Does the Financial Economy Support the Productive Economy? Kenji E. Kushida Shorenstein Asia-Pacific Research Center Stanford University 7/30/2015 0

- 1 - Syncretism: New, Traditional, and Hybrid Japan’s syncretic political economy: the coexistence of new, traditional, and hybrid areas. New = Startups, portion of finance that resembles Wall Street (investment banks, securities firms, some kinds of insurers), private equity, hedge funds, etc. Startup ecosystem: plenty of money, not enough Venture Capitalists capable of investing like Silicon Valley VCs. (their investments often look like loans, they are usually not previously entrepreneurs, limited interpersonal networks, etc.)

- 2 - Syncretism: New, Traditional, and Hybrid Traditional: local banks, local SMEs, etc. Historical patterns of political pork? Not a clear departure into financialized model, but mostly not a growth engine. Hybrid: large manufacturers, financial groups, and many medium-sized firms. Q= share buybacks?  some, but not like US Q= shares tied to executive compensation/bonuses?  levels far lower than US, still relatively little cross-firm executive hiring Q= declining R&D?  yes, but not decimated like US model Q= core competitive problems? Commoditization and lack of IT investment towards strategic, productivity-enhancing uses