1995 Reports

Crumbling or transforming? Japan's economic success and its postwar economic institutions

Patrick, Hugh T.

The purpose of this paper is to provide an overview of the evolutionary change of three of the major postwar economic institutions: the large firm industrial relations system; the main bank system of large firm corporate finance; and the keiretsu systems of various forms of business ties among groups of firms. In following sections I consider the conditions and circumstances that resulted in the development and flourishing of these institutions; the subsequent developments of the economy that have made these institutions less effective and in some respects now clearly inefficient; how these institutions have responded; and, in a brief conclusion, speculate how they are likely to evolve.