4 The Japanese electronics industry in the context of domestic and global challenges

Both the Japanese economy as a whole and the country's electronics industry enjoyed immense success during most of the postwar period. However, with the collapse of the asset bubble that had developed during the second half of the 1980s, the fortunes turned: the 1990s were characterized by minimal growth or outright recession — the result of a mixture of deep-seated structural problems and inadequate economic policies. In fact, the entire Japanese way of doing business and steering the economy has come under intense criticism and many facets that were once considered as clear competitive advantages have now come to be viewed as impediments. In the words of one observer, the economic system that had driven Japan's success has ‘soured’ (Katz 1998).