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The Joint Paper by YANO Makoto, Former Chairman of RIETI, and FURUKAWA Yuichi, Former Faculty Fellow of RIETI, Published in Proceedings of the National Academy of Sciences (PNAS)

The paper, "Two-dimensional constrained chaos and industrial revolution cycles," jointly authored by Makoto Yano, former Chairman of RIETI, and Yuichi Furukawa, former Faculty Fellow of RIETI, has been published in the online edition of the multidisciplinary scientific journal Proceedings of the National Academy of Sciences (PNAS). It is an open access website, and the paper can be downloaded free of charge from the link below. A printed version will be published in the near future.

Since the 18th century, the modern economy has gone through cycles of rapid technological innovation and serious stagnation, each lasting almost 100 years. This study describes this phenomenon with a new term, "industrial revolution cycle," and clarifies its mechanisms using the interrelationship between market quality and technological scarcity. This paper indicates that "large-scale innovations such as industrial revolutions reside in high-quality markets."

Since the end of 1979, the United States and the United Kingdom, then under the strong leadership of President Reagan and Prime Minister Thatcher, respectively, have decisively implemented market reforms and promoted market upgrading. History has shown that this laid the foundation for the Third Industrial Revolution. To overcome Japan's prolonged stagnation that began around 1990, it is essential to promote innovation in every corner of society. This study suggests that we should promote market upgrading in order to lay the foundation for such innovation.

The idea of an "industrial revolution cycle" was proposed by System Reform in the "Age of Quality" (Yano 2005, Iwanami Shoten) as part of research of the Global COE program in collaboration with the Graduate School of Economics and Graduate School of Business and Commerce, Keio University and Kyoto Institute of Economic Research. This study models and explains the core of that concept.

To read the paper: