Graduate School of International Studies
Yonsei University
Political Economy of Japan
Fall 2006 (ZJ 629-01) Instructor: Prof. Sang-young Rhyu
FRI. 09:00-12:00 Office: New Millennium B/D # 619
Millennium Hall # 201 2123- 3961;
Course Description
Japan is in the midst of a profound transformation process –economic, social, and political – that will lead to a new model of Japanese political economy.
This course is on Japanese political economy. It aims to provide an overall understanding of political economy in Japan. The course covers diverse topics of contemporary Japan through the lens of political economy including the developmental state and Japan Inc., the politics of industrial policy, the bubble economy and lost decade, the Japanese financial Big Bang, the political economy of globalization and Japanese reform.
This course will be divided into two parts. The first part will focus on the developmental state of Japan, and the second part will cover the Japanese “lost decade” and the future of reform. Central questions to address include: How did the Japanese developmental model arise? How does Japan fit into the globalization era? Why has Japanese reform been so slow and protracted? And what does the future hold for Japan? The course will also address some emerging issues regarding international cooperation in the IT and financial sectors as well as regional integration of East Asia. And recent signs for economic recovery will provide us with new theoretical debates. Will the recovery be sufficiently strong or durable to get back onto the path of sustained growth and reform? The direction and the path of Japanese reform will be discussed.
This class will be made up of lectures, discussions and student presentations. And Japanese reading lists are not required, but encouraged. There are no prerequisites for this course.
Requirements & Evaluation
Students are expected to read all assignments before class and participate in class discussions. Grades will be based on class participation and presentation (20%), mid-term examination (30%) and term paper (50%).
Suggested reading list
Jennifer Amyx and Peter Drysdale (eds.), Japanese Governance: Beyond Japan Inc. (London and New York: Routledge, 2003).
Kazuo Sato (ed.), The Transformation of The Japanese Economy (New York and London: M. E. Sharpe, 1999).
Kozo Yamamura and Yasukichi Yasuba (eds.), The Political Economy of Japan 1: The Domestic Transformation (Stanford: Stanford University Press, 1987).
Takatoshi Ito, Hugh Patrick, and David E. Weinstein, Reviving Japan’s Economy: Problems and
Prescriptions (Massachusetts: The MIT Press, 2005)
中谷 巖, 『日本經濟の歷史的轉換』, (東京: 東洋經濟新聞社, 1996).
Class Schedule
Week 1 Introduction and Overview
Week 2 Contending perspectives of Japanese political economy
Questions: (1) What is Japanese developmental model and how do we analyze it? (2) What are the existing viewpoints towards Japanese political economy? (3) What are the newly emerging perspectives on Japan?
Required Readings:
Yasusuke Murakami, “The Japanese Model of Political Economy,” in Kozo Yamamura and Yasukichi Yasuba (eds.), The Political Economy of Japan 1: The Domestic Transformation (Stanford: Stanford University Press, 1987), pp. 33-90.
Wolfgang Streeck. “Introduction: Explorations into the Origins of Nonliberal Capitalism in Germany and Japan.” Wolfgang Streeck and Kozo Yamamura. Eds. The Origins of Nonliberal Capitalism (Ithaca and London: Cornell University Press, 2001), pp. 1-38.
Supplement Readings:
Chalmers Johnson, Japan: Who Governs? The Rise of the Developmental State (New York and London: W.W. Norton & Company, 1995), Chapter 3: “Comparative Capitalism: The Japanese Difference”, pp. 51-68.
Gary Hamilton and Nicole Woolsey Biggart. “Market, Culture, and Authority: A Comparative Analysis of Management and Organization in the Far East.” In Marco Orru, Nicole Biggart and Gary Hamilton. Eds. The Economic Organization of East Asian Capitalism (London: Sage Publications, 1997), pp. 111-150.
Week 3 Politics and “1955 Regime”
Questions: (1) How did “1955 Regime” arise? (2) Why LDP fell from power? (3) How can we understand Koizumi’s Japan?
Required Readings:
Masaru Kohno, “Rational Foundation For The Organization of The Liberal Democratic Party in Japan”, World Politics, 44 (April 1992), pp. 369-397.
Aurelia George Mulgan, “The dynamics of coalition politics in Japan,” in Jennifer Amyx and Peter Drysdale (eds.), Japanese Governance: Beyond Japan Inc. (London and New York: Loutledge, 2003).
Michio Muramatsu and Ellis S. Krauss, “The Conservative Policy Line and the Development of Patterned Pluralism”, in Kozo Yamamura and Yasukichi Yasuba (eds.), The Political Economy of Japan 1: The Domestic Transformation (Stanford: Stanford University Press, 1987), pp. 516-555.
Supplement Readings:
T.J.Pempel, “The Unbundling of ‘Japan, Inc.”: The Changing Dynamics of Japanese Policy Formation”, Journal of Japanese Studies, 13, 2 (Summer 1987), pp. 271-306.
Kent E. Calder, Crisis and Compensation: Public Policy and Political Stability in Japan, 1949-1986 (New Jersey: Princeton University Press, 1988), pp.440-480.
Week 4 Bureaucracy
Questions: (1) What are the main characteristics of politics-bureaucracy relationship? (2) Why bureaucrats (mainly Okurasho) were pressured to reform? (3) What is newly remodeled government-business relations in Japan today?
Required Readings:
John O. Haley, “Governance by Negotiation: A Reappraisal of Bureaucratic Power in Japan”. Journal of Japanese Studies, 13, 2 (Summer 1987).
Michio Muramatsu. “Recent Changes in Japanese Public Administration.” In Kazuo Sato. Ed., The Transformation of the Japanese Economy (New York: M.E.Sharpe, 1999), pp. 340-364.
Junko Kato, The Problem of Bureaucratic Rationality: Tax Politics in Japan (Princeton: Princeton University Press, 1994), Chapter 7: “Conclusion: Bureaucracy, Party, and the Power of Rationality”, pp. 221-241.
Supplement Readings:
眞淵 勝, 『大藏省はなぜおいつめられたのか』(東京: 中公新書, 1997).
Week 5 Industrial policy
Questions: (1) What are Japanese industrial policy and the cause of its success? (2) Under what political economic environment could adjustment policy become successful in the declining industry? (3) Is Japanese industrial policy really being dissolved?
Required Readings:
Daniel I. Okimoto, Between MITI and the Market (Stanford: Stanford University Press, 1989), pp. 1-54.
Robert M. Uriu, Troubled Industries: Confronting Economic Change in Japan (Ithaca and London: Cornell University Press, 1996), pp. 10-41.
Supplement Readings:
Merton J. Peck, Richard C. Levin and Akira Koto, “Picking Losers: Public Policy Toward Declining Industries in Japan”. Journal of Japanese Studies, 13, 1 (Winter 1987), pp. 79-123.
Week 6 Network and intermediate organization
Questions: (1) How did network affect economic growth of Japan? (2) Why did Japanese Firms choose the form of the Keiretsu? (3) What are the characteristics of Japanese Amakudari?
Required Readings:
Shumpei Kumon, “Japan as a Network Society,” in Shumpei Kumon and Henry Rosovsky (eds), The Political Economy of Japan 3: Cultural and Social Dynamics (Stanford: Stanford University Press, 1992), pp. 109-141.
Michael L.Gerlach, Alliance Capitalism: The Social Orgnization of Japanese Business (Berkeley: University of California Press, 1992), Chapter 3: “The Organization of Japanese Business Networks”, pp. 63-102.
Supplement Readings:
Chalmers Johnson. “The Reemployment of Retired Government Bureaucrats in Japanese Big Business.” In Chalmers Johnson, Japan: Who Governs? The Rise of the Developmental State (New York and London: W.W. Norton & Company, 1995), pp. 141-156.
Colignon, Richard A. and Usui, Chikako, Amakudari: The Hidden Fabric of Japan’s Economy
(New York: Cornell University Press, 2003).
Week 7 The burst of “bubble” and lost decade: an overview
Questions: (1) How did the bubble economy boom and burst? (2) What happened during the long downturn or “lost decade”? (3) Was the lost decade really lost ?
Required Readings:
Makoto Itoh, The Japanese Economy Reconsidered (New York: PALGRAVE, 2000), Chapter 1: “The Long Downturn in the Japanese Economy”, pp. 1-29; Chapter 4. “The Burst of Bubble and The Political Economy of the 1990s Depression”, pp. 76-105.
Yukio Noguchi, “The Bubble and Economic Policies in the 1980s”, Journal of Japanese Studies, 20, 2 (Summer 1994), pp. 291-329.
Supplement Readings:
Kozo Yamamura, “The Japanese Political Economy after the Bubble: Plus Ça Change?” Journal of Japanese Studies, 23, 2 (Summer 1997), pp. 291-331.
T.J.Pempel, “Regime Shift: Japanese Politics in a Changing World Economy”, Journal of Japanese Studies, 23, 2 (Summer 1997), pp. 333-361.
Week 8 Financial system and Japanese big bang
Questions: (1) What have changed after big bang? (2) What are the structural problems that have protracted the economic recovery in spite of financial Big Bang? (3) How attractive is the Japanese financial market?
Required Readings:
Masahiko Aoki, Hugh Patrick (eds.), The Japanese Main Bank System (Oxford: Oxford University Press, 1994), Chapter 1: “The Japanese Main Bank System: An Introductory Overview”, pp. 3- 50.
Takeo Hoshi and Anil Kashyap, Corporate Financing and Governance in Japan: The Road to the Future (Cambridge and London: The MIT Press, 2001), Chapter 8: “The 1990s: Crisis and Big Bang”, pp. 267-304.
Supplement Readings:
Henry Laurence, Money Rules: The New Politics of Finance in Britain & Japan (Ithaca and London: Cornell University Press, 2001), Chapter 6: “Japanese Finance in the 1990s: Creating a Free, Fair and Global Market”, pp. 145-187.
ポ-ル·ツェア-ド, 『メインバンク資本主義の危機』 (東京: 東洋經濟新報社, 1997).
Week 9 Mid-Term Exam
Week 10 Keiretsu and corporate governance
Questions: (1) What are the characteristics of corporate governance of Japan? (2) Why is the Keiretsu system being dissolved? (3) What is meant by globalization in Japanese firms?
Required Readings:
Masahiko Aoki, “Toward an Economic Model of the Japanese Firm”, Journal of Economic Literature, 28 (March 1990), pp. 1-27.
Michael L.Gerlach, Alliance Capitalism: The Social Organization of Japanese Business (Berkeley: University of California Press, 1992, Chapter 4: “The Basic Form and Structure of the Keiretsu”, pp. 103-159.
Supplement Readings:
Michael L. Gerlach, “Twilight of the Keiretsu?: A Critical Assessment”, Journal of Japanese Studies, 18,1 (Winter 1992), pp. 79-118.
Takeo Hoshi and Anil Kashyap, Corporate Financing and Governance in Japan: The Road to the Future (Cambridge and London: The MIT Press, 2001), Chapter 6: “Benefits and Costs of Keiretsu Financing.” pp. 185-218.
Week 11 Regulatory regime and competition policy
Questions: (1) What is the Japanese path of regulatory reform? (2) What collective action would Japanese take in building institutions of new regulatory regime and competition policy? (3) Does the competition policy make the Japanese market freer and fairer?
Required Readings:
Steven K.Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Ithaca and London: Cornell University Press, 1996).
Thomas F.Cargill, Michael M.Hutchison and Takatoshi Ito (eds.), Financial Policy and Central Banking in Japan (Cambridge: The MIT Press, 2000), Chapter 3: “The New Financial Supervision and Regulatory Framework”, pp. 39-81.
Veronica Taylor, “Re-regulating Japanese transactions: the competition law dimension,” in Jennifer Amyx and Peter Drysdale (eds.), Japanese Governance: Beyond Japan Inc. (London and New York: Routledge, 2003), pp.134-155.
Supplement Readings:
Kohno Masaru, “A Changing Ministry of International Trade and Industry,” in Jennifer Amyx and Peter Drysdale (eds.), Japanese Governance: Beyond Japan Inc. (London and New York: Routledge, 2003), pp. 96-112.
Week 12 International Cooperation and Trade
Questions: (1) How does Japan comply with new international trade regime? (2) Is Internationalization of Yen possible? (3) What are the industrial factors hindering the regional integration to develop?
Required Readings:
Saori N. Katada. “Determining Factors in Japan’s Cooperation and Noncooperation with The United States: The Case of Asian Financial Crisis Management, 1997-1999.” In Akitoshi Miyashita and Yoichiro Sato eds. Japanese Foreign Policy in Asia and The Pacific (New York: Palgrave, 2001), pp. 155-173.
Kazuo Sato. “Economic Growth, Foreign Trade, and Trade Policy in Japan.” In Kazuo Sato. ed., The Transformation of the Japanese Economy (New York: M.E.Sharpe, 1999), pp. 340-364.
Supplement Readings:
Terutomo Ozawa, “The hidden side of the flying-geese catch-up model: Japan’s dirigiste institutional setup and a deepening financial morass”, Journal of Asian Economics 12 (2001), pp. 471-491.
Mitsuhiro Seki. “The Destruction of the Full-Set Industrial Structure: East Asia’s Tripolar Structure.” In Kazuo Sato. ed., The Transformation of the Japanese Economy (New York: M.E.Sharpe, 1999), pp. 321-339.
Week 13 Japanese reform and economic recovery
Questions: (1) What are the theoretical issues and debates surrounding the method and direction of Japanese reform? (2) What have been reformed in crucial sectors, e.g., welfare system? (3) Is Japan really changing its way?
Required Readings:
Yukio Noguchi. “Leaving the ‘1940’ System and Moving into a New System.” In Kazuo Sato. ed., The Transformation of the Japanese Economy (New York: M. E. Sharpe, 1999), pp. 392-402. Ronald Dore. Stock Market Capitalism vs. Welfare Capitalism (New York: Oxford University Press, 2000), Chapter 4: “Corporate Governance: From the Employee-Favoring Firm to the Shareholder- Favoring Firm,” pp. 71-132.
Kenzo Yoshida, Yung-Hsing Guo, and Li-Hsuan Cheng, “The Japanese Pension Reform of 2004: A New
Model of Legislative Process, Asian Survey, Vol.46, No.3 (May/June 2006), pp. 381-400.
Supplement Readings:
Hatsuse Ryuhei, “Japanese responses to globalization: nationalism and transnationalism,” in Glenn D. Hook and Hasegawa Harukiyo (eds.), The Political Economy of Japanese Globalization (London and New York: Routledge, 2001), pp. 173-187.
Toshihiko Fukui, “New Framework for the Conduct of Monetary Policy: Toward Achieving Sustainable
Economic Growth with Price Stability” Quarterly Bulletin (Bank of Japan, may 2006),
pp.13-21.
Week 14 Conclusion and wrap-up
Questions: (1) Whither go the “1955 regime” and “1940 regime”? (2) How can the Japanese neighboring countries cope with a changing Japan? (3) What are the newly rising themes in study of Japanese political economy?
Required Readings:
Nakatani Iwao, “A Design for Transforming the Japanese Economy,” Journal of Japanese Studies, 23, 2 (Summer 1997), pp. 399-417.
William H. Overbolt. “Japan’s Economy, at War With Itself.” Foreign Affairs. Vol.81, No.1 (January/February 2002).
Pat Boyd, “Globalization and the Future of the national Economy”, Keizo Koho Center and MIT-Japan
Program Symposium Conference Report (January 2006).
Supplement Readings:
Ronald Dore, “Asian crisis and the future of the Japanese model”, Cambridge Journal of Economics, 22 (1998), pp. 773-787.
Leonard Schoppa. “Japan: The Reluctant Reformer.” Foreign Affairs (September/ October 2001),
pp. 76-90.
Week 15 Student Presentations
(1) Designing research framework from a political economy perspective
(2) Clarifying your research puzzle and identifying variables
(3) Finalizing your idea in a very simple and logical way
Week 16 Final Exam
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