The government repeatedly used public works programmes, hoping they would boost spending and generate a virtuous spiral of rising incomes. The economy does appear to be growing now. But it is not very strong, and there are real doubts about whether this will be any different from previous false dawns. On Friday Japan's Economic Planning Agency warned that after six months of growth, the economy was likely to face another six months of stagnation. The traditional methods of stimulating the economy have not worked.
Many economists think that what Japan needs is a heavy dose of deregulation and competition.
There has been some movement, notably the reforms of the financial markets in 1996. But the issue is the key division between the Prime Minister Mori and his opponents within his own Liberal Democratic Party, led by Koichi Kato and Taku Yamasaki, who want these market based reforms to move much more quickly. The problem is there are entrenched interests within business and the political establishment who don't. Much of East Asia has been watching economic developments in Japan for years, particularly since the financial crisis of 1997, hoping that a resurgent Japan would be able to help the region's recovery. In fact there has been a recovery which owes more to the United States.