Japanese Economic Policy and Policy Evaluation -The Case of "Industrial Policy"-

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Despite the enormous literature on Japanese "industrial policy," few scholars have systematically measured the effect the policies have had. Instead, most merely rely on anecdotes. This is unfortunate, for the policies offer little reason to think that they could have accomplished their ostensible goals. One of the more common policies involved loan subsides--yet only under implausible circumstances could they have affected investment levels. One of the more common responses is to point to the 1960s--yet no one has shown that the government had even the capacity to have fostered that growth. One of the best known sets of subsidies involved smaller firms--yet we have little reason to think the government contributed to their long-term health. Some of the institutions supposedly most central to industrial policy were the specialty banks--yet none seems actually to have promoted growth.