Lessons from Model Changes of Industrial Policy and the Financial System in Japan

The perfect match of industrial policy and the financial system will lay a solid base for sustainable development. This paper studies the transition path of Japanese economic development mode. In this paper, the Japanese development mode will be discussed. Japanese economic policies after the Second World War formed a complete industry development chain centered by enterprises. Meanwhile, the financial system was in a sub-dominant position. This property of the financial system is also one of the most important reasons for the bubble economy in the late 1980s. After the collapse of the bubble economy, Japanese authority failed again to adjust the production-orientated and consume-depreciated industrial development style. Japan experienced a long-term economic recession and did not recover until recent years. In order to realize a new round of sustainable development, a consumer-oriented industrial policy doctrine should be established. We expect the deregulation of industry including transportation, development of recycling economy, adjustment of the financial system and the decision mechanism of monetary policy as well.