The Political Economy of Japan Bradley M. RICHARDSON

policy to encourage growth and new industry development is a thing of the past.ConclusionThe Japanese economy grew dramatically between the 1950s and thepresent. During the first two decades of this growth, the Japanese governmentproduced batteries of industrial policies with the goal of developing infrastructure andachieving productivity gains in particular industries. In the 1970s and later,government aid was provided the computer industry and "high" technologydevelopment. Indicative economic plans which called for growth of the total economywere also formulated. Because of the coincidence between government support andeconomic success, Japan became known abroad as a successful example ofgovernment-led high growth.Evaluations of the direct role of indicative planning and so-called industrialtargeting have varied depending on scholarly biases and methodology choices.Understanding government policy impact is difficult in the face of these divergences.Assessing the separate contributions of government policy frameworks, commercialbank decisions, general demand draw and other factors adds to the difficulties, asdoes also the absence of satisfactory counter-factuals. However, it can be said withconfidence that:(a) tax incentives, lending and some other instruments required bykey-industry development plans likely helped facilitate growth by creating favorableconditions for investment in long-term capital improvements, iron and steel ad to alesser degree in other industries;(b) the amounts of government investment in most industries were too smallrelative to private bank funding to have the indicative effects often attributed to them;(c) since commercial bank lending decisions depended on many differentfactors, government lending likely played only a limited role after the early 1950s,with the exception of the shipping, coal and electric power industries, wheregovernment lending often matched private bank participation;(d) government priorities also favored declining or problem industries in thecase of coal and shipping with the result that considerable amounts of governmentfunds were mis-allocated from an economic point of view (118);(e) when the extensive supports given recessed industries, medium andsmall industries and farmers are considered, Japan appears to be as much aneconomic welfare and clientelist state as a developmental state.