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POLICY REGIMES AND INDUSTRIAL COMPETITIVENESS
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POSTCOLONIAL INTERNATIONAL RELATIONS
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Pierre P. Lizée
PEACE, POWER AND RESISTANCE IN CAMBODIA
Global Governance and the Failure of International Conflict Resolution
S. Javed Maswood
JAPAN IN CRISIS
Ananya Mukherjee Reed
PERSPECTIVES ON THE INDIAN CORPORATE ECONOMY
Exploring the Paradox of Profits
Cecilia Ng
POSITIONING WOMEN IN MALAYSIA
Class and Gender in an Industrializing State
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INSTITUTIONAL CHANGE AND THE POLITICAL TRANSITION IN HONG KONG
Mark Turner (editor)
CENTRAL–LOCAL RELATIONS IN ASIA-PACIFIC
Convergence or Divergence?
Fei-Ling Wang
INSTITUTIONS AND INSTITUTIONAL CHANGE IN CHINA
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Basingstoke, Hampshire RG21 6XS, England
Japan in Crisis
S. Javed Maswood
School of International Business and Asian Studies
Griffith University
Nathan, Brisbane, Australia
© S. Javed Maswood 2002
All rights reserved. No reproduction, copy or transmission of this publication
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First published 2002 by
PALGRAVE MACMILLAN
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PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
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DOI 10.1057/9781403918505
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Maswood, Syed Javed.
Japan in crisis / S. Javed Maswood.
p. cm.—(International political economy series)
Includes bibliographical references and index.
1. Japan—Economic conditions—1989– 2. Financial crises—Japan. 3. Banks
and banking—Japan. I. Title. II. Series.
HC462.95 .M3845 2002
338.952—dc21 2001059843
10 9 8 7 6 5 4 3 2 1
11 10 09 08 07 06 05 04 03 02
Contents
List of Tables vii
List of Abbreviations viii
1 Introduction 1
Economic stagnation in Japan 3
Structural adjustment in Japan 5
The Asian financial crisis 9
The Asian crisis as a catalyst for change in Japan 12
The structure of this book 16
2 Economic Stagnation in Japan 17
From a Japanese bubble to an Asian bubble 24
The Asian crisis and the Japanese economy 28
Explaining the failure of economic recovery packages 30
Conclusion 36
3 Financial Reforms in Japan 39
Crisis in the Japanese financial sector 40
Banking sector reforms in Japan 46
Regulatory controls and surveillance 54
Bank reform and persisting economic weakness 56
Conclusion 61
4 Corporate Reforms 62
Main features of the J-firm 63
Corporate reforms and convergence 68
Corporate reform in Japan 74
Conclusion 83
5 Regulatory Reforms 87
Regulatory politics in Japan and the United States 88
Regulatory reforms in Japan 93
Bureaucratic opposition to deregulation and reform in Japan 96
Structural reform in the context of Japanese party politics 97
Prime Minister Koizumi and Japan’s reform agenda 106
Conclusion 113
v
vi Contents
6 Japan’s Regional Economy and the Asian Monetary Fund 115
The Asian crisis as a foreign policy opportunity 119
Japanese aid to crisis countries 125
The Asian Monetary Fund 128
American rejection of the Asian Monetary Fund 132
The AMF revisited 136
Conclusion 142
7 Conclusion 144
Notes 155
Bibliography 168
Index 172
List of Tables
2.1 Official discount rates in Japan 24
2.2 Bank lending to emerging Asian markets at end June 1997 26
3.1 1998 Upper House election results 44
3.2 Bank support and restructuring goals 54
4.1 Corporate failures in Japan 70
4.2 Company restructuring in Japan 80
5.1 Amakudari in selected Japanese industries 97
vii
List of Abbreviations
ADB Asian Development Bank
AMF Asian Monetary Fund
APEC Asia Pacific Economic Cooperation
APT ASEAN Plus Three
ARC Administrative Reform Commission
ARF ASEAN Regional Forum
ASEAN Association of South East Asian Nations
CCL Contingent Credit Lines
CEFP Council on Economic and Fiscal Policy
CEM Comprehensive Economic Measures
CPSU Communist Party of the Soviet Union
DIA Deposit Insurance Agency
DPJ Democratic Party of Japan
DSP Democratic Socialist Party
EAEC East Asian Economic Caucus
EOI Export-Oriented Industrialization
EPA Economic Planning Agency
FDI Foreign Direct Investment
FDIC Federal Deposit Insurance Corporation
FRC Financial Restructuring Commission
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
IMF International Monetary Fund
ISI Import Substitution Industrialization
JNR Japan National Railway
JSP Japan Socialist Party
LDP Liberal Democratic Party
LTCB Long-Term Credit Bank
NLC New Liberal Club
NPL Non-Performing Loans
OPEC Organization of Petroleum Exporting Countries
PKO Peace Keeping Operations
RRC Regulatory Reform Committee
RTC Resolution Trust Corporation
SDPJ Social Democratic Party of Japan
UK United Kingdom
viii
List of Abbreviations ix
UNCLOS United Nations Law of the Sea Conference
US United States
WTO World Trade Organization
