The Role of the Japanese Economy in a Changing Western World

The framework of the world economy today is being affected by the occurrence of a number of great changes, and I believe it is possible to identify three fundamental trends that characterize these changes. Firstly, the progressive globalization of economic activity and the relative decline in the status of the United States are causing a shift in the world economic order: US economic leadership is giving way to a system supported by coordination and solidarity among the leading industrial nations. Secondly, the progress of technological innovation, which has been described as a third industrial revolution, is changing the pattern of industry away from mass production and mass consumption towards diversified production and diversified consumption. Thirdly, while the industrialized nations are exposed to the dangers of protectionism, they are continuing to seek out a new dimension for the free-trade system.