The role of industrial policy: Japan’s experience

Vol. 15 No. 1 (1995)

Jan-Mar / 1995
Published January 1, 1995

How to Cite

Kagami, Mitsuhiro. 1995. “The Role of Industrial Policy: Japan’s Experience”. Brazilian Journal of Political Economy 15 (1):121-36.

The role of industrial policy: Japan’s experience

Mitsuhiro Kagami
Institute of Developing Economies, Tóquio, Japão.
Brazilian Journal of Political Economy, Vol. 15 No. 1 (1995), Jan-Mar / 1995, Pages 121-136


There are two views on “industrial policy”, negative and positive. Negative
views say the market mechanism is the best way to allocate resources efficiently. Thus, government
policy with preferential treatment for a specific industry hinders this market force
and leads to a misallocation of resources. On the other hand, positive views say that state
intervention is necessary since market forces sometimes fail to allocate resources efficiently.
Broadly speaking, this is an issue on relationships between the state and the market, or to
what extent we can rely on the “invisible hand” of Adam Smith.

JEL Classification: L60; L52; N15.

Keywords: Industrial policy economic development market failure economic history of Japan