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Potential innovators of Japan are discussed.

Japan's economy is beginning to show signs of sustainable growth after enduring four years of stagnation. The country's stock market has increased 50% over 1995 levels and corporate pretax profits increased by 23% in the fiscal year ending in Mar 1996. The economy's recovery has been assisted by a decline in the dollar value of the yen and record low interest rates from Japan's central bank. Japanese companies that shifted large amounts of manufacturing to other parts of Asia have enjoyed increased profitability.

Japan's trade surplus has dropped significantly because of the high yen, international pressure, changes in demand, and an increase in imports of products made abroad by Japanese-owned businesses. The high yen makes imports cheaper. As a result, consumers are buying imported products such as food, clothing, and CDs. For many years, countries such as the US have put pressure on Japan to import more products. Japanese car and electronic companies are also finding it profitable to import goods produced in their overseas factories.

The reasons for foreign direct investment accounting for only 2% of gross domestic product in Japan are discussed. Examples are examined.

There is now growing confidence that the Japanese economy is beginning to experience a revival. Most economists believe that the country will achieve economic growth of around 3% in 1996 and around 2% in 1997. The government's stimulus package provided the initial impetus for turning the economy around, and growth is now being fuelled by record low interest rates. Around one million new jobs have been created during 1996, partly as a result of the relaxation of employment regulations.

Japan's economy in 2001 was disappointing as it has been over he past decade. Because of the bad-loan crisis, bans are not functioning properly as the main funnels of cash to businesses.

Japan's economic recovery remains modest despite the freakish 12.7% growth rate reported for the first quarter, with the labor market crucial to any sustained recovery. The Bank of Japan quieted fears of an interest-rate hike with a report calling for a monetary policy aimed at helping the recovery. Unemployment remains at a post-WWII high of 3.5%, with companies that failed to lay off workers when the recession hit now reluctant to hire more as it ends. Only that, however, will boost consumer confidence and spending.

Nikon restructured its operations during Japan's recent economic slump and has emerged as a stronger global competitor. The company renowned for its quality cameras is now primarily a manufacturer of sophisticated machines need to produce microchips called 'steppers'. These machines are used to etch circuits on computer chips and prices begin at $2.5 million each. Nikon has been moving more production of its cameras overseas and will eventually only manufacture its high-end models in Japan.

The social atmosphere of many Japanese corporations remains stifling at a time when many managers need to encourage creative thinking and productivity. Young white-collar male college graduates are discontent and one 1995 survey indicated that 57% between the ages of 20 and 24 planned to switch jobs. Some workplaces have become more conservative as employees worry about job security and fear 'restructuring' as a euphemism for layoffs.