Success is the mother of failure: why did Japan fall into the “supply-side policy trap”
【Abstract】In the process of postwar industrialization in Japan, because the constraints of economic development were not insufficient demand but insufficient supply, instead of implementing Keynesian policies like those in Europe and the United States, Japan chose industrial policies, namely, supply-side policies. In order to achieve rapid industrialization in Japan after the war, the government and producers formed an alliance, implemented the supply-side policy as a structural policy, and succeeded in achieving the rapid growth on the basis of industrialization by allocating resources to industrial sectors that were in line with the national development strategy. However, after the completion of the transition to an industrialized economy, the conditions and environment for policy implementation had undergone major changes, but for the benefit of producers, the Japanese government still refused to adjust the basic policy direction and fell into a “supply-side policy trap,” incurring failure. The case of Japan showed that the factors that once led to success in the course of industrialization and economic development had become the factors that caused failure after changes in the constraints, just like the phrase “success is the mother of failure.”
【Keywords】 industrialization; economic growth; performance differences; supply-side policies; structural adjustment;
. (1) In the understanding of this paper, industrial policy constitutes the core of supply-side policy. In this paper, the connotation and extension of industrial policy and supply-side policy are consistent to a great extent. Therefore, according to the need of discussion in this paper, these two concepts are used in the same sense. [^Back]
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