Introduction

Abstract

Since the bursting of its bubble in 1992, the Japanese economy has been stagnating for more than a decade. The GDP growth rate fell from 3.1% in 1991 to 0.9% in 1992. Since then it has hovered around 1.0%, except when it went to 3.5% in 1996 and — 1.1% in 1998.¹ This stagnation has occurred largely because domestic demand has drastically declined, while globalization has intensified international competition and has forced Japanese companies to relocate their production to low-production-cost countries. Even high-tech companies, such as those in the telecommunications and semiconductor industries, have had to confront changes in international industrial structures, since Japan has been lagging behind the United States in many fields of technological innovation and behind the European Union in several areas. Moreover, Korea and Taiwan are catching up with Japan in technology and engage in production with much lower labor costs and higher efficiency than Japan. Consequently, some Japanese industries have lost their world-leading positions

http://www.mofa.go.jp/mofaj/gaiko/bluebook/2002/gaikou/html/siryou/sr_05_02_01_02.html and http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=JPN&CCODE=JPN&CANME=Japan&PTYPE=CP