After defeat in the Second World War, Japan achieved an economic miracle in the 1960s. Japan also maintained relatively high economic growth in the 1970s despite two oil crises while other industrialized countries such as the United States and major European countries suffered from economic stagnation. Japan even began to threaten the dominant position of the US in the world economy during the 1980s and the Japanese economy was almost unstoppable during the bubble economy in the late 1980s. However, the Japanese economy suddenly decelerated after the collapse of the bubble economy in the early 1990s, when Japan's average stock price (Nikkei 225 Stock Price Index) dropped sharply from its highest point of around ¥40,000 to a low point of less than ¥20,000 in only a few years. Since then, Japan's economic growth has remained low and stagnant most of the time. In 2010, Japan was surpassed by China in terms of GDP size, and today the Chinese economy is more than twice the size of Japan’s. The Japanese economy has experienced dramatic change, and the key turning point was the collapse of the bubble economy.

Although the change was dramatic and significant, the Japanese economy has also continued to maintain some of its core characteristics. Some of these originated a long time ago, such as its economic nationalism, which originated with the opening-up of an isolated Japan by western powers in the late Edo period. The government promoted industrialization since the Meiji Restoration in 1868 to survive the era of imperialism, with the privatization of some economic industries following later. However, the military government began to intervene in the economy extensively in the 1930s and it is during this period up to the end of the Second World War that Japan's quintessential economic characteristics, such as government–business collaboration led by economic bureaucrats, was institutionalized. With some significant transformation, a close government–business or state–market relationship still characterizes the Japanese economy. In this sense, an analysis from a political perspective is essential for examining and understanding the Japanese economy.