Industrial Policy in the 21st Century: The Case of Japan

Japan was widely perceived as a prime example of a successful industrial policy during the post-war period of high growth. It seemed to be a powerful alternative to the free-market thinking of Reagan and Thatcher. But the myth of the ‘almighty MITI’ – the Ministry of International Trade and Industry – faded in the 1990s when Japan had to rapidly adapt to the challenges of globalization and digitalization.

MITI’s industrial policy proved to be largely ineffective as the most protected industries lost global competitiveness and the focus of industrial policy shifted from ‘picking winners’ – companies and sectors – to a cross-sectoral approach focused on nurturing innovation and financing through government banks and public-private funds.

The presentation will look at Japan’s industrial policy in a global context, based on a qualitative and quantitative analysis of policy instruments and sectors. A case study will examine whether industrial policy can be effective in turning domestically oriented mid-sized companies into world-class ‘Hidden Champions.’

Dr. Stefan Lippert is Professor in International Business at Temple University, Japan Campus, where he teaches corporate strategy and organization. He has held academic positions in Japan and abroad, including Nagoya University of Commerce and Business, Hitotsubashi University, University of Tsukuba, and Harvard University. His research interests include the internationalization of Japanese and Asian firms, especially the ‘Hidden Champions,’ and the effectiveness of government intervention. In his consulting work, he advises Japanese and international companies primarily on strategy, organizational transformation and cross-border M&A.