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How has Japan's industrial strategy evolved over time

            More than the Western economies of the US and Europe Japan can be seen as the most important case of a government influencing the economy without directly controlling production or taking a centrally planned role.
             In Japan, industrial policy is a reflection of economic nationalism. This means that one gives priority to the interests of one's own nation but not necessarily involving protectionism, trade controls or economic warfare. Nationalism may mean these things, but it is equally possible that free trade will be in the national interest during particular periods as it was for Japan from the 1970's onwards. Industrial policy is however a recognition that the global economic system is never thought of merely in terms of the freely competitive mode.
             There are two basic components to Japanese industrial policy, corresponding to the macro and micro aspects of the economy. The Japanese call the micro aspect industrial rationalisation policy and the macro aspect industrial structure policy.
             Industrial rationalisation means state intrusion into the detailed operations of individual operations with measures intended to improve these operations (or even on occasion to abolish the enterprise).
             Industrial structure policies are an attempt by the state to select and develop strategic industries. The government attempts to change the proportions of certain industries in ways it deems advantageous to the nation.
             Japan's industrial policy can be dated from the Meiji Restoration of 1868. At the dawn of this period the country had just emerged from the feudalistic Tokugawa shoganate system. Japan found itself decades behind the West in both technology as well as the size of its physical capital stock. The oligarchies that ruled Japan believed that it would become another China and get carved up by Western industrial powers. They built a non-political civil bureaucracy and embarked on a forced draft industrialisation programme.

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