Japan's Phoenix Economy.

ECONOMIC conditions in Japan; ECONOMIC reform; INTERNATIONAL relations; FINANCIAL crises

The author argues that Japan's economy will reform and revive--it just might take a decade to do so. He maintains that Japan thrives with bright, ambitious businesspeople, academics, and even bureaucrats capable of leading the new Japan. However, the author remarks that they lack a clear economic program, critical mass, and an institution around which to coalesce. Therefore, he predicts it will take ten more years to reach this promised land and the road from here to there will be rough. Japan's dilemma is that the obstacles to growth are woven into the very fabric of the nation's political economy. Japan's economic crisis is thus a crisis of governance in both government and business. Revival will therefore require a fundamental overhaul of institutions. However, even reformers disagree among themselves as to what constitutes reform. Consequently, defining the programs, reaching the intellectual consensus, and forming the necessary institutional coalition will take several more years. Even so, there is little doubt that reform will eventually succeed.