Rejoinder to Shapira. (response to Philip Shapira in this issue, p. 522)

Phil Shapira's comments on our article can be grouped into four main theses. We offer a brief rejoinder to each one.

THE STAGNATION THESIS

Japan's developmental state is less effective than we make it out to be. The economy has stagnated since the burst of the financial bubble in the early 1990s; joblessness is at a postwar high; and the state's capacity to guide corporate behavior has considerably diminished.

Response

Western reports of Japan's economic malaise are greatly exaggerated. To be sure, economic growth since 1992 has been much slower than what the Japanese are accustomed to, but Japan's gross domestic product has grown in every year since the bubble burst. Technically, Japan has not experienced an economic recession, let alone a crisis. Unemployment went above 3.0% in 1995, the first time in 40 years, but that was only about half the U.S. level and less than one-third European rates …