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As Japan moves from a "catch-up" strategy to a post-developmental stage, it is changing its actions and reactions in terms of international political economy and domestic policy issues. The current changes in Japan can best be understood as following a path toward "permeable insulation: " Japan's government and economic system continue to insulate domestic businesses from full competition and the rigor of market forces, but this insulation is also permeable because a decline in state power vis-a-vis the private sector has combined with a decline in the solidarity of private institutions (such as keiretsu or trade associations) to make strategies of insulation much less rigid and uniform. The contributors examine the implications of this approach in depth in eight critical issue areas.