Note to reader: This article, originally published by the Keizai Koho Center (KKC) – Japan Institute for Social & Economic Affairs – was a requirement for participation in the 1999 Study Tour of Japan.  The article has since been edited and updated for purposes of readability, comprehension, and relevance. 

The 15 KKC Fellows of 1999 were selected from applicants across the US, UK, Canada, and Australia.  We had the opportunity to meet with government officials, industrial, professional and academic leaders, and visited schools and cultural facilities.  I took back home with me a great deal of new knowledge of Japan to integrate in to my East Asian Studies course.  It was a great honor and pleasure to experience a KKC study tour.

1990: Teaching U. S. – Japan Trade Relations:

In 1990, declining international competitiveness was the major U. S. economic problem.  It contributed to:

  • Mounting trade deficits
  • Deterioration in America’s core industries – steel, autos, machine tools, consumer electronics, cameras
  • Low economic growth rates and stagnation in living standards
  • Stormy political and economic relations with Japan.

These national concerns influenced the instructional aims of teaching the important economic relationship between America and Japan to secondary level, social studies students. 

  • Economics teachers, reflecting the time, wrote educational objectives into their lesson plans that examined if the Japanese economy was outperforming our own
  • Japan’s extraordinary penetration of U. S. and global markets during the 1980’s concerned many of my Northside and later North Atlanta High School students
  • Some students expressed views in class that the Japanese were beyond merely a formidable economic competitor nation – the Japanese world-wide economic expansion was perceived as predatory   
  • It appeared to these students that Japan was targeting one American industry after another until they achieved dominant market share in each.

A common approach for beginning a lesson on the trade deficit was to present a popular editorial cartoon theme of the period: The format routinely featured a tense Uncle Sam figure facing off against a sturdy Japanese sumo wrestler.  After the motivation, teachers guided students to understand causes of the trade deficit in structural terms based on widely believed generalizations:

  • The Japanese saved 15 – 20% of their incomes – Americans saved 3 to 5%  in comparison
  • Japanese business practices focused on growing market share through long term planning and investment strategies – U. S. business tended to focus on short-term profits and under-invest over the long term
  • Japanese eighth grades could out-compute U. S. college freshmen – American schools were failing to prepare their graduates with the skills necessary to compete in the global economy
  • Japanese practice of lifetime employment and seniority resulted in greater worker loyalty and productivity – American workers lived with insecurities of unemployment and a changing labor market
  • Japan’s (MITI) Ministry of Industry and Trade’s guidance of the investment-driven economy appeared to be a more effective approach for penetrating foreign markets than the less regulated U. S. market-oriented model. 

Changes in Japan 1990 – 2000 and updated to 2013:

Japan was in recession during the 1990’s, and has been more or less for the past twenty years.  In the past two years, Japan has registered slight growth rates in several quarters.  Japan’s industrial economy has been hollowed out by China’s price advantage and Korea’s competitiveness.  The Japanese downturn was caused by:

  • Mounting corporate bankruptcies and debt (stemming from the bubble economy)
  • Slumping foreign and domestic demand for electronics
  • Slimmer corporate profit margins and growing losses
  • Disastrous overseas investments – drastically overpaid for prestigious trophy real estate (prestigious buildings, famous golf courses, etc.), Hollywood movie studios
  • 1997 Asian economic meltdowns in Thailand, Indonesia, and South Korea affected Japan far less severely
  • Harsh IMF restrictions to reform “crony capitalism” in Thailand, Indonesia, and South Korea retarded Japanese recovery.

Furthermore, America dominated the computer electronics race during the 1990’s:

  • Microsoft developed the software that drove 90% of the world’s computers
  • Intel dominated the micro-processor  market with its intelligent chips
  • Digital electronic devices became increasingly connected to American computers, software, and internet startups; example – Apple (Mac, I-Pad, I-Phone, I-Pod, I-Tunes, etc.)

The vaunted Japanese economic model that produced the growth miracles of the 1970’s and 1980’s has been re-examined by the government – a new direction is to teach knowledge and skill sets needed for moving away from an industrial society to a hi-tech service economy.

The Japanese school system is still admired for its successes in many subject areas, mostly for its overall efficiency and comprehensiveness.  The Ministry of Education has been challenged by many to develop students more eager to solve problems intuitively and to take risks.  The government is encouraging young people to choose careers in entrepreneurship, high value commerce and trade, and internet startups

The role of MITI in the economy, focusing on its patterns of regulation and its views on market allocation, was questioned. Reforms such as limited deregulation, opening of restricted markets – are being attempted.  

Current challenges in teaching U. S. – Japan trade relationship and the rise of China:

As a result of these new perceptions, the challenge of teaching the U. S. – Japan economic relationship has increased in complexity.  In 1990, social studies teachers engaged students with questions inquiring if maybe the U. S. should borrow ideas from the Japanese economic model.  By 2000, China’s eclipse of Japan in the consumer electronics industry forced new questions to be asked by teachers:

  • Will Japan’s economy ever pull out of the near two decade-long recession and start growing rapidly again?
  • Japan is dominated by U.S. edge in software, microprocessors, electronic commerce markets – how can it ever catch up?  Has Japan accepted U. S., Chinese, and Korean dominance in consumer electronics?
  • Japan is aging rapidly and badly needs economic growth – is another economic take-off through expansion of exports realistic? 
  • If not, what steps should Japan take to reform its economy and stimulate the growth needed for recovery when it, too, is producing increasing amounts of goods in China and other lower wage nations?
  • Why and how is the Japanese educational system linked to the nation’s problems?
  • What educational reforms have been proposed that will increase personal initiative and enhance creativity and problem-solving skills?
  • Are there any consequences to the U. S. economy if the Japanese economy, now the third largest, should slip further into recession?

Proposed solutions to Japan’s problems?

Japan traces its current crisis to the 1985 Plaza Accord that raised the value of the yen currency:

  • Government increased the yen’s value 10% making exports more expensive to hopefully re-balance the yen and dollar as trading currencies
  • Exports continued to boom, profits surged, the value of tangible assets shot up, people felt very wealthy.
  • Investors poured trillions of yen into property acquisitions that inflated land and stock values to bubble levels – example: Emperor’s palace value and surrounding park land was equal to California’s total assets at bubble height
  • Stock market zoomed upward,  investors sat on shares, millions of investors leveraged additional property and stock market purchases from assumed increased value of dramatically inflated assets 
  • Government policies that provided near-zero interest rates fueled the boom, also protected big banks from letting companies go bankrupt when the bubble burst, nor writing off bad loans from books to reflect real balance sheet value.     

The aim of the 1985 Plaza accord was to recommend structural changes for Japan that were designed to reduce the trade deficit between the two countries.  In the 1990’s U. S. recommendations focused more on Japan serving as the economic engine that would pull Asia out of the doldrums caused by the 1997 crisis that swept East Asia.  The U. S. urged Japan to employ more ambitious economic stimulus packages to spark economic growth.  A result is that
the national deficit, proportional to the economy, has become one of the highest in the world.

According to Richard Katz, Japan suffered from an over-regulated, dual economy that protected inefficient producers at the expense of star performers.  Katz argued that Japan mistakenly stayed the course in trying to export its way out of the recession instead of boosting consumer demand to internally stimulate the economy, a policy Katz claims to be better-suited to an advanced industrial state.    

Proposed Japanese reforms for business and the economy:

The Japanese government has currently resorted to radically doubling the money supply – the aim is to lower the value of the yen to make Japanese goods more price competitive, stimulate internal demand too. Some economists are calling this strategy risky and predict it will end badly with prices and wages inflated and foreign and domestic demand still flat. 

Japan is considerably less visible on Americans radar who now increasingly view China as the new leader of Asia.  Americans are also focused on their own countries economic difficulties – the mortgage backed security bonds caused a similar bubble that burst in 2008 – the U.S. economy is still slowly reviving.  Perhaps four auto companies – Toyota, Honda, Nissan, Mazda (one-third Ford owned) that continue to sell very well is a sign that Japan’s influence on the U. S. economy and markets has weakened.  

In recent years, Japan’s Economic Strategy Council has taken two big steps to recovery:

  • Alleviated the banking system’s bad debt balances and promoted urban and environmental development
  • Limited de-regulation of the marketplace to spur competition, reform the antiquated distribution system and financial services industries.

Rise of China:

China’s large population and low wages propelled the country past Japan 2000 – 2013 to become the world’s second largest economy.  Similar trade deficit problems have occurred between the U. S. and China – economists have identified the causes which remarkably reflect the former solutions to balancing the trade deficit with Japan.  (See above reasons 1 – 5, lesson on trade deficit.)  However, China’s economic take off has been based more on available low wage labor supply than Japanese efficiency (Just in Time and Zero Defects Manufacturing best practices).  

  • As China gets wealthier and ages, will it repeat the Japanese experience – industry hollows out as manufacturers migrate to lower wage nations?
  • Can China get wealthy before it ages?  If not, what are the consequences for the nation struggling to create a social safety net for 1.3 billion people – if it falls short?

Proposed reforms for Japanese educational system:

Japan’s post-World War II national development strategy emphasized development of a mass, credential-based education system to promote social equality and a trained labor force.  One result of this overall successful mass education system was powerful social conformity that, according to educational theorists, stifled creative thinking.  The Economic Strategy Council responded by proposing a remedy of more varied selection of schools for students to attend.  The Ministry of Education issued reforms but they have been slow in coming and challenging to implement at the local level. 

For example, the KKC Fellows, while in Hiroshima, met with Mr. Tadahiko Hasegawa.  The former Director and General Manager of Mazda Motors informed the group of social studies educators that his company needs workers who are better at solving problems and taking risks to pioneer innovations.  I asked; “Are you also referring to creativity?”  Mr. Hasegawa answered; “In a word – yes.” 

The shortage of workers entering the labor force persists – the population is aging more rapidly than any other nation in history.  Japan’s low birth rate and unwillingness to increase admission of foreign workers through immigration intensifies the problem.  

The next day, KKC Fellows visited the highly rated Misuzugaoka High School to observe the faculty teaching students.  According to the Principal Yoshiteru Osaka, overall high test scores, family income, the quality of facility and grounds, and school’s location reflected a solidly middle to upper middle class level.  KKC Fellows consensus observed:

  •  Misuzugaoka teachers were enthusiastic, knowledgeable, resourceful, and engaging 
  • The students appeared very obedient and responsive to instruction, but also a bit shy  
  • Students did not ask questions, nor were they prompted to

Social studies teachers, for forty minutes essentially lectured – they broke the stream of knowledge up by distributing a handout with a factoid / quote / picture / application to real life, and / or utilized visual projections of other key facts and images on a screen.  They were both observed in the last five minutes employing a lesson-summarizing question that guided students to their desired conclusion through prompting a chorus verbal response.  The summary questions employed were the teacher’s “interactive component”.

Mr. Osaka provided a nice reception for the KKC Fellows and the school’s Social Studies Department staff.  A Fellow asked Mr. Osaka if there were plans to reform the rote teaching style with more innovative methodologies.  Mr. Osaka, understanding the need for change, yet reluctant to alter a system that had won widespread recognition for the high scores of its students on college entrance examinations, gave a great deal of thought to his reply.  The KKC Fellows and department staff, charged by the question, leaned in and awaited Mr. Osaka’s answer.  Finally, he said while stroking his chin with his right hand; “It might be difficult.” 

Mr. Osaka felt fortunate to describe teenaged rebellion at Misuzugoaka as manifested in wearing non-uniform socks and coloring hair.  Classroom disorder, while mild by western standards, has been increasing in Japan too.  Some Japanese educators blame the disorder on increased individualism attributed to the “innovative western methodologies” they feel are being forced on them.  In the meantime, the educational destinies of Japanese secondary students ride on the outcomes of college entrance examinations.

One reform has been to begin factoring in to the selection process additional college admissions criteria such as grades, school involvement, and special achievements while de-emphasizing the entrance exam to the importance level of the Standardized Achievement Test (SAT) in the United States.  Proposed reforms include:

  • Introduction of alternative instructional approaches such as discussion, collaborative learning, student presentations, special projects, and hands-on experiences.
  • Application of innovative approaches and programs that will help Japan retool its educational infrastructure into a more relevant mirror of society and work. 

But those reforms may be slow in coming and “might be difficult” to implement. 



The Economist.  “Japan’s Growth Companies.” June 26, 1999, 71-72

Ellington, Lucien.  “Japanese – US Economic Relations: Perceptions and Reality.” Social Education, November / December 1991, 439-444.

General Affairs Division, Hiroshima Municipal Board of Education, Education in Hiroshima City, Hiroshima, Japan: General Affairs Division, Hiroshima Municipal Board of Education, November 39, 1998.

Hasegawa, Tadahiko.  Director and General Manager, Mazda Motor Co.  Interview with author and KKC Fellows.  Mazda Motor Factory, Hiroshima, Japan, June 39, 1999

Imai, Takashi. “Japanese and Asian Economies Recovering Together.” Keizai Koho Occasional Paper Series 8 (January 1999)

Japan: Opportunities and Challenges, Washington, D. C.:  Keizai Koho Center, 1997, video tape

Japan Times. “Panel Urges Government to Promote Competition.” Japan Times, July 11, 1999

Katz, Richard.  Japan, the System that Sourced: The Rise and Fall of the Japanese Economic Miracle. Armonk, NY: M. E. Sharpe, Inc. 1998

Kawanishi, Yuko.  “New Perspective Needed on Classroom Chaos.” Asahi Evening News, June 20, 1999

Landers, Peter.  “Japan’s Climate for Business Said to Improve.” The Asian Wall Street Journal, July 6, 1999

Mainichi Daily Times. “Lifetime Employment System Likely to Change.” Mainichi Daily Times, July 3, 1998

Ministry of Education, Science, Sports, and Culture.  School Education. Tokyo: Ministry of Education, Science, Sports, and Culture, 1998

Osaka, Yoshiteru, Principal, Misuzugaoka High School.  Interview with author and Keizai Koho Center Fellows Ronald Byrnes, Edward Consolati, Graham Williams, Anthony Breslin, and Ted Hartsoe.  Misuzugaoka High School, Hiroshima, Japan, July 1, 1999

Reischauer, Edwin O. and Marius B. Jansen.  The Japanese Today: Change and Continuity. Cambridge, MA: Harvard University Press, 1995

Yoshikatsu, Takahashi. “Scenarios for Economic Recovery.” Look Japan, May 1999, 16 – 17