Revue Algérienne des Sciences Juridiques et Politiques
Volume 62, Numéro 3, Pages 265-279
2025-09-28
The Parallel Economy In Japan: An Analytical Study Of The Impact Of The Liberal Democratic Party's Trends On Shaping The State's Economic Policy
Authors : Hani Mohamed . Badawi Habib . Louahab Ouahiba .
Abstract
This study examines Japan's "parallel economy of power" - the enduring system of factional politics within the Liberal Democratic Party (LDP) that operates alongside formal institutions to shape economic policy outcomes. Through analysis of leadership transitions, tax reforms, and heated tobacco product (HTP) taxation, we reveal how this shadow system of factional bargaining distorts policy implementation. While formal democratic processes persist, the LDP's internal economy of political capital exchange (where cabinet posts, pork-barrel spending, and regulatory favors are traded) consistently overrides technocratic decision-making. Drawing on institutional theory and policy network analysis, we demonstrate how this parallel power structure exacerbates Japan's key economic challenges - from regressive tax compromises to stalled structural reforms. The findings illuminate how informal political economies persist within advanced democracies, with implications for nations experiencing prolonged single-party dominance.
Keywords
Parallel Power Economy ; Factionalism ; Informal Institutions ; Liberal Democratic Party ; Economic Policy-Making ; Institutional Theory ; Tax Reform ; Japan
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