From Growth Superstar to Economic Underachiever: The Role of Trade in Japan's Sagging Fortunes

Japan is a case of "success that soured.">sup>1>/sup> While Japan was a miracle economy during the high-growth era, the miracle ran out of juice more than twenty years ago. A twenty-three-country regression using a "conditional convergence" model shows that, in 1960-70, Japan achieved 8.4 percent annual growth in real gross domestic product (GDP) per worker, far above a model projection of 7.0 percent. In 1973-90, by contrast, Japan's growth was only 3.0 percent, far below the model projection of 4.3 percent. A Japan dummy is sizable and significant in both cases.