Introduction

The contributions of Leontief's input-output analysis to economic theory are discussed by many others in this volume. So, I focus, instead, upon applied aspects and the policy implications of his theory. In particular, I emphasize the role and impacts of his model in Japanese national economic policy and development planning in terms of macroeconomic and industry structural changes since the mid-1950s. While regional inputoutput models also have been widely used for regional development issues by Japan's local governments and related institutions, I shall touch on them only in the context of national development policy. Although national input-output models have been extensively used by Japan's government agencies, especially the Economic Planning Agency (EPA) and the former Ministry of International Trade and Industry (MITI, now METI), the enthusiasm for using the model that existed between the 1950s and 1970s seems to have gradually cooled down, except for the case of environmental policy. The dramatic turning point occurred in the early 1980s, when the cabinet of the then Prime Minister, Yasuhiro Nakasone, instituted a neo-liberal economic policy. This policy declared an over-abundance of quantitative guidelines and opted to maintain only a little of what had been the core of the government's economic planning. Even though important improvements by the government continued to accumulate in the form of input-output table compilation and related modeling techniques, the downgrading of the status of quantitative macroeconomic and sectoral targets generally has been observed.