Conclusion: The Emergence of a Twenty-First-Century Policy on the Economy and Industry

Abstract

The government carried out a major reorganization of bureaucratic administration in January 2001, and MITI’s name was changed to METI: Ministry of Economy, Trade, and Industry. The reorganization was in effect a reflection of the administrative and financial reforms that accompanied the deregulation of the 1980s and 1990s and that appeared in the Administrative Reform Council’s “Final Report” of 1997.

1 Establishment of the Ministry on Economy, Trade and Industry (METI)

The government carried out a major reorganization of bureaucratic administration in January 2001, and MITI’s name was changed to METI: Ministry of Economy, Trade, and Industry. The reorganization was in effect a reflection of the administrative and financial reforms that accompanied the deregulation of the 1980 and 1990s and that appeared in the Administrative Reform Council’s “Final Report” of 1997.

1.1 The Administrative Reform Council’s “Final Report”

The December 1997 “Final Report” of the Administrative Reform Council explained the “reasons for the need to undertake administrative reform” in terms of the “principles and aims of administrative reform,” which it defined first as: “to reconstruct ‘how this country does things’ with the aim of forming a freer and fairer society while building on Japan’s achievements thus far.” Specifically, it pointed out that the advances made by Japan’s economy during rapid growth “had created the precious ‘asset’ of economic prosperity, but had also left a legacy of enormous debt, symbolized by a fiscal debt that had swelled to 400 or even 500 trillion yen; that stage is already retreating into the past.” This raised the following issues: “As a result of many years of striving for an industrial society modeled on those of the West, Japan has become enveloped in an array of national regulations, conventions, and practices that have rendered society extremely uniform and rigid”; furthermore, “the steady growth of Japan’s economy has come to an end, and people’s values have diversified as society has matured; thus, the same systems that in the past stimulated people’s will to work hard and invigorated society are today if anything promoting structures of dependence, reinforcing the sense that Japan is a closed society, and impeding the people’s creative will and spirit of challenge.” In short, what was being sought was “a revision of the postwar administrative system [so as to build] autonomous individuals, and a shift to a 21st-century administrative system appropriate for forming a freer and fairer society.”

These critiques of existing conditions led to the establishment of the following goals. “In order to rebuild ‘the way things are done in this country,’ what we need first and foremost is to reform government organizations, which have become excessively large and rigid, and to realize a streamlined, efficient, and transparent government suitable for effectively carrying out important national functions.” The Report thus called for reflection, in line with these goals, as to “whether the bureaucracy was not interfering excessively in various aspects of people’s lives.” “The policies and regulations designed to protect the people’s interest have become increasingly self-referential, with the result that they increasingly defend only the vested interests of certain people, that conflicts and contradictions between different policy objectives are handled internally without transparency, or that resolutions to problems are simply put off.” The Report concluded that in order to rectify this situation, the core of administrative reform must now focus on “the rigidity of the policy planning departments that were bound by the interests and constraints of a given project; inefficient implementation [of policy] that neglected the convenience of the user; the unclear and closed policy-making process and the absence of an evaluative or feedback function; and the failure of the overall adjustment function due to an exclusive and inviolable system of jurisdictions in which ministries and agencies are divided vertically and are not permitted to speak out about areas in other administrative jurisdictions.” The Report recommended that the following mechanisms and characteristics be the goal of reform to build a “21st-century administrative system appropriate for forming a free and fair society”:

First, ensuring a comprehensive and strategic approach. It is absolutely essential to be able to respond quickly to the moment-by-moment changes that sometimes occur in the internal and external environment and to the varied and sometimes contradictory policy issues that arise, to look at the entire picture of domestic and international politics and society, to make comprehensive and strategic judgments about which values to prioritize given the times and the issues at hand, and to make bold decisions on values and plan policy accordingly.

Second, stressing maneuverability. The decision-making process must be speeded up dramatically, first in order to ensure that urgent and national tasks such as crisis management and security are addressed without omissions and second, to prevent, across all government administration, the folly of straying from the policy decision mechanism.

Third, ensuring transparency. Fairness in policy judgments requires transparency regarding decision-making responsibilities. Also, given that this is an era of rapid change, the demand for infallibility, imposed only on government administration, can lead to breakdowns, delays, and postponements of policy decisions. Do the times not require that we change our assumptions, recognize that government administration might err, and adopt a perspective that allows for and promotes constant policy evaluation and change along with free competition on policy matters among the public and the private sectors?

Fourth, pursuing efficiency and simplicity, goals that are both old and new. Psychological theorizing is insufficient to achieve this aim. We need to create a new administrative system in which markets and society can constantly monitor the efficiency of administration and in which efficiency is considered among the most essential tasks.

The Report’s specific prescriptions included the following: (1) a dramatic expansion of the functions of the Prime Minister’s Official Residence and the Cabinet to ensure comprehensive and strategic policy-making, including the planning and proposal of basic policies, and to improve the capacity for comprehensive coordination on important policies; (2) separation of the policy-making and implementation functions and introduction of a reorganized system of mutual recommendations by ministries and agencies divided along functional lines; (3) ensuring transparency, beginning with administration; and (4) improving administrative efficiency—utilizing private-sector capacity through a complete public- and private-sector joint reexamination of projects and through the establishment of a system of independent administrative agencies.

1.2 METI’s “Organization Plan”

A major Central Government Reform was thus implemented in January 2001, reorganizing 22 ministries and agencies into one Cabinet Office and 10 ministries (Ministry of Internal Affairs and Communications; Ministry of Justice; Ministry of Foreign Affairs; Ministry of Finance; Ministry of Education, Culture, Sports, Science and Technology; Ministry of Health, Labour and Welfare; Ministry of Agriculture, Forestry and Fisheries; Ministry of Economy, Trade and Industry (METI); Ministry of Land, Infrastructure, Transport and Tourism (MLIT); Ministry of the Environment) and two agencies (National Public Agency; Defense Agency). The Financial Reconstruction Commission and seven agencies were eliminated (Management and Coordination Agency; Hokkaido Development Agency; Economic Planning Agency; Science and Technology Agency; Environment Agency; Okinawa Development Agency; National Land Agency). Under the 1998 Basic Law on Central Government Reform, Article 21 (“Organization Plan”) for the newly established METI laid out the following aims:

• 1. To promote economic structural reform

• 2. To develop industrial policy based on the following:

  • a. To stop pursuing measures to promote specific industries or redistribute income among industries, or to reduce such practices and shift to policies that respect market principles.

  • b. To focus on interdisciplinary policies such as the formulation and improvement of rules on economic transactions in the market, protection of industrial property rights, and policy-making across industry lines regarding technology development, and to promote the smooth transformation of the industrial structure.

• 3. To actively contribute to the formation of a new international economic order through regional or multilateral frameworks on industrial and trade policy, and to develop measures for international coordination regarding industry.

• 4. To reduce administration designed to protect SMEs or SME organizations, instead strengthening the role of regional bodies and improving the environment to encourage the creation of new industries.

• 5. To strengthen the role of Japan’s regions and to reduce the involvement of the central government in measures to promote regional economies and industries.

• 6. To develop energy policy based on the following:

  • a. a focus on measures for energy conservation and new energy.

  • b. a significant elimination or mitigation of regulations designed to make supply-and-demand adjustments among business operators.

  • c. a strengthening of policies on crisis management and the links with environmental policy.

  • d. a determination of appropriate directions for future nuclear development and use.

• 7. To set government policy priorities regarding technological development.

• 8. With regard to the Economic and Fiscal Policy Advisory Council’s deliberations on basic policy governing the operation of the economy as a whole, to participate as needed for those deliberations in developing plans from the perspective of industrial policy, structural reform of the economy, and the maintenance and strengthening of private sector vitality.

• 9. To assume the functions of the former Ministry of International Trade and Industry on information and communications without any change to the division of functions between it and the Ministry of Posts and Telecommunications.

• 10. The Fair Trade Commission will continue to be responsible for a policy on competition that is centered on antitrust policy, which will not be taken over by the Ministry of Economy, Trade and Industry.

• 11. Regarding technological development through the Large-Scale Project and other programs, the Ministry of Education, Science and Technology will be responsible chiefly for academic research and scientific research, and METI will be responsible chiefly for commercialization and practical applications.

• 12. The Ministry of Education, Science and Technology will be responsible for academic and scientific research on the technological development of nuclear power, and METI will be responsible for areas related to energy use.

• 13. METI will conduct the primary review of regulations to ensure the safety of nuclear power for energy uses, and the Nuclear Safety Commission will carry out the secondary review.

• 14. Reviews will be conducted of the Ministry’s internal organization, such as the sections responsible for promoting specific industries, based on changes in industrial policy.

The major difference between METI and its predecessor, MITI, was found in the fact that “promotion of economic structural reform” headed the list of priorities of the organizational plan. Structural reform of the general economy and of trade and industrial policy was therefore established as a major task of policy. At the same time, in the section on industrial policy that followed, Clause 2, Item (a) called on the Ministry to “stop pursuing measures to promote specific industries or redistribute income among industries, or to reduce the practice, and to shift to policies that respect market principles,” which meant, for example, as cited in Clause 4, “reducing administration designed to protect SMEs or SME organizations.” In other words, industrial policy to address social gaps or terminal care for declining industries was low on the list of METI policy priorities.

Clauses 1–7 set out the main issues in economic and industrial policy, with 60 items in the Law for the Establishment of the Ministry of Economy, Trade and Industry detailing the extent of administrative authority. Clauses 9 and beyond addressed coordination with other ministries and agencies on policies concerning telecommunications, competition, technology, nuclear energy, nuclear energy safety, and so on, but these did not constitute any major change from previous policies. One of the chief concerns of the reform was for the visions and principles pertaining to the economy and society and for structural reform itself to take the information industry fully into account. Given this, the explicit statement that the jurisdictional divisions in telecommunications were to remain unchanged (meaning METI involvement was to be restricted) undeniably represented a certain lack of vision and suggests that the reform was less than comprehensive.

2 Trade and Industrial Policy at the Turn of the Century

2.1 Policy Development in Anticipation of Organizational Reform

Article 21 Paragraph 14 of the Basic Law on Reform of the Central Government Ministries and Agencies called for “ reviews… of the Ministry’s internal organization, such as the sections responsible for promoting specific industries.” This meant seeking the dissolution of the “window guidance” that was so particular a feature of traditional industrial policy. The 1973 organizational reform had already taken this path to some extent, and industrial policy increasingly cut across specific industries with the vertical, industry-specific form of organization seen as inapt for the purpose. Under these circumstances, as repeatedly pointed out above, “market-intervention industrial policy” became less and less the preferred solution to issues from the 1980s on, as the preference became “an approach to policy that respects and promotes the market mechanism.” A typical manifestation of this change was in the relationship with the Japan Fair Trade Commission. Until the high growth period, MITI often conflicted with the FTC over the operation of the Antimonopoly Law; approvals of intra-industry collaboration were regarded as valuable policy measures, and ways were therefore found to establish exemption legislation, administrative guidance, and other measures.

This thinking changed dramatically in the first half of the 1980s, however, to a new emphasis in domestic industrial policy on promoting competition and ceding coordination to the scope of voluntary action by companies. According to the 1978–1983 Industry Stabilization Law (officially the Law on Temporary Measures for Stabilization of Specified Depressed Industries), plants were supposed to be closed and companies merged under publicly authorized rules to address the post-oil crisis issue of structurally depressed industries. The 1983–1988 Structural Improvement Law (Temporary Measures Law for the Structural Adjustment of Specific Industries) that followed, however, took a different approach based on the “Six Yamanaka Principles” presented in its formulation: (1) contraction and revitalization (2) reduced influence on employment and regional economies (3) implementation of comprehensive measures, (4) respect for private-sector autonomy, (5) focus on policies for competition and adherence to open systems, (6) time-limit on policy responses. The new approach stressed due regard for the actual circumstances of the private sector (designating industries based on private-sector applications) rather than regulating imports, and undertaking preliminary negotiation with the FTC but not granting exemptions to application of the Antitrust Law. The last of these represented a major change in the relationship with the Antitrust Law, and policy shifted in the direction of supporting autonomous responses, including corporate mergers, at the company level.

Thus industrial policy came to focus less on industries than on the enterprise system and corporate organization. In the 1990s, direct engagement in advance in corporate mergers and combinations was replaced by “rule-based” policies, meaning the proposal of rules to govern policies on competition (such as reviewing the standards for examining mergers). This was evident in the June 1993 “interim compilation” (based on deliberations of the Industrial Structure Council’s Fundamental Issues Subcommittee), which proposed institutional reform (for example, for pure holding companies, greater flexibility in the labor market, and so on) in its review of Japan’s economic system.

These changes were moreover reinforced by overseas criticism of Japan’s industrial policy, and on the fact that the Japan–US Structural Impediments Initiative (SII) talks in 1989–1990 had attributed the closed nature of Japan’s economy to industrial policy. The trade problems that underlay these changes had, beginning in the late 1970s, pointed to Japan’s responsibility as an “economic superpower,” and Japan’s large trade surplus was henceforth perceived as a problem. Japan and the United States had already seen friction over Japanese textile products, but with friction arising over one sector after another, including steel, semiconductors, and automobiles, measures for resolving the bilateral trade imbalance often took the form of voluntary restraints by Japan. At the same time, countries in Europe and America seeking to export to Japan strongly criticized the Japanese market as “closed,” and demanded market opening and expansion of the import framework not only for manufactured goods but for primary products as well. Various domestic industry regulations that had been singled out as non-tariff barriers were relaxed and amended to comply with shared international rules. Overseas pressure meant that regulatory reforms were implemented first in those sectors involved with trade. Industry relied heavily on exports and therefore put a priority on preventing trade friction; market opening in the mineral and industrial products sectors therefore can be said to have proceeded quite smoothly compared with that of the primary goods sectors. The expansion of regulatory reform into areas unrelated to trade was in line with industry calls for fiscal rebuilding and demands for “small government.”

However, these measures were transient and fundamentally inconsistent, given that voluntary restrictions on exports required policy involvement, on the one hand, while demands were made for minimal policy involvement regarding imports, on the other. Even in trade negotiations, therefore, industrial policy sought to address issues with rules-based approaches—that is, based on rules agreed upon by multiple countries. Regarding unilateral measures taken in the course of bilateral coordination, Japan developed clear arguments to present at the World Trade Organization (WTO) that adhered to the principle of free trade, and took the policy stance, as a principle of trade negotiation, that the scope for government intervention was limited. For example, in the Japan–U.S. Steel negotiations, MITI, in accordance with the December 1991 draft of the international rules for trade negotiations submitted to the GATT Uruguay Round, decided that “the age of voluntary [export] restraints has passed” and refused to extend its VERs on steel exports to the US. Similarly, in the negotiations on automobiles, it rejected the numerical targets requested by the Clinton Administration and finally reached agreement based on its decision to bring the matter to the WTO for a ruling if necessary.

Industrial policy thus shifted to a reliance on the market economy system, and, although later in coming, trade policy, too, began placing a greater emphasis on the market. The fact that this did not remain the ultimate target is touched on briefly at the end of the chapter.

2.2 Changing Policy Targets

The transformation of trade and industry policy not only spread the general idea of relying on market mechanisms, but also changed the nature of traditional policy tasks. An especially great change was seen in the policies on industry location and on SMEs.

Industry location policy, which had sought to correct regional disparities by dispersing factories among different localities, was until the 1980s based on the Comprehensive National Development Plan and similar plans. With industry relocation playing a leading role, the policy aimed to promote regional development through such means as the Law for Accelerating Regional Development Based Upon High-Technology Industrial Complexes (Technopolis Law, 1983), the Law to Promote the Group‐Siting of Designated Types of Business Contributing to Higher Grade Local Industrial Structures (Key Facilities Siting Law, 1988), the Multi‐Polar Pattern National Land Formation Promotion Law (1988), the Law for Comprehensive Development of Regional Core Cities with Relocation of Office–Work Function (Regional Cores Law, 1992), the Office Arcadia Plan, and others. Where the main policy objectives of these measures concerned industrial location in the period of high economic growth, the 1980’s saw plans to form regional cores by advancing the service sector, premised on the 1980s Vision of a shift to a more knowledge-intensive industrial structure.

However, these policy approaches were in large part withdrawn in the latter 1990s. As explained above, Article 5 of METI’s Organization Plan reduced the role of the national government, delegating more and more to regional localities; in 1998, the Technopolis Law and the Key Facilities Siting Law were abolished and the Law for Facilitating the Creation of New Business was established, with support for new venture start-ups by individual business owners and SMEs in mind. Further, in 2001, METI abolished the New Industrial City Construction Promotion Law and the Law on the Promotion of the Development of Special Regions for industrial Development.

These ideas were clarified in the 1997 New Business Creation Promotion Act that replaced the Law on Temporary Measures for Activation of Specific Regional Industrial Agglomerations; in other words, it was spurred by the shift from the concept of conventional “industrial location” to that of “business creation.” The “Law on Establishing Regional Industrial Clusters and Strengthening Them by Promoting Investment and Innovation” (Regional Industrial Revitalization Law), enacted in 2007, represented a distillation of this idea in policy form.

Similarly, the social policy perspective, including that of business and distribution policy, was also reversed with regard to the kind of SMEs referred to in Clause 4 (“reducing administration designed to protect SMEs or SME organizations, strengthening the role of regional bodies, and improving the environment to encourage the creation of new industries).” Regarding the SME sector, where the economic disparity with large companies became a problem in the high growth period, efforts were made to eliminate significant gaps in productivity, corporate income, and wages, and to raise the stability and standard of living of SME owners and their workers, based on the Small and Medium-Sized Enterprise Basic Law of 1963. It was for that purpose that policies to “modernize and upgrade the corporate structure of SMEs” and to “compensate for disadvantages in business activities” were adopted.

However, entering the 1990s, the Large-Scale Retail Stores Law, which was one of the points at issue between Japan and the United States, led to a rethinking of the existing practice of protecting small-scale businesses through restrictions on store openings. Protective measures for SMEs underwent a transformation, as indicated by the Law’s relaxation of restrictions on opening stores and the emphasis on promoting local areas through the concentration of commerce. The Large-Store Law was abolished in 2000, a move that was in accord with the Administrative Reform Council’s recommendation that the government’s “excessive intervention” be ended.

With these changing expectations surrounding SMEs and the SME role, correcting the disparities was no longer the aim of SME policy. Rather, based on hopes for growth potential in the SME sector, the nucleus of policy became to develop an environment in which SMEs would be able to fully exercise that potential. The Basic SME Law revision of 1999 demonstrated this new principle, as expressed in the statement that, “Conducting distinctive business activities in diverse business fields, providing opportunities for diverse employment, and providing opportunities for individuals to demonstrate their abilities and carry out their projects would form the foundation of our economy.” Thus the concepts underlying policy changed, and with the new policy objective of creating “diverse and vibrant SMEs,” the New Business Creation Promotion Law was enacted and the old policy measures were greatly changed.

Even in policy on the textile industry, which had numerous SMEs, the registration system began to shift toward a free-trade structure. MITI, already taking steps to rely on the market economy system and support voluntary activities by companies, abolished the Law on Extraordinary Measures for the Structural Improvement of the Textile Industries (“Textile Industries Law”), replaced it with a revised version, and ultimately abolished that as well in 1999. This constituted the end of industrial adjustment policies targeting the coal and the textile industries, meaning that at the end of the twentieth century, the curtain was falling on measures that had played such a large part in postwar industrial policy.

Industrial technology policies followed a similar trajectory in the withdrawal of central government involvement. Industrial technology policy had leaned increasingly toward basic research since the 1980s, based on the Industrial Science and Technology Agency’s “MITI National Research and Development Program” (“Large-Scale Projects”), and was promoting government-led large-scale projects as measures to secure international competitiveness through the development of original technology. Moreover, promotion of the “Sunshine” and “Moonlight” projects notwithstanding, R&D supported by the central government tended to focus more on basic research. In the late 1990s, however, the creation of new industries assumed greater importance in the face of structural recession, and technological development shifted to projects with more practical applications. The November 1995 Science and Technology Basic Plan, which derived from the Basic Law on Science and Technology (July 1996), called for the strong promotion of R&D in response to social and economic needs, also illustrating the shift to practical research, and greater stress was placed on the role of private research institutions in R&D. Following the Central Government Reform of January 2001, the National Academy of Sciences and Technology was renamed in Japanese and in April that year it changed organizationally as well, becoming the National Institute of Advanced Industrial Science and Technology (AIST).

Industrial policy on the information industry, a main focus of technology development, had originated and developed based on the 1956 Law on Temporary Measures for the Promotion of the Machine Industry (“Machine Industries Law”) and the 1957 Law on Temporary Measures for the Promotion of the Electronics Industry. Around 1990, however, the central issues shifted to the fusion of information management and telecommunications and the development of human resources as the backbone of industry. However, although the new policy issues arising with the information-oriented society often required coordination among ministries and agencies across multiple jurisdictions, the 2001 reorganization of administration did not result in consolidation. As a result, despite growing calls for the creation of an advanced information and telecommunications society, many areas requiring comprehensive policy responses were left to the Cabinet, and the twenty-first century began without the establishment of an apposite strategy.

Meanwhile, the intellectual property system emerged as a key policy issue due to negotiations on intellectual property rights in the GATT Uruguay Round. In order to further harmonize with international systems on the basis of the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), a series of revisions were made that led to the enactment of a new Basic Law on Intellectual Property in 2002. This represented a shift to a new framework.

2.3 Policy Areas Focusing on New Issues

While some policy areas saw disengagement, others had new issues to address. The principle example was environmental issues.

Until the period of high growth, MITI had implemented regulations such as green area ratios for industrial plants, based on the Factory Location Law. This reflected the point of view of environmental conservation. Later efforts included emissions regulations to curb air pollution and regulations on the treatment of industrial waste and other issues. Environmental regulations had a considerable effect, and Japan, once described as “a leader in pollution” became “a leader in pollution control.”

The movement to reduce greenhouse gas emissions bore fruit with Japan’s adoption of the Kyoto Protocol including a six-percent emissions reduction in the 1997 “Third Conference of Parties to the Framework Convention on Climate Change” (Kyoto Conference on the Prevention of Global Warming, COP3). Meanwhile, the Japanese government established a “Basic Law on the Environment” in 1993 and issued a Cabinet Decision on a Basic Environment Plan in 1994. In 1997, the “Environmental Impact Assessment Law” was enacted, and the system for environmental impact assessment, long a concern, was improved and made more consistent. In the process, MITI sought to ensure maximum corporate autonomy on environmental measures, and to ensure that environmental regulation not restrict economic growth. Both these features accordingly became part of policy on the environment. MITI’s policy stance recognized that environmental efforts could become a springboard for economic progress and took a flexible approach to incorporating new policy issues.

Respecting corporate autonomy and seeking to develop administrative approaches reliant on the market economy system, MITI created various legal frameworks for recycling waste products and promoted the recycling of packaging containers, scrap automobiles, and used home appliances. This approach shared features with the shift to a voluntary system concerning industrial safety and represented the basic policy response to newly emerging issues.

The core issues of energy policy had to be redefined in relation to such environmental measures. The electricity industry was liberalized and petroleum industry regulations were relaxed: both cases reflected the expectation that greater freedom in corporate activity would launch a virtuous cycle, and this point of view became a basic feature of production. Hopes were high that the basic aim that had long governed energy policy—namely, securing an abundant and low-cost supply of energy—would be served by introducing a competitive order (because competition would “lower costs”) and by nuclear power generation (because it promised an “abundant” supply of energy). This was crucial because the increased supply of energy resulting from economic growth could not be made compatible with environmental demands for reduced greenhouse gas emissions without reducing fossil-fuel dependency.

METI’s Basic Energy Plan of 2003 was thus based on the Basic Law on Energy Policy. Its three key issues were “ensuring stable supply,” “adapting to the environment,” and “utilizing the market principle.” The Plan stated that METI would “continue to promote [nuclear power generation] as a main power source, premised on ensuring safety,” and announced that it “planned to diversify [Japan’s] energy sources,” including “domestic nuclear energy.” In this way, energy policies were accelerated that included the construction of new nuclear power plants, but a major shift in this policy was forced by the accident at the Fukushima Daiichi Nuclear Power Plant in March 2011.

The basic policy of emphasizing harmonization based on multilateral rules governing trade policy also fluctuated in the early twenty-first century over policies related to Asia-Pacific Economic Cooperation (APEC). This, too, represented a significant change. In particular, given that regional trade liberalization does not always proceed smoothly, participating countries’ interest in free trade agreements (FTAs) signaled the need for different policy approaches than before. At the start of the twenty-first century, Japanese trade policy had to make the shift from a complete commitment to “multilateralism” to the “joint pursuit of bilateral and multilateral agreements.”

3 Conclusion

Konosuke Odaka has pointed out that “from the late 20th to the early 21st century, the policy thinking explored by MITI (later METI) was the question of how to break away from ‘industrialism’ or the focus on industrial growth” (Odaka 2013, p. 572).¹ However, as Odaka himself cautions, it is not appropriate to narrowly interpret MITI’s promotion of leading industries and new industries with growth potential as meaning that industrial “growth” was its “core” concern. The Visions of heavy and chemical industrialization and then of forming a knowledge-intensive industrial structure sought to create an affluent society through structural shifts to more advanced industrial structures, that is, industrial sectors with higher value-added productivity. That is why MITI dealt aggressively with the friction arising in declining industries due to structural change, and why it took social policy needs into account in its measures for the SME sector which might well to be left behind by these changes. In that sense the move beyond “industrialism” was developing at the start of the twenty-first century.

Needless to say, however, the issues facing economic society and economic development have changed with the times, and because of the need to address these issues, the focus of policy, viewed in the near term, has also changed with the times and thus become a mirror reflecting the age. More important, however, is that the policy approaches, and the ideals supporting them, have themselves changed with the times, to a premise of reliance on the market economic system, respect for corporate autonomy, and a universally shared way of thinking that transcends national boundaries.

From the late twentieth into the twenty-first century, international economic society has undergone major structural changes due in large part to rapid growth in Asia. What is required of trade and industrial (or economic and industrial) policy is that it “play the role of effectively formulating the ideas governing macroeconomic policy” and that it “maintain constant attention to the intersections of the macro with the micro, harmonizing them through policy, and also play the important role of maintaining a balance between the domestic economy and its relations with overseas economies.” Those in policy positions have striven to meet these obligations (Odaka 2013, p. 591). As MITI did before it, METI will continue to bear responsibility for responding flexibly to shifts in policy needs and for developing resolutions that address those needs effectively.