The Secret History of the Politics of Public Spending in Japan

By

09-03-13 Park 009

Japan’s meteoric economic rise from the end of World War II through the 1980s and then its rapid descent into economic stagnation is one of the greatest reversals of economic fortunes among the industrialized democracies. Japan’s public finances followed a similar arc, with Japan, a former model of fiscal discipline and restrained spending, becoming virtually synonymous with wasteful pork barrel spending. Yet this widely accepted view of Japan ignores a simple but critical fact: Japanese spending remains low despite ballooning budget deficits.

This presentation explains this puzzle by focusing on a poorly understood yet massive government-run financial system called the Fiscal Investment Loan Program (FILP). FILP, not only provided the ruling party a second shadow budget, it allowed the party to build a powerful and long lasting political coalition that helped it stay in power.

Online Notes

Author Bio

Gene Park teaches courses on East Asian politics and political economy. He is currently completing a research project on the politics of government finance in Japan. His research interests include the comparative political economy of East Asian states and advanced industrial democracies. His work has appeared in the journals Governance and Asian Survey, and he co-authored an article for the edited volume, The State after Statism (Harvard University Press). Gene received his Ph.D. in Political Science from University of California, Berkeley in 2007. He is also he recipient of a Fulbright scholarship. He has been a visiting scholar at the Japanese Ministry of Finance and a Research Fellow at Stanford University¹s Asia-Pacific Research Center.