Particularistic spending has played a storied role in Japanese politics, but during the last decade of LDP rule, expenditures on roads, bridges, agricultural projects, and the like steadily lost ground to more programmatic outlays on social welfare, science and technology, and public order (but not defense or foreign aid). Prime Minister Koizumi played an important role in this shift, but the trends preceded him and continued under his much weaker successors. The end of the Cold War, increasing foreign investment, and the weakness of the domestic economy probably played mostly minor roles in the decline of particularism. The aging of Japanese society, not least in rural areas, created direct pressure for programmatic spending, while partisan upheaval, the growing share of floating voters, and reforms to the electoral and administrative systems created both an incentive and a greater capacity to redirect attention to the concerns of median voters.
Negotiations for China's accession to the WTO provoked a debate between pessimists who believed that opening the economy would lead to a flood of imports and a de-nationalization of manufacturing industry, and those who believed that it would spur rationalization of state-owned enterprises, lock in domestic reforms, attract foreign investment, and open the way for trade expansion. The industry most frequently mentioned as endangered was motor vehicles, where an awkward combination of Stalinist central planning with localized autarky had resulted in a proliferation of inefficient producers. With the partial exception of two investments by Volkswagen, initial joint ventures in assembly operations failed miserably. China's commitments on joining the WTO banned (or at least complicated) many of the most important industrial policy tools it had used to promote the auto industry since the opening to joint ventures in the early 1980s'including performance requirements, high tariffs, and numerical quotas. After accession in 2001, tariffs fell steadily while output and foreign investment soared. The Chinese government moved towards a lighter-handed but more effective form of industrial policy that reduced top-down planning while expanding market incentives and scope for managerial freedom. Rather than destroying industrial policy for the auto industry, WTO accession constrained and disciplined it. When foreign auto firms and their governments pushed for more aggressive protection of trademarks and other intellectual property rights under the WTO, the Chinese government initially stalled. Continuing pressure then tilted the balance of state policy toward promotion of independent design, whether by state-owned enterprises testing the boundaries of their joint ventures with foreign multinationals, or by audacious smaller firms purchasing foreign designs and technology to complement inexpensive local parts and assembly, thereby creating the conditions for the emergence of a more competitive industry.
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