Japan's best days are over. That was the provocative conclusion of Don Straszheim, president of the Milken Institute, at a recent Dataquest conference. But though Straszheim provided some compelling evidence, his conclusion was flawed.

True, Japan's GDP has trended down from more than 9.4 percent in the early 1960s to an average of 1.8 percent in the late 1990s. The country is mired in a straitjacket of debt and hampered by slow-moving conglomerates ill-suited to take on today's nimble competitors in rapidly changing markets. And Japan, like much of Asia, clings to a business climate based on government largess and preservation of the status quo in management and employment, with individual merit sometimes counting for little. It all adds up to a bleak balance sheet, leading Straszheim to claim that the Japanese "will be the last people in the world to accept the realities of global competition."

Maybe so. But Straszheim and other economic analysts discount or are blind to the intangible asset of Japan's innovative spirit and technological prowess. Japan is still home to four of the world's top 10 semiconductor makers, with all the manufacturing and design capabilities that implies. And Japan is the logical birthplace of two of the most promising platforms of the consumer future: digital television and third-generation cellular phones. More broadly, Asia is home to a whole world of able-bodied builders: The dedicated engineering managers of Tokyo, Seoul and Hsinchu; the entrepreneurs of Taipei, Hong Kong and Singapore; the manufacturers of Osaka, Shenzhen and Penang.

Huge structural hurdles lay before Japan and its neighbors. But there are plenty of smart and well-equipped engineers vigorously at work in Asia. And that's a human force to be reckoned with-a power that, although it can't be calculated on any spreadsheet, inevitably will rise up.

In the early 1980s, analysts were predicting Japan would steal America's inventions and bury the United States with its manufacturing clout. Now Straszheim and others claim the United States will crush the economically and socially stultified Far East.

Tides fall, then rise again. Analysts who write off Japan and Asia should beware the ultimate rise of a Pacific century.