Industrial Policy at the Turn of the Century

The purpose of this chapter is to review the policies of the MITI/METI since the mid-1970s and to evaluate the changes in policy principles that occurred at the turn of the twenty-first century. The key policy change was a shift into the direction of deregulation and structural reform. Although MITI had policy jurisdiction over structural issues such as trade and industry, the environment, energy, and regional disparities since the mid-1970s, it has gradually adopted a restrained attitude toward the scope of its policy involvement. In other words, the policy has been to leave as much as possible to the self-efforts of the private sector or market mechanisms. METI’s policy can be positioned as an extension of this policy. In addition, during the recession of the 1990s and thereafter, the structural reforms to restore economic vitality and put the Japanese economy on a growth trajectory emerged as a policy issue. At the same time, Japan had to manage its domestic economy in consideration of foreign economic relations. In these contexts, MITI and its successor METI expanded the scope of their responsibilities and jurisdiction beyond their traditional focus on industry into the macroeconomic realm.