Economic Ideology and Japanese Industrial Policy

During the Great Depression and World War II, the ideology of developmentalism--characterized by a nationalistic perspective, a production orientation, and a strategic view of the economy, including restraint of market competition and rejection of the profit principle--emerged and strongly influenced policy innovation in Japan and institutional reforms in its economy. Liberal capitalism in the postwar era eliminated the military nature of the Japanese economy, and forced developmentalism to adapt to democratic political institutions and the free trade regime.