A one day workshop of the European Network on the Japanese Economy was organized by Jenny Corbett (Nissan Institute of Japanese Studies, Oxford and CEPR) at CEPR on 29 August 1996. This was the first in a series of workshops sponsored by the ESCR and the Daiwa Foundation Four papers addressed current policy debates in Japan: the role of industrial policy, central bank independence, ageing and inequality, and new production paradigms ‘after Toyota’.

In ‘Industrial Policy for Japan’s Telecommunications Industry’, Kotaro Suzumura (Hitotsubashi University) described the background of current industrial policy-making in the telecommunications industry and the results of recent reforms in the structure of the main provider (NTT) and other common carriers. Suzumura argued that some of the problems of industrial policy in this field come from the relative inexperience of the Ministry of Posts and Telecommunications. The paper took the usual debate on effectiveness of industrial policy (see Komiya, Okuno, Suzumura (1988)) a stage further by arguing that policy design needs to change as industrial structure and technology levels change. Thus the type of policy which MITI (the Ministry in charge of industrial policy in most industries) conducted might have been suitable for older industries but was not suitable in a high-technology information industry. The chief task for telecommunications policy is to minimize intervention and at the same time provide a coordination role to ensure common standards of connectivity.

The formulation of Japanese monetary policy during the bubble economy years of 1985–90 was discussed in ‘International Policy Coordination and Central Bank Independence’ by Yoshinori Shimizu (Hitotsubashi University). Shimizu argued that one of the errors of monetary policy in this period was the attempt to target the exchange rate under the influence of international policy coordination efforts. America put pressure on Japan to raise the value of the yen and expand its imports after the Plaza agreement, which fuelled an expansionary policy during that period. Furthermore, despite the recognition of a need for a tighter policy in 1989, the Bank of Japan was unable to tighten policy for another eighteen months because of undue pressure from the Ministry of Finance in deference to the American position. This argument has now become the standard Japanese interpretation of the policy mistakes of 1989–90. This view may not be widely shared outside Japan but has become very influential in favour of greater independence for the Bank of Japan.

In ‘Ageing and Inequality’ Fumio Ohtake (Osaka University and University of Essex) and Makoto Saito (Kyoto University) use the methodology of Deaton and Paxson to study increasing consumption inequality in Japan. It is well-known that the level of income inequality in Japan is relatively low by international standards. It is less well-known that both income and consumption inequality have been growing through the 1980s. This paper uses time-series, cross-section data from the National Survey on Family Income and Expenditure to examine whether there is an increase in consumption inequality in older age cohorts. The authors address the question of whether the overall increase in consumption inequality in Japan is due to the ageing of the population. They find that consumption inequality rises dramatically after the age of forty in Japan (a pattern which is also shown in Taiwan but not in the US or the UK). Furthermore, consumption and income inequality rise at about the same rate in Japan whereas in other countries consumption inequality increases by more than income inequality. The authors also show that the overall increase in consumption inequality in Japan after the 1980s owes approximately 50% to the ageing of the population (that is the increasing weight of older age cohorts), but the other 50% is due to an increase of within-cohort inequality.

The results of case study research on three new auto plants established in the 1990s was presented by Hirofumi Ueda (Osaka City University and SOAS, University of London) and Koichi Ogasawara (Saitama University) in ‘The Changing Nature of Japanese Production Systems in the 1990s and Issues for Labour Studies’. The Toyota production system has been widely used in many Japanese firms and has been adopted throughout the automobile industry in other countries. The paper argues that in an era of growing skilled labour shortage in Japan, production line work needs to be made more attractive. The research was a first attempt at examining whether new auto plants embodied a fundamentally different production process, or whether the changes were merely minor improvements on the Toyota system. There was considerable individual variation in the three plants and the authors found a significant reduction in heavy and dangerous work. It is however too early to predict the demise of the Toyota system.