Abstract

During the Nineties and in recent years the prolonged stagnation of the Japanese economy and the weakness of its financial sector have greatly affected the performance and the competitiveness of Japan's industry. This paper examines how industries and firms have reacted to the challenges posed by new economic conditions at home and abroad. In the first part of the paper, the attention is focused on the dual structure of the Japanese industry, i.e., the co-existence of competitive, deregulated and financially sound sectors with low-productivity, protected and financially weak ones. In the second and third part the issues related to the transfer abroad of manufacturing activities and the undergoing change in the labour market are discussed. Finally, the future prospects of the Japanese industry are discussed on the basis of recent data regarding research and development activities.