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Deutsches Institut für Japanstudien

Competitive Conditions

Project duration: 1994-1997

In the first part of this research project, the role of competitive policy was examined. Still under American occupation, Japan had been given an extensive competitive legislation. However, numerous exceptions to the ban on cartels were made during the high-growth period. The importance of Japan's anti-cartel and anti-concentration policy should therefore not be overestimated. But it would be wrong to conclude from this that Japan is covered with cartels and controlled by monopolies. The country proved to be flexible and dynamic, by international comparison, not only during the so-called high-growth period (1955–1973) but also in the subsequent phase (1973–1992). The results raised the question of which other factors - structural or political - were decisive in producing the competitive intensity of the Japanese economy, manifested  by the adaptability of her industrial structure. This question was tackled in the second part of the project. The focus lay on an analysis of the interplay between structural and functional characteristics of labour market organization or training and employment system on the one hand and industrial organization on the other. These were considered in the historical context of Japan’s belated industrialization and catch-up process. The results can be summarized as follows: 1) The flexibility of Japan's economic system was determined, in a decisive way, by the organization of the training and employment system (enterprise-specific training, enterprise-internal labour market). The microeconomic theory of competition, limiting itself to the organization of product markets as the major determinant of competition, does not do justice to the Japanese experience. 2) The Japanese training and employment system took shape only in the process of industrialization. Its structural and functional characteristics can be made plausible by the relatively late and fast catch-up process of Japan's national economy. 3) The characteristics of the training and employment system shaped Japan's economic development even after the successful catch-up process. They proved to be an advantage when it came to cope with the problems of structural adaptation in the sequel of the two oil crises or with the shift to technology-intensive areas. 4) The system came under pressure when the general conditions changed under which it had developed and been functioning: lower growth rates, changes in the age distribution of the population, and new technological regimes.