Shifting Domestic and International Perceptions of Japan's Economy

Abstract

AbstractJapan's remarkable economic success especially from the 1960s to the 1980s has attracted extensive worldwide attention. However, the world's admiration has plummeted since the 1990s, when the Bubble Economy burst, bringing on chronic stagnation. Since then, the world has regarded the Japanese economy less as a desirable model and more as an evident failure with many lessons for other economies. These external judgments, positive and negative, have also affected how the Japanese perceive their own economy. This article reviews how these domestic and international perceptions of Japan's economy have varied. It situates the companion articles by Hwang (2012) and Harada (2012) in the historical context of studies of the Japanese economy. This article especially discusses one recurring fixation that muddles comprehension of factors underpinning Japan's economic success and failure: the tendency to overestimate characteristics that supposedly are specific to Japan and different from other market-oriented economies. From the 1960s through the 1980s, scholars, commentators, policy-makers, and the public insisted these characteristics were singular and significant contributors to Japan's remarkable economic development. Since the 1990s, they have considered them the root causes of Japan's remarkable stagnation. Both are exaggerations. Although some singularly Japanese attributes perhaps contributed to Japan's economic ascent and decline, it is equally plausible they did not. It is more likely that poorly conceived and executed macroeconomic policies, especially monetary policy, had greater influence on Japan's post-1990s stagnation.