Wuppertal Paper 124

Wuppertal Papers are scientific working papers of a preliminary character aimed at promoting scientific discourse. Comments and contributions to the discussion are expressly desired by the authors. As a report from a research process not yet concluded, the contents do not necessarily reflect the opinions of the Wuppertal Institute. Slight deviations between the printed version and the PDF version are possible. For example, blank pages have been omitted in this PDF document. Therefore, if you are quoting from the PDF version, we suggest that you indicate this in brackets: " PDF version ". Abstract The article analyses Japanese approaches to dealing with eco-efficiency from an institutional perspective. Our main outlook is that though promising attempts have been made despite the overall economic crisis, a better horizontal coordination among both administrations and businesses is required. The governance processes can be analysed following approaches developed by New Institutional Economics and related policy analysis. The paper is divided into three sections. The first introduces the concept of eco-efficiency and explains the demand for regulatory policies from theories of market failures; the paper argues in favour of innovation-oriented regulation. The second examines how a nation's institutional capabilities influence knowledge generation towards new solutions that sell on the markets; the " capacity-building approach " as developed by Martin Jänicke is explicitly discussed. The third section discusses contemporary Japanese policies with regard to waste, energy and material flows both on the governmental and the business level. It explains how European approaches diffuse and merge with domestic Japanese institutions. However, governance of eco-efficiency is expected to continue to differ due to ongoing national differences and specific conditions of knowledge creation.