The Cold War structure had begun to be dismantled, as captured most vividly in the pulling down of the Berlin Wall, and the industrialization of emerging economies continued to move forward. As shown by these facts, the conditions surrounding Japan's economy began to undergo such sea changes as globalization and intensified competition.
These changes should have brought about the strengthening of corporate earnings power and the efficient reallocation of resources through active entry into and exit from markets and industries. Rising asset prices and overheated domestic demand, however, distorted various signals for economic adjustment and weakened investment discipline. Rather, a large amount of business fixed investment was made based on an excessively optimistic outlook for demand.