Department of Economics
PhD Theses:


İbrahim ÖZTÜRK
The Rise and Fall of Japan’s Developmental Institutions

(Supervisor: A. Suut Doğruel)


In this dissertation, the rise and fall of Japan's developmental institutions are analyzed. The main thesis is that Japan’s developmental ideology and developmental institutions of the post-war years have strongly fostered the miraculous industrial achievements of Japan. The established hegemonic world system and its institutions, as well as domestic structures, have also supported Japan’s system to achieve its main targets. With the radical chances in the external political and economic environment surrounding by the late 1970s, the institutions and the ideology of the “old” system have started to lose their relevance. In explaining the under-achievements of the system, the role of the established interest-seeking coalitions among politicians, bureaucrats, and big business should be given special reference.

Japan's developmental institutions of the post-war period were based on production priorities aiming to achieve fast growth, and in turn to generate sufficient employment and income. It was believed that this target could be achieved through maximum foreign trade performance of the industrial structure. Therefore, Japan's industrial institutions and policies have been increasingly characterized by higher savings, investments, and exports. In order to create the domestic winners and champions in the world league, particularly in the strategically chosen sectors, domestic markets were sheltered from foreign competition and the organization of economic activity was left to the guidance, control and discretion of the triple compromise between bureaucrats, big-business, and politicians. Considering the recent situation, it is getting clearer that it has turned out to be against the interest of the whole society. The system has been increasingly hindered due to its lack of transparency, accountability to the people, and isolation from foreign competition in order to maximize the gains of producers.

Although the need for structural transformations at the systemic level have become evident, particularly after the burst of the bubble economy in the early 1990s, such demands, however, have been strongly resisted by the beneficiaries of the existing system. Two other important reasons for the slow pace of reforms are, first, the existence of potential uncertainties surrounding the coming changes, and therefore Japan still is in the process of trial and error. Second, because of the strong belief in the existing system that has proved its competence and strength in overcoming bottlenecks of the earlier crisis and brought Japan “the number one status”.

Although the author of this dissertation expects that Japan’s system will converge to the Western style market economies, at least to a certain degree, under the existing "fears" and "hopes", however, it is not possible to make a long term reliable prediction for the future discourse of the system.