of the Japanese IT revolution initiated by then Prime Minister Mori. The Japanese IT revolution was vital to the Japanese economy not only for it to catch up with other IT advanced economies including other East Asian economies such as South Korea, Singapore, and Hong Kong, but also to promote growth during the long period of economic stagnation since the bursting of the bubble economy in 1991. Public funds had been invested so far in various IT projects and the construction of IT infrastructure. Japan today, however, due to the effect of the bursting of the Net bubble in the US, has been suffering a recession in IT-related industries. Household appliances companies and PC manufacturers have already laid off several tens of thousands of employees and a large...
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