There were several reasons why industry policy worked to some extent in postwar
Japan: First, Japanese firms had been accustomed to direct government control and
market intervention since the war period so that they exhibited a degree of obedience;
second, tight foreign currency management provided a strong leverage for MITI’s
initiatives at least in the 1940s and 1950s. And third, people were still concerned over
hosting FDI so that the fostering of indigenous firms and entrepreneurs was taken for
granted. Japan had actually been more open to multinational enterprises in the 1910s
and 1920s than in the postwar period. These conditions are widely different from those existing today in the LDCs. We should, therefore, be careful in drawing direct lessons
from the Japanese experience.