Regime Change in the "Lost Decade"
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Lingnan University Digital Commons @ Lingnan University Theses & Dissertations Department of Political Sciences 2005 Japan : regime change in the "lost decade" Shuk On, Fiona TANG Follow this and additional works at: https://commons.ln.edu.hk/pol_etd Part of the Political Science Commons Recommended Citation Tang, S. O. F. (2005). Japan: Regime change in the "lost decade" (Master's thesis, Lingnan University, Hong Kong). Retrieved from http://dx.doi.org/10.14793/pol_etd.7 This Thesis is brought to you for free and open access by the Department of Political Sciences at Digital Commons @ Lingnan University. It has been accepted for inclusion in Theses & Dissertations by an authorized administrator of Digital Commons @ Lingnan University. Terms of Use The copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited. All rights reserved. JAPAN: REGIME CHANGE IN THE “LOST DECADE” TANG SUK ON, FIONA MPHIL LINGNAN UNIVERSITY 2005 JAPAN: REGIME CHANGE IN THE “LOST DECADE” by Tang Suk On, Fiona A thesis submitted in partial fulfillment of the requirements for the Degree of Master of Philosophy Lingnan University 2005 I declare that this is an original work based primarily on my own research, and I warrant that all citations of previous research, published or unpublished, have been duly acknowledged. Tang Suk On, Fiona 2005 ABSTRACT JAPAN: REGIME CHANGE IN THE “LOST DECADE” by Tang Suk On Fiona Master of Philosophy The shift in both the political and economic situations of Japan in the post- 1993s caught the attention of observers because the abrupt changes were unparalleled in other Organization for Economic Cooperation and Development (OECD) countries. Politically, a single conservative party had dominated Japan’s electoral and government spheres in a way unmatched in any other industrialized democracy two-to-one majorities over the next largest party; complete control of all cabinet posts; and a relatively large influence of government over the economy. Economically too, Japan’s rapid growth had also been without parallel and had put it at the head of the countries called the “Asian dragons”. The national growth rates of Japan were also double those of other OECD countries in the postwar period; labour productivity in manufacturing and industry was far greater; unemployment and inflation were dramatically lower; saving rates of people remained consistently higher; and overseas investments and holdings exploded more dramatically. All these successes had shocked the rest of the world. However, the loss of the dominance by the LDP and the end of the high growth of Japan's economy in the early 1990s contributed to what many Japanese have come to call the 'lost decade' and resulted in serious debates over the political and economic direction of Japan. This thesis uses a qualitative research methodology. A theoretical model of regime change will be used to analyze the political and economic shift of Japan. Contents List of Abbreviations ii Acknowledgement iv 1. Introduction: Main theme of this Study 1 2. Political institutions in Japan: Comparison between pre-1993 18 and post-1993 periods 3. Socio-economic coalition: Pre-1990s and post-1990s periods 52 4. Public policy paradigm in Japan: Comparison between pre-1993 71 and post-1993 periods 5. Conclusion 96 References 101 i Abbreviations: DPJ Democratic Party DSP Democratic Socialist Party FEFTCL Foreign Exchange and Foreign Trade Control Law FIL Foreign Investment Law HC House of Councilors HR House of Representatives JCP Japan Communist Party JNP Japan New Party JNP Japan Renewal Party JSDP Japan Self-Defense Force JSP Japan Socialist Party KDD International Telegram and Telephone LDP Liberal Democratic Party LP Lineral Party LTCI Long-term care insurance MAFF Ministry of Agriculture and Forestry MITI Ministry of International Trade and Industry MOF Ministry of Finance MSD Medium-sized-district NLC New Liberal Club NTT Nippon Telegraph and Telephone OECD Organization for Economic Cooperation and Development PAFTAD Pacific Trade and Development Conference ii PBEC Pacific Basin Economic Council PECC Pacific Economic Cooperation Council PR Proportional representative system SNTV Single non-transferable vote SDPJ Social Democratic Party UN United Nations USDA United States Department of Agriculture VER Voluntary export restraint iii Acknowledgements Truly, without the support made by Professor Brian Bridges and Dr. C.P Chan, this research would certainly not exist. I was very fortunate to meet the great teachers, who continually reinforced my faith in the potential of the research. Numerous people from Lingnan University were enormously helpful. For their support and advice, I would like to thank Ceci Lau, Stephanie Hui, Prof. Alfred Chan, Dr. Wong Yiu Chung and Gary Wong. In addition, I would like to thank Peter Chan, Tina Hung, Owen Ho, Kathleen Wong, Josie Lok and Jacky Cheng at PCCW for their generous support in my four years Part-time MPhil Study. Finally, I am deeply thankful to my great parents Tang Leung Lin and Cheng Sau Kuen, my brothers Kwok Choi, Kwok Kei and sister Suk Ling. They are my deepest and most enduring support. Last but not least, I would like to make special thanks to Terence Tuet for his enormously support. iv Chapter One Main theme of this Study 1. Introduction In the 1990s Japan’s political economy was sharply different from what it had been two or three decades earlier. Thirty-eight years of electoral dominance by the Liberal Democratic Party (LDP) had ended with the party’s internal fragmentation. The early 1990s seemed to have finally brought vindication to the perennial losers – the opposition parties. In 1989, the LDP lost an election and control of the House of Councilors (HC) of the Japanese Diet (Japan’s national legislature). This was followed in 1993 by the LDP losing control of the House of Representatives (HR), and by the first non-LDP government since the party’s formation in 1955. In July 1993, an eight-party coalition supplied Japan’s first non-LDP prime minister since 1955. Although the LDP remerged as the nation’s largest party and regained cabinet control following elections in 1996, it was not the same party it had been, nor did it enjoy any of its once sweeping dominance (Pempel, 1993, p. 175). Economically, the changes were equally striking. Four decades of unprecedented growth from the early 1950s until the end of the 1980s came to an end with the simultaneous collapse of both stock and land prices, the collapse of numerous financial institutions, and at least $600 billion in unrecoverable loans (Pempel, 1998, p.212). The shift in both the political and economic situations of Japan caught the attention of observers because the abrupt changes were unparalleled in other Organization for Economic Cooperation and Development (OECD) countries in the postwar period. Politically, a single conservative party had dominated Japan’s electoral and government spheres in a way unmatched in any other industrialized democracy two-to-one majorities over the next largest party; complete control of all cabinet posts; and a relatively large influence of government over the economy. Economically too, Japan’s rapid growth had also been without parallel and had put it 1 at the head of the countries called the “Asian dragons”. The national growth rates of Japan were also double those of other OECD countries in the postwar period; labour productivity in manufacturing and industry was far greater; unemployment and inflation were dramatically lower; saving rates of people remained consistently higher; and overseas investments and holdings exploded more dramatically. All these successes had shocked the rest of the world. However, the loss of the dominance by the LDP and the end of the high growth of Japan's economy in the early 1990s contributed to what many Japanese have come to call the 'lost decade' and resulted in serious debates over the political and economic direction of Japan. This thesis’s research questions, therefore, are (i) to examine the extent to which change has really occurred in the 1990s and (ii) to find out whether the change that Japan underwent in the 1990s can be considered as a ‘regime change’ (by utilising a theoretical model of regime change). The definitions of ‘regime’ and ‘regime change’ will be discussed in more detail later in this chapter, but the starting point will be the definition that the “regime consists of all those arrangements that regulate the way in which the demands put into the system are settled and the way in which decisions are put into the effect. They are the so-called rules of the game, in the light of which actions by members of the system are legitimated and accepted by the bulk of members as authoritative” (Easton, 1957, p.392). The working model of ‘regime change’ includes three main pillars, namely the domestic political institutions, public policy paradigm and socio-economic coalition. Detailed examination will be put on the description and analysis of changes happening in these three main pillars in Japan. This thesis uses a qualitative research methodology. A theoretical model of regime change will be used to analyze the political and economic shift of Japan. I will analyze the content and context of the changes of Japan through a literature review from materials including books, journals, newspapers and internet sources in order to clarify the political and economic changes of Japan. Qualitative Historical-Comparative research approach will be used, as the Historical-Comparative research is suited for questions in which combinations of 2 factors produce a specific outcome. It is also appropriate for comparing entire systems, and to study long-term social change. Gobin (1998) states that the historical - comparative approach allows us to analyse such changes and justifies a broader scope.