As Japan moves from a "catch-up" strategy to a post-developmental stage, it is changing its actions and reactions both in terms of international political economy and domestic policy issues. The current changes in Japan can best be understood as following a path toward "permeable insulation." Japan's government and economic system continue to insulate domestic businesses from full competition and the rigor of market forces, but this insulation is also permeable because a decline in state power vis-a-vis the private sector since the 1990s has combined with a decline in the solidarity of private institutions (such as keiretsu or trade associations) to make strategies of insulation much less rigid and uniform. As a result of the "permeable insulation," Japan's response to the global and domestic challenges of the 1990s is neither one of full acceptance nor rejection of global standards and practices. Instead, the basic scheme is one of pragmatic utilization of new rules and circumstances to continue industrial policies of promotion or protection in a new post-developmental era. By bringing together in-depth case studies of eight critical issue areas, this book looks at Japan's responses to globalization and move toward "permeable insulation." Part 1 introduces the reader to the concept of "permeable insulation" and provides a detailed review of past practices and changes in policy. Part 2 deals with international trade issues, Japan's compliance with and resistance to global trade rules, and the domestic interests visible in Japan's compliance. Part 3 focuses on domestic measures and policies that Japanese firms have used to adapt to the changes, within Japan and abroad, triggered by globalization and liberalization.
Part I: Introduction 1. Introduction: The Emergence of Permeable Insulation, Ulrike Schaede and William W. Grimes 2. Japanese Policy Making in a World of Constraints, William W. Grimes and Ulrike Schaede Part II: International Political Economy and Permeable Insulation 3. Internationalization as Insulation: Dilemmas of the Yen, William W. Grimes 4. Sword and Shield: The WTO Dispute Settlement System and Japan, Saadia M. Pekkanen 5. Adjustment Through Globalization: The Role of State FDI Finance, Mireya Solis 6. Integrated Production in East Asia: Globalization Without Insulation? Patricia Nelson Part III: Domestic Political Economy and Permeable Insulation 7. METI and Industrial Policy in Japan: Change and Continuity, Mark Elder 8. Industry Rules: From Deregulation to Self-Regulation, Ulrike Schaede 9. Changing Japanese Corporate Governance, Christina L. Ahmadjian Part IV: Conclusion 10. Permeable Insulation and Japan's Managed Globalization, Ulrike Schaede and William W. Grimes