How much does it matter that Japan creates relatively few new high technology companies? Many observers estimate, or at least assume, that entrepreneurial dynamism and its associated innovations promote economic growth and in the long run are necessary for it. In recent years there has been much attention devoted to fostering such new firms in many countries, including Japan, with much of this interest derived from the example of Silicon Valley. Before the 1990s, after several decades of excellent performance by the Japanese industry, any observer noting that it had few new high tech companies would probably have met with indifference. Success spoke for itself. Now, after an economic plateau lasting over a decade, questions about the late and relatively small-scale emergence of high tech startups have become increasingly salient.

Foreign banks have long faced difficulties in attempting to enter certain Japanese financial markets. This is due partly to regulatory practices and partly to specific Japanese socioeconomic conditions, for instance the system of relationship banking. While retail banking is still a sector in which almost no foreigners have been able to succeed, some foreign financial institutions have been able to gain market share in investment and wholesale banking.

Today, Japanese financial markets offer a bizarre playing ground for foreign competitors.On the one hand, overdue reforms, deteriorating stock markets, and shockingly bad ratings should scare many foreigners away from making commitments to Japan's markets. On the other hand, it is just these problems and the dissatisfaction with the Japanese banking sector, as well as an increasing division of the Japanese economy into large global players and small domestic companies, that might help a few strong foreign banks with superior global capabilities overcome their liability of foreignness. Indeed, we assume that improved market opportunities for foreign banks in Japan are related to a fundamental lack of global capabilities on the part of Japanese financial institutions, despite their pronounced advantages as local players. In contemplating the future of foreign financial institutions in Japan, we propose three scenarios. Japan is often compared with Great Britain, where the term "Wimbledon effect" was coined after deregulation of Britain's financial markets--the "Big Bang"--resulted in the acquisition of many British banks by foreign companies. (The analogy refers to the fact that although Britain provides the world's foremost arena for tennis at Wimbledon, the winners of the Wimbledon tournament tend to be foreign players.) The Wimbledon effect would predict that market deregulation will strengthen the financial center but lead to asituation in which markets are dominated by foreign banks. Focusing on investment banking, our paper examines whether Japan faces the same developments as did Great Britain, whether the Wimbledon effect is a plausible scenario for Japan, and whether the analogy between the two financial centers is suitable.

The two other scenarios are strong positions of foreign-Japanese joint ventures ("mixed double") and the continuing dominance of Japanese financial-service providers ("home run").While domination by foreign financial institutions has come to pass in Britain, its BigB ang has at the same time boosted London's position as a financial center. However, in this paper we will explain why Japan's case is different from the situation in the British financialmarkets. Not only is market domination by foreigners in Japan an effect that cannot be expected in the medium run, but Tokyo's domestic orientation distinguishes it from so-called global centers such as London and New York and makes it highly vulnerable in the current situation. Japan's long-lasting economic problems, Tokyo's historical lack of a greater region it has served as a financial center, and an increasing need for globally competitive financial services by large international Japanese corporations cast doubt on the future status of Tokyo as a leading financial center.

In the second decade of market reform, rural cadre and entrepreneur households enjoy large net income advantages of roughly equal magnitude. Cadre household incomes are primarily from salaries, and they do not decline with increasing levels of rural industrialization. These cross-sectional findings about income determination are reinforced by an event-history analysis of occupational shifts. With large income advantages based on salary income, at no point in market reform have cadres moved into self-employment or private entrepreneurship at higher rates than ordinary farmers. However, village cadres have become the most important source of collective enterprise managers and collective enterprise managers in turn have become the most important source of new private entrepreneurs. Therefore the thriving collective enterprise sector of the 1980's has served as a breeding ground for private enterprise in the 1990's.

The term peri-urbanization refers to a process in which rural areas located on the outskirts of established cities become more urban in character, in physical, economic, and social terms, often in piecemeal fashion. Peri-urban development usually involves rapid social change as small agricultural communities are forced to adjust to an urban or industrial way of life in a very short time. High levels of migration are an important driver of social change. Rapidenvironmental deterioration; large-scale, often haphazard, land conversion; and infrastructure backlogs are major policy challenges associated with peri-urbanizing regions. Typically, peri-urbanization is stimulated by an infusion of new investment, generally from outside the local region in question, including foreign direct investment (FDI).

This discussion paper is based on analysis of peri-urbanization dynamics in the Hangzhou-Ningbo Corridor of the Lower Yangtze Region of China. The case-study area is of particular interest, both because of the scale of the phenomenon in the area and the fact that the corridor typifies the long-running and dynamic peri-urbanization process occurring in the Lower Yangtze Region as a whole, arguably the world's largest extended urban region (EUR). Analysis focuses on adaptation, successful and otherwise, to the severe stresses, demographic, social, and environmental, accompanying peri-urbanization. Policy implications are then drawn; anticipated future stresses in the case-study area, and by implication the larger extended urban region, are used to trigger recommendations.

In a series of papers (Fung & Lau, 1996, 1998, 2001), we have argued that neither the U.S. nor the Chinese bilateral trade balance data are accurate. In this paper, we utilize the most up-to-date information and provide more accurate estimates. The adjustments include f.a.s.-f.o.b. and f.o.b.-c.i.f. conversion, re-exports via Hong Kong, re-export markups of Hong Kong middlemen and trade in services. With these adjustments, the best estimate of the U.S.-China bilateral trade balance in goods and services in 2002 is US$ 74.3 billion. This is a large figure, but is more than 25% smaller than the official estimate of the U.S. government.