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Economics / Business

Japan’s Lost Decade

(I-House Publishing 2000)

Hiroshi Yoshikawa

During the height of its prosperity in the late 1980s, Japan was “number one.”
Yet only a few years later, at the beginning of the 1990s Japan’s economy suddenly reversed itself and fell into its longest-lasting and most severe recession since World War II.
Thus began Japan’s “lost” decade.
The author—in his Tenkanki no Nihon, of which this volume is a translation—asked if Japan’s protracted slump can be attributed to a decline in the nation’s growth rate.
Though this theory has gained acceptance since Japan’s labor force is certain to decrease with the aging of its population, the author maintains a different viewpoint.
The real culprit is not insufficient demand, nor a decline in the potential growth rate.
Rather, it is a combination of causes coinciding with the most decisive turning point—the end of the high-growth era.
Japan’s manufacturing industries continued to prop up the economy, using export as a means.
Nevertheless, the economy failed to develop steady domestic demands.
That is, domestic demand linked with improvement in the people’s standard of living, failed to rise—and this resulted in the excesses of the ten-year-long “bubble” and the lost decade that followed it.

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