Japan's Fiscal Crisis The Ministry of Finance and the Politics of Public Spending, 1975-2000

by Wright, Maurice

• ISBN13: 9780199250530
• ISBN10: 0199250537
• Format: Hardcover
• Copyright: 2002-05-23
• Publisher: Oxford University Press

Summary

This controversial and authoritative account of budget-making and budgetary politics, the author traces the origins and development of Japan's present crisis. In a detailed analysis of the institutions, structures, and processes of central government, the author explains how decisions weremade about how much to spend and on what in the central budget and the Fiscal and Investment Loan Programme - the so-called 'second budget'. Wright shows who and what won and lost and why, explains the informal policy and behavioral rules-of-the-game by which the conduct of the main players wasregulated, and compares Japan's fiscal performance with the UK and other G7 countries.It challenges the orthodoxy that a dominant and dominating Ministry of Finance (MOF) implemented tough policies of retrenchment in the 1980s. The appearance of fiscal discipline was not matched by the reality of too much spending, too few revenues, and heavy borrowing. MOF not only failed torestore a balanced budget, it was unable to achieve most of its short and long-term fiscal objectives during the last quarter of the 20th Century. Unravelling the complexity and opacity of the budgetary system, the author shows how MOF officials exploited it to foster an illusion of control. Through adroit manipulation of off-budget sources, and by fiscal sleight-of-hand, MOF was able to deliver an expanding supply of budget benefits to theruling Liberal Democratic party, and the means to finance the growth and maintenance of a 'Public Works State'.

Table of Contents

Introduction

The Origins of the Fiscal Crisis

The Context of Japanese Budgeting

The Politico-Economic Context

Administrative Reform

Politicians and Bureaucrats in the Policy-making Processes

Institutions, Structures and Actors

The Spending Ministries and Agencies

Ministerial Autonomy and Territorial Boundaries: Co-ordination, Competition and Conflict in the Policy-making Processes

The Ministry of Finance

MOF's Elite Administrators

The LDP's Policy-making Structures

Budget Institutions and Structures

The 'Second Budget': The Fiscal Investment Loan Programme

Interactions

Budget Objectives and Policies

Economic Forecasts and Fiscal Projections

Budget Strategy, Guidelines and Ceilings

The Budget Processes in the Spending Ministries

The Budget Bureau's Hearings, Examination and Negotiations

Rules-of-the-Game: Managing Relations with the Spending Ministries

Making the FILP Budget

The Role and Influence of the LDP in the Budgetary Processes

The Outputs of the Budgetary Processes

Who Wins, Who Loses?

Cuts and Squeezes in the Bureaucracy

A 'Public Works State'

Winning and Losing in the FILP Budget

Effects and Effectiveness

Fiscal Reconstruction: 'Smoke and Mirrors'

Deficits and Debts

Japan's Fiscal Performance in an International Context

FILP Under Stress

Coping with Fiscal Stress

Budget Institutions, Deficits and Debts

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