Introduction to institutional change in Japan

Abstract

This paper summarizes and reflects on seven important papers analyzing recent changes in important Japanese institutions. It addresses the origin, development, and recent adaptation of core institutions, including financial institutions, corporate governance, lifetime employment, and the amakudari system. To place current institutional changes in perspective, it also includes discussion of both historical and international comparisons. Emphasis is placed on comparisons with Meiji Japan, a period in which Japan borrowed and adapted foreign institutions to its unique circumstances. Comparisons with recent economic and financial reforms in Korea are also included to provide a broader perspective on the current reform process in Japan. The conventional wisdom is that Japanese institutions have remained relatively rigid since the collapse of the 1980s bubble, while the seven papers discussed herein find that there has been significant institutional change over the last decade.