In 1968, the Sato Government established the “scrap-and-build” principle of structural reform of the central government, and in the next year, the "overall full number law,” establishing a personnel ceiling for nonfield personnel of the central ministries and agencies as a whole, was enacted. Since then the personnel management system and the scrap-and-build system of organizational management have been strictly enforced in the annual inquiry of organization and personnel by the Administrative Management Bureau of the Management and Coordination Agency during the course of the fiscal year (2).

The main results of the second national administrative reform movement which began after the second oil crisis were privatization of three public corporations. These included the Japan National Railway and the Japan Telegraph and Telephone, and the establishment of the Management and Coordination Agency by the reorganization and consolidation of existing administrative organizations including the Administrative Management Agency (3).

(a) Fiscal Crisis. As the economy bubbled in late 1980s and burst in early 1990s, a mountain of financial wreckage was left not only in the private sector but also in the public sector. The Finance Ministry calculated that the outstanding balance of government bonds would reach to ¥240 trillion by the end of March 1997. Together with the debts of local governments and other liabilities, the country was saddled with over ¥440 trillion in debts. This economic reality forced Prime Minister Hashimoto to launch a broad campaign to overhaul Japan’s governmental and economic system.

(b) New Civic Activism Toward Bureaucratic Corruption. The precise reason all parties gave high priority to administrative reform in the last election campaign in Japan was a series of scandals of high-ranking bureaucrats. After the land speculation-driven economic bubble came to an end, the scandalous irregularities of the political, business, and bureaucratic worlds have been exposed one after another.

One result of the corruption was the collapse of the Liberal Democratic Party (LDP) government after 38 years of uninterrupted single-party rule. In the heat of popular movement pushing for total reform of the governmental system, the general election of 1993 took place. Then the LDP was defeated, and Mr. Hosokawa’s coalition government was organized.

The collapse of the LDP’s rule made the power structure considerably transparent. As a consequence, the widespread public debate took place over the legitimacy of a politically powerful bureaucracy. So the top agenda of new government was, as a matter of course, political and administrative reform. Since then the reforms have been one of the highest priorities of successive governments in Japan.

Another result was an aggressive civic activism against bureaucratic corruption—especially in 1996, the year of a general election. Earlier that year scandals of top-ranking officials in the Ministry of Finance and that of Health and Welfare caused public respect for bureaucrats to nosedive. The bribing of politicians by those in business frequently occurred after the war, but it was the first time that, as one high-ranking career bureaucrat after another had been suspected of questionable conduct, the situation was met with an aggressive and angry response from the public. Thus there arose unprecedented investigations by citizens groups called “citizens’ ombudsmen” to disclose a tor...