An analysis of the performance of Japan's economic and political institutions from late 1970s to 2007. The authors explain how Japan's flawed response to new economic, political, and technological forces ushered in a lost decade and a half of economic development from 1990. Impressive economic performance in the 1980s masked an 'accident waiting to happen' - the collapse in equity and real estate prices in 1990-91. Japan's iron triangle of politicians, bureaucrats, and client industries, combined with a flawed financial liberalization process and policy errors by the Bank of Japan and the Ministry of Finance, brought Japan to an abyss of deflation, recession, and insolvency by the late 1990s. The turning point was the election of Koizumi as prime minister in 2001. The book explores Koizumi's economic reform, new developments in socioeconomic conditions, the politics and economy after Koizumi, and the economic and political challenges facing Japan in the new century.