Hostname: page-component-5d59c44645-jqctd Total loading time: 0 Render date: 2024-02-22T06:50:01.871Z Has data issue: false hasContentIssue false

The Dango Tango: Why Corruption Blocks Real Reform in Japan

Published online by Cambridge University Press:  23 January 2015


Japan’s economy has stagnated since the bursting of the twin real estate and stock bubbles in 1990. Construction employment rose after the bubbles burst despite a real estate glut.

Systemic corruption is delaying recovery. The key is the dango—Japan’s system of bid rigging, which is pervasive in public construction. The firms rotate who will win the “competitive” bid. The bureaucrats leak the highest price bid that will be accepted in return for favors from the industry and lucrative sinecures when they retire (amakudari—”descent from heaven”). The ruling politicians (the “construction tribes”) get kickbacks and ensure the adoption of enormous public construction programs.

The result is that Japanese public and private capital flows are corruptly routed to uses that are not simply inefficient, but outright harmful to society. Pervasive corruption is the primary obstacle to Japanese economic (and environmental) health and political reform.

Copyright © Society for Business Ethics 2004

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)


Alletzhauser, Albert J. 1990. The House of Nomura: The Inside Story of the Legendary Japanese Financial Dynasty. New York: HarperCollins Publishing.Google Scholar
Annual Report on the Japanese Economy and Public Finance 2001–2002—No Gains without Reforms II (“2002 Annual Economic Report”). Cabinet Office, November 2002. (accessed March 24, 2003).Google Scholar
BBC News Online: Business. “Enron’s fall shows ‘genius of capitalism.’ (accessed December 6, 2002).Google Scholar
Black, William K. 2002. “A Tale of Two Crises.” Kravis Leadership Institute Leadership Review [online journal] (Fall). Scholar
Browning, Edgar K., and Zupan, Mark A.. 1996. Microeconomic Theory and Applications (5th edition). New York: HarperCollins.Google Scholar
Browning, Edgar K., and Zupan, Mark A.. 1999. Microeconomic Theory and Applications (6th edition). Boston: Addison-Wesley.Google Scholar
BusinessWeek Online. 2002. “Landing an Airport on Time—and on Budget” (April 22). (accessed March 7, 2003).Google Scholar
Choy, Jon. 1998. “Japan’s Construction Industry: The Economic Engine that Can’t.” Japanese Economic Institute No. 34 (September 4). (accessed February 23, 2003).Google Scholar
Eiji, Aoki. 1998. The Japanese Mission to the European Union. “News and Views from Japan” (March; extract) (accessed March 25, 2003).Google Scholar
Gleckman, Howard. 2002. “Enron is No ‘Tribute to American Capitalism.’BusinessWeek online (15 January). (accessed December 6, 2002).Google Scholar
Gordon, Donald. 1996. “A Bull in a China Shop.” Japan Economic Foundation (July/August): 47.Google Scholar
Ito, Takatoshi. 2001. “Long-term Stagnation in Japan and Its Policy Implications.” (Unpublished memorandum, December 31).Google Scholar
Japanese Foreign Ministry. 2001. “Employment Situation Worsens.” Japan Brief/FPC No. 0136 (August 13). (accessed March 17, 2003).Google Scholar
Johnson, Chalmers. 1975. MITI and the Economic Miracle. Stanford, Calif.: Stanford University Press.Google Scholar
Johnson, Chalmers. 1986. “Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan.” Journal of Japanese Studies 12(1): 128.CrossRefGoogle Scholar
Kerr, Alex. 2001. Dogs and Demons: Tales From the Dark Side of Japan. New York: Hill and Wang.Google Scholar
Kohno, Masaru, and Yoshitaka, Nishizawa. 1990. “A Study of the Electoral Business Cycle in Japan: Elections and Government Spending on Public Construction.” Comparative Politics (January): 15166.CrossRefGoogle Scholar
McMillan, John. 1994. “Why Does Japan Resist Foreign Market-Opening Pressure?” (August). Resist%20Foreign%20Market-Opening%20Pressure%201.pdf (accessed February 25, 2003).Google Scholar
McMillan, John. 2001. “Dango: Japan’s Price-fixing Conspiracies” (November).’s%20PriceFixing%20Conspiracies.pdf (accessed February 27, 2003).Google Scholar
Moffeit, Miles. 2002. “The Collapse of the Culture of Cool.” Dallas-Fort Worth Star Telegram [online journal] (May 19). (accessed January 27, 2003).Google Scholar
New York Times. September 27, 1998, A1.Google Scholar
Nihasi, Mitsuhiro, Tatsuyoshi, Saijo, and Masashi, Une. 2000. “The Outsider and Sunk Cost Effects on ‘Dango’ in Public Procurement Bidding: An Experimental Analysis.” Unpublished manuscript (July 1).Google Scholar
Overhold, William H. 2002. “Japan’s Economy, at War with Itself.” Foreign Affairs 81(1) (January/February): 13447.CrossRefGoogle Scholar
Porter, Michael. 1990. The Competitive Advantage of Nations. London: McMillan Press.CrossRefGoogle Scholar
Schaede, Ulrike. 1996. “The 1995 Financial Crisis in Japan.” Working Paper 85. The Berkeley Roundtable on the International Economy, 1996. (accessed February 26, 2003).Google Scholar
Statistical Handbook of Japan. 2002. Government of Japan. (accessed March 3, 2003).Google Scholar
Taro, Yayama. 1990. “The Recruit Scandal: Learning from the Causes of Corruption.” Journal of Japanese Studies 16(1): 93114.CrossRefGoogle Scholar
Whitten, Darrel E. 2002. “A Capital Question: Can Japan Compete?” The Globalist (June 25). (accessed March 12, 2003).Google Scholar
Woodall, Brian. 1993. “The Logic of Collusive Action: The Political Roots of Japan’s Dango System.” Comparative Politics (April): 297312.CrossRefGoogle Scholar