Masahiko Aoki, a Stanford economist who forged new ways of thinking about organizations, institutions and East Asian economies, died in Palo Alto on July 15. He was 77, and recently had been hospitalized for lung disease.

Aoki was a founder of comparative institutional analysis, which explores issues, perspectives and models of institutions within the economy. He studied economic systems, corporate governance and East Asian economies, and developed the "theory of the firm" to compare organizational structures in the corporate world.

Aoki was the Henri and Tomoye Takahashi Professor of Japanese Studies and Professor of Economics, emeritus, and senior fellow at the Stanford Institute of Economic Policy Research and the Freeman Spogli Institute for International Studies. He came to Stanford in 1967 as an assistant professor, and also had appointments at Harvard University and at Kyoto University in Japan. Aoki retired to emeritus status at Stanford in 2005.

Scholar, institution builder

Aoki's colleague, Stanford economist Takeo Hoshi, described him as a prolific and dedicated scholar. "Even at the hospital, he worked on revising his most recent paper that examines institutional development in China and Japan from the late 19th century to the early 20th century," said Hoshi, the Henri and Tomoye Takahashi senior fellow at Stanford's Freeman Spogli Institute for International Studies.

Hoshi noted, "Masa was the first scholar to apply rigorous theoretical tools in modern economics to study of the Japanese economy." This led Aoki to develop, along with his Stanford colleagues, the framework behind comparative institutional analysis, which can be applied to any economic system, he added.

For Hoshi, Aoki was the "biggest reason why I decided to focus on the study of the Japanese economy in my career almost 30 years ago, and why I moved to Stanford a couple of years ago to be the director of the Japan Program at Asia-Pacific Research Center."

Aoki was the inaugural director of the Japanese Studies Program at the Walter H. Shorenstein Asia-Pacific Research Center (APARC) when it was re-established in 2011.

John Shoven, the director of the Stanford Institute for Economic and Policy Research, said Aoki was both an accomplished scholar and institution builder.

"He is widely respected all over the world, and was able to span the worlds of economic theory and applied economic policy. We have lost both a friend and one of the world's leading economists," Shoven said.

Aoki's passing represents "a loss to economics, to Stanford and to me personally," said Stanford economist Kenneth J. Arrow, 1972 winner of the Nobel Prize in economic sciences.

"His most important contributions were to the analysis and understanding of organizational forms in economic life. Aoki particularly studied the contrasting forms of economic organization in the United States and Japanese economies. His work was informed by a deep understanding of economic theory," said Arrow, the Joan Kenney Professor of Economics and Professor of Operations Research, emeritus.

Leadership roles

In his 2001 work, Toward a Comparative Institutional Analysis, Aoki developed a new approach to analyze how institutions evolve, why institutional structures are diverse across economies, and what factors lead to institutional change or inflexibility.

Aoki's most recent book Corporations in Evolving Diversity: Cognition, Governance, and Institutions, was published in 2010.

Aoki was born in Nagoya, Aichi Prefecture, in 1938. He graduated from the University of Tokyo with bachelor's and master's degrees in economics, in 1962 and 1964, respectively, and a doctoral degree in economics from the University of Minnesota in 1967. In addition to his Stanford career, he held visiting positions at academic institutions in China, Germany, Japan, Sweden and the United Kingdom.

Aoki was president of the International Economic Association from 2008 to 2011, and served as president of the Japanese Economic Association. He was awarded the Japan Academy Prize in 1990 and the sixth International Schumpeter Prize in 1998.

He was the founding editor of the Journal of the Japanese and International Economies, and also founded the Research Institute of Economy, Trade and Industry, and the Virtual Center for Advanced Studies in Institution at the Tokyo Foundation. He was involved in the establishment of the Center for Industrial Development and Environmental Governance at Tsinghua University.

Aoki is survived by his wife, Reiko, of Stanford, and two daughters, Maki, of Boston, and Kyoko, and granddaughter Yuma, of the San Francisco Bay Area.

Clifton Parker is a writer for the Stanford News Service.

Thomas Sheehan, Stanford Professor of Religious Studies, shares with SCPKU intern Nathalie Chun his experience as a faculty fellow at the Stanford Center at Peking University (SCPKU) this summer.  His three-week academic residence at SCPKU focused on the study of phenomenology and Heidegger in China. 

My first question is: why did you choose to come to China?

Thomas Sheehan: This is my third time here in China; the previous times I’ve come to visit my son or to teach. But this time I’ve really come here to learn and interact with Chinese scholars. I’ve talked to professors and students from universities all over China and this has meant that I have established contacts with superb scholars here.

So far, what has been your general impression of the study of phenomenology and Heidegger in China?

TS: There’s been a long tradition, at least in the 20^th Century, of the study of phenomenology and Heidegger. Many Chinese professors went to Germany in the 1930s to study with Heidegger and they brought back his works and translated his major works into Chinese quite early on. So there’s been a tradition that has led to a level of scholarship that is really quite good. These scholars read German, French, English and obviously Chinese and are conversant with all of the contemporary literature. The only problem is people across the Pacific don’t know about their work and that’s what I’d like to promote.

You mentioned that you have come to learn from the professors and students. What do you think has been the most interesting thing that you’ve learnt from interacting with them?

TS: The new and exciting thing for me has been to see how Chinese philosophy professors are trying to conjugate elements of Heidegger’s philosophy with Chinese tradition of Daoism for example. Heidegger himself was interested in that, and I knew about that in a vague sort of way, but its really quite alive here.

You’ve mentioned how eager you are to continue this sort of interactions; can you expand more on your plans for the future?

TS: We have some concrete plans that I hope will be realized already next year. My first is the following: a two-day video conference conducted at SCPKU between Chinese and American scholars (who will gather at Stanford). The Centre has extraordinary video facilities for conferencing, while I’ve never done this before; I think we will try to make something happen in spring of next year. Secondly there’s a conference on Phenomenology here at PKU in May that I hope to attend. And thirdly, personally, I would like to have the opportunity to teach. I’ve very happy that Tsinghua University has invited me to teach a short course next spring.

Do you think this sort of cross-cultural dialogue can be creating a new way to look at philosophy for the future? Do you think this could be the future for philosophy and academia?

TS: Speaking of philosophy, we can only profit by being in touch with Chinese scholars. How many thousands of years of tradition does China have and I myself am generally ignorant of that. My interests in Western philosophy have reached their peak and I would really like to devote my later years to this kind of cross-cultural dialogue in philosophy. I personally could only learn, and my colleagues as well.

On the broader question of inter-cultural exchange, I’m convinced that we need more soft power exchange because I’ve seen how excited Chinese youth and professors are about the opening up of China while also preserving their Chinese characteristics and traditions. I like that very much. Anything that my colleagues and I can do to learn about and contribute to a soft power exchange will only be for the better.

The increasing resistance to antimicrobial drugs is a growing public health concern, particularly in low- and middle-income countries that require high out-of-pocket payments for prescription drugs.

“Understanding the drivers of antibiotic resistance in low- to middle-income countries is important for wealthier nations because antibiotic-resistant pathogens, similar to other communicable diseases, do not respect national boundaries,” said Marcella Alsan, MD, PhD, MPH, the lead author of the study, which was published July 9 in The Lancet Infectious Disease.

Alsan is an assistant professor of medicine at Stanford, an investigator at the Veterans Affairs Palo Alto Health Care System and a core faculty member at the Center for Health Policy/Center for Primary Care and Outcomes Research.

“Out-of-pocket health expenditures are a major source of health-care financing in the developing world,” said Jay Bhattacharya, MD, PhD, senior author of the study and a professor of medicine, a senior fellow at the Freeman Spogli Institute for International Studies and another core faculty member at CHP/PCOR.

Read the full article here.

The Washington Post's Anna Fifield reviewed Crossing Heaven's Border (Shorenstein APARC, 2015), a book by author and journalist Hark Joon Lee. The book details the challenges facing North Korean defectors -- their perilous escapes, the repressive regime that they seek to flee from, and for some, what life looks like on the other side.

"Lee’s book is compelling because it offers a fresh perspective on the puzzle that is North Korea. He writes about the challenges he faced in reporting on this story and the ethical questions he encountered, and the toll it took on him as a person," Fifield writes.

Sensationalist stories about North Korea often swirl in news headlines, but Lee chronicles their hardships as a firsthand witness who embedded with defectors from 2007 to 2011. 

Lee, reporting for the Korean newspaper Chosun Ilbo, initially published the stories as articles, and later as a documentary on the Public Broadcasting Service in 2009. Lee's account focuses on the lives of ordinary North Koreans.

"He writes about the tenderness he sees between a middle-aged couple from different social backgrounds who fled so they could be together; Soo-ryun, who had a difficult escape but found love and had a baby, only to be struck down by stomach cancer; pretty Young-mi, who dreamed of going to the United States but then found she couldn’t even understand the English that South Koreans use," Fifield writes.

The review and a Q&A with Lee is available on the Washington Post website.

Joon Nak Choi will be the 2015-16 Koret Fellow in the Korea Program at Stanford University’s Walter H. Shorenstein Asia-Pacific Research Center (APARC), effective Jan. 1, 2016.

A sociologist by training, Choi is an assistant professor at Hong Kong University of Science and Technology. His research and teaching areas include economic development, social networks, organizational theory, and global and transnational sociology, within the Korean context.

Choi, a Stanford graduate, has worked jointly with Stanford professor Gi-Wook Shin to analyze the transnational bridges linking Asia and the United States. The research project explores how economic development links to foreign skilled workers and diaspora communities.

Most recently, Choi coauthored Global Talent: Skilled Labor as Social Capital in Korea with Shin, who is also the director of the Korea Program. From 2010-11, Choi developed the manuscript while he was a postdoctoral fellow at Shorenstein APARC.

Mark Granovetter, a professor and chair of Stanford’s sociology department, praised Choi for his work in academia.

“Joon Nak’s dissertation on social influences on hedge fund managers’ success broke important ground in our understanding of financial markets. His recent book Global Talent sheds critical new light on the challenges of Korea and other economies facing high-level labor shortages, and the potential of foreign workers to meet them. As the 2015-16 Koret Fellow, he will bring his considerable talents to bear on the study of Korean society,” Granovetter said.

During his fellowship, Choi will study the challenges of diversity in South Korea and teach a class for Stanford students. Choi’s research will buttress efforts to understand the shifting social and economic patterns in Korea, a now democratic nation seeking to join the ranks of the world’s most advanced countries.

Supported by the Koret Foundation, the fellowship brings leading professionals to Stanford to conduct research on contemporary Korean affairs with the broad aim of strengthening ties between the United States and Korea. The fellowship has expanded its focus to include social, cultural and educational issues in Korea, and aims to identify young promising scholars working on these areas.

“It will be my pleasure and honor to spend the next year at Shorenstein APARC, and have the opportunity to engage in the vibrant research community there," Choi said.

Choi holds a bachelor’s degree in economics, international relations and urban studies from Brown University, and a master’s degree and doctorate in sociology from Stanford University.

The United States and European countries can take steps to avoid making the same economic mistakes that Japan committed during the latter's "lost decade," a Stanford economist wrote in a new paper.

The study, published in the IMF Economic Review, describes the reasons Japan was not able to pull out of its long recession in the 1990s, offering some lessons for U.S. and European leaders in the wake of the 2007-09 meltdown.

In particular, the delay in bank recapitalization and the lack of structural reforms in the economic sphere kept Japan from realizing a full recovery, wrote Takeo Hoshi, the Henri and Tomoye Takahashi senior fellow at Stanford's Freeman Spogli Institute for International Studies.

"Bank recapitalization" refers to a governmental reorganization of failing banks, often involving the use of public money to keep them solvent. "Structural reforms" describes how a government might overhaul its economic structures to increase business competition – such as deregulation to cut costs for firms.

The shortcomings in these two policy areas "retarded Japan's recovery from the crisis and were responsible for its stagnant post-crisis growth," said Hoshi, whose co-author was Anil K. Kashyap, an economics professor at the University of Chicago Booth School of Business.

Risky bank lending

Japan's "lost decade" originally referred to the 1990s, though the country has still not regained the economic power it enjoyed in the 1970s and 1980s. Some say Japan has actually experienced two lost decades if the 2000s are counted as well.

Faced with a huge financial crisis at the dawn of its lost decade, Japan had to navigate challenges that other advanced economies had not confronted since the Great Depression, Hoshi and Kashyap wrote.

However, government leaders made mistakes, Hoshi said. One was failure to rehabilitate the banks and another was to misunderstand the nature of the problems afflicting the Japanese economy. For example, much like the United States in 2007-09, the Japanese banks had made many dubious loans to risky customers.

"Instead of recognizing that major structural adjustments were needed, much of the policy response was calibrated under the assumption that Japan faced a simple cyclical problem that could be addressed with indiscriminate fiscal stimulus," wrote Hoshi, the director of the Japan Program at the Walter H. Shorenstein Asia-Pacific Research Center.

For example, on the demand side, monetary policy was not as expansionary as it could have been, he said. Deflation persisted for a long time. And fiscal stimulus packages – such as tax cuts – were inconsistent. Meanwhile, much of Japan's fiscal spending took the form of public works projects that had low productivity.

As for structural reforms, the Japanese government lacked a sense of urgency. For example, even in the reform-minded administration of former Prime Minister Junichiro Koizumi, only eight of the proposed 35 reform initiatives would have directly boosted growth. Of the others, 16 might have indirectly supported growth and 11 would have had no effect on growth, Hoshi said.

Drastic change needed

Unfortunately, some European nations seem to be following Japan's lead, Hoshi said.

"In France, Italy and Spain, bank recapitalization has been delayed and the structural reforms have been slow. Without drastic changes, they are likely to follow Japan's path to long economic stagnation," Hoshi and Kashyap wrote.

The problems that held back Japan seem to be less serious in the U.S., Hoshi said: "Employment protection is low in the United States and the labor market shows high mobility. The regulatory advantage for incumbent firms is smaller than in Europe or Japan and starting new business is relatively easy."

As the researchers noted, the United States and Germany are in a bit better economic shape, partly due to the fact that they did undertake structural reforms sooner rather than later. The U.S. was able to recapitalize its banks more quickly, for example.

Still, five years after the failure of the Lehman Brothers investment bank left the world's financial markets in chaos, the U.S. and Europe are not yet back to what had looked normal before the crisis, according to the research. For instance, employment levels have not reached the levels seen before the 2007-09 crash.

"The U.S. recovery has been tepid despite a number of extraordinary macroeconomic policies (at least in the traditional sense). This suggests that the U.S. economy also has problems, but they are just different from those in Japan and in Europe," Hoshi said.

In the years leading up to the financial crisis, the researchers wrote, U.S. growth was fueled by a consumption boom from rapid housing price increases and rising debt levels.

"In a broad sense, the U.S. economy before the crisis was similar to the Japanese or Spanish economies," noted Hoshi, adding that in Japan, the speculative investment boom in the late 1980s masked structural problems.

Clifton Parker is a writer for the Stanford News Service.