Governance Reform and Institutional Change in Japan

This chapter elucidates why governance reforms aimed at shrinking the bureaucracy areas of influence have progressed in Japan. The discussion focuses on aspects of institutional change that have resulted in governance styles allowing political leaders to control the bureaucracy more easily in the context of administrative reforms since the 1980s. Institutional changes in the Japanese Government have occurred in response to the complex context of critical junctures and layering of institutions. Critical junctures emerge in institutions that are stable along the path dependencies, and the impact of past institutional choices directs the progress of the reform. The critical junctures driving institutional change in Japan were the financial difficulties caused by economic crises and bureaucratic corruption. This triggered a shift to a style of governance led by the Prime Minister’s Office (PMO), reducing the returns that bureaucrats and politicians received from institutions that had continued through path dependency. In the PMO-led style of governance, bureaucrats in contact with the Prime Minister were willing to provide information and eliminate agency slack to further strengthen the cabinet’s functions when incentivized by promotion. Meanwhile, for the Cabinet to facilitate governance reform, a favorable relationship between the PMO and the ruling party headquarters is essential. This chapter also discusses how governance reforms developed under the conditions of leadership based on the Prime Minister’s personality and preferential relationship with the ruling party headquarters, which allowed the cabinet to function fully during the crisis phase.