Institutional Differentiation of Public Service Provision in Japan: Corporatisation, Privatisation, and Re-municipalisation

The modern Japanese government has remained ‘small’ in terms of the number of public employees by developing several ways to provide public services. Before World War II, Japan created public enterprises, special companies, public corporations, and other legal entities. Many companies were contracted to the government to provide public services. Industrial associations played an important role in regulating industrial sectors. Local governments followed the central government in providing public services. At the grassroots level, neighbourhood organisations played important roles in providing information from the government and complementing public service provision by local governments. Public service provisions by quasi-governmental and non-governmental organisations continued after World War II. Public corporations were established to develop infrastructure and welfare services. Local governments also established local public corporations. In recent years, administrative reforms have converted the provision of some public services by the public sector into provision by the private sector. Public corporations were privatised and reorganised. An Incorporated Administrative Agency (IAA) was created. At the local government level, public service provisions by non-governmental bodies were expanded by the Designated Management System (DMS). Thus, institutional differentiation of public service provision allowed the Japanese government to remain small.