Need for Reform of Japanese Industries

According to Katz (1998) Japan's industrial "generals were unprepared to cope with a mature market. It was not the lack of foresight, but also a massive bureaucracy which was so unwieldy that it could not deal with change quickly enough to reestablish Japan as the major industrial power. It may be simplistic, but to some degree Japan is still operating prop planes in the jet age. "Without sweeping structural reforms, Japan will continue to stagnate" (p. 4) The structure, as Katz explains, was built for catch=up activity (much as South Korea's tumultuous economy is today), but when Japan not only caught up but moved to the forefront, the structure was no longer supportive.

One serious shortfall for Japan is its xenophobia. Even as its industries expand overseas, the managers in those countries- that is, the real decision makers, are Japanese who report solely to Japanese headquarters in Japan. Even as some major industries, primarily the Japanese automotive industry, is setting up assembly and parts plants world-wide (including, of course, the U.S.) the local managers there still report to their "shadow" peers, the Japanese. Of course, the Japanese are quite judicious about importing goods that would compete with their own industries. Automobiles from American and German or British manufacturers are extremely limited as imports. We have also seen how American agriculture is handicapped, even though Japan cannot subsist on its home-grown products exclusively. As Ka

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