Topic 4 Japan and its Corporate Hegemony

1
Topic 4 Japan and its Corporate Hegemony

• A Geographical Context
• B Japanese Development
• C The Corporate and Industrial Hegemony

2
Geographical Context
A

• 1. Location
• In which way the location of Japan is unique?
• 2. Maritime Orientation
• How the ocean is influencing the Japanese
  society?
• 3. Demography
• What characterizes the Japanese population?
• 4. Resources
• Is Japan lacking resources?

3
Location and Insularity
1

• Location
• jih-pen in Chinese (suns origin)
• Since Western civilizations encountered China
  before Japan, the name Japan stuck.
• Nihon (or Nippon), meaning Source of the sun.
• Relative isolation in Pacific Asia
• Insularity.
• Do not share a land border with any country.
• Maritime access
• Shimaguni (island country) / insularity.
• Labeled as the Great Britain of the Pacific.

Contemporary Flag
Imperial Flag
4
Location and Insularity
1

• Economic domination
• Small-sized country the size of California.
• Average-sized population (127 millions).
• Limited array of resources.
• Domination of the Pacific Asian economy
• Vast national market.
• Productive labor force.
• Financial power.
• Technological innovator.

5
Location and Insularity
1

• Outside influence
• Limited outside influence
• Linked to its position on Pacific Asia.
• Linked with its insularity.
• Writing, Buddhism and Confucianism came from
  China, via Korea.
• Protected from Chinese (Mongol) and Korean
  invasions.
• Terminus location
• End of maritime roads from Europe impeded
  European colonization.
• Changes in relative location
• During the 20th century, the position of Japan
  was modified.
• From a peripheral to a central position.
• Trade became trans-pacific and Japan was a hub of
  the America-Pacific trade.

6
Maritime Orientation
2

• Maritime space
• 4 islands 98 of the land mass
• Hokkaido (79,000 km2).
• Honshu (227,000 km2).
• Shikoku (18,000 km2).
• Kyushu (36,000 km2).
• 3,500 islands in two major groups (Ryukyu and
  Bonin).
• Several large bays
• Tokyo, Nagoya and Osaka.
• Important concentration of port infrastructures
  and urban regions.
• Arc of over 1,700 miles.
• Coastline
• 19,000 miles.
• 3rd in the world behind Russia and Australia.

Russia
China
Hokkaido
Sea of Japan
North Korea
South Korea
Honshu
Tokyo Bay
Nagoya Bay
Shikoku
Kyushu
Osaka Bay
7
Maritime Orientation
2

• Linking the main Japanese islands
• Required the construction of bridges and tunnels.
• Impressive engineering achievements.
• 1) Seto-Ohashi bridge
• Shikoku/Honshu.
• Naruto Strait.
• 2) Kanmon bridge
• Strait of Shimonoseki.
• Kyushu/Honshu.
• 3) Seikan tunnel
• Tsugaru Strait (Honshu/Hokkaido)
• 33 miles, 1988, longest in the world.

Hokkaido
3
Sea of Japan
Honshu
2
1
Shikoku
Kyushu
8
Maritime Orientation
2

• Physical constraints
• Physical geography increases the territorial
  exiguity.
• 16 of the land is habitable.
• Most of the population lives on 0.3 of the
  territory.
• Fight against the scarcity of space
• Long narrow valleys.
• Concentration of agricultural productivity.
• Efficient management of existing agricultural
  land.
• Kanto plain
• 30.5 of the population.
• 8.3 of the surface of Japan.
• 50 of the flat territory.

Hokkaido
Honshu
Kanto Plain
Nobi Plain
Yamato Plain
Shikoku
Kyushu
9
Maritime Orientation
2

• Land Use
• Mountains (84)
• 75 too steep to be used for agriculture and
  settlement.
• Littoral plains (16)
• Bulk of the population and economic activities.
• Little river navigation.
• Forests (65)
• All of it in mountainous areas.
• 90 of all farmland is used.
• Loss of agricultural land due to urbanization.

10
Maritime Orientation
2

• Fishing
• Insularity and fishing have influenced Japanese
  food supplies
• 25 of protein coming from fishes (6 world
  average).
• Japan has the most important fishing fleet in the
  world.
• Massive usage of aquaculture.
• Fishing is favored by the meeting of two
  currents
• Kuroshio (warm and salty).
• Oyashio (cold).
• Enabling better plankton growing conditions.
• Diet
• Unique diet the outcome of the geography.
• Rice is the main staple food
• Soybean as a source of protein (tofu, shoyu).
• Meat not part of the diet until 20th century.

11
Evolution of the Japanese Diet (kg / capita /
year)
2
12
Maritime Orientation
2

• Climate
• Japan is the meeting place of the important
  weather patterns.
• Temperate.
• Monsoons warm air masses from the south.
• Siberian cold air masses from the north.
• High precipitations.
• Three major climate regions
• North temperate climate with cold winters and
  important snowfalls.
• Center east/west variation.
• South subtropical climate.

Oyashio Cold
Cold winter winds
Hokkaido
Honshu
Shikoku
Kyushu
Kuroshio (Black current) Warm and salty.
13
Maritime Orientation
2

• Seismic activity
• Meeting of 3 tectonic plates
• Most active in the world.
• 1,500 earthquakes a year (about 30 are felt).
• Process of subduction.
• Volcanic activity
• 10 of the worlds active volcanoes (200)
• About 40 volcanoes are currently active.
• Mount Sakurajima (Kyushu) erupted more than 5000
  times since 1955.
• Mount Fuji last erupted in 1707.
• Numerous hot springs.

Eurasian Plate
Pacific Plate
Philippines Plate
14
Maritime Orientation
2

• Earthquakes
• The 70 years rule
• Tokyo affected by a major earthquake every 70
  years (1633, 1703, 1782, 1853, 1923).
• Great Kanto earthquake (1923)
• 8.3 on the Richter scale.
• 100,000 140,000 deaths.
• Kobe 1995
• 5,500 deaths and 250,000 made homeless.
• 30,000 damaged buildings.
• Reconstruction costs between 2 and 3 of GDP.
• Influence construction materials, construction
  techniques and lifestyle.

15
Demography
3

• Demographic and cultural homogeneity
• 127 million.
• 99 of the population is of Japanese ethnicity
• Some minorities.
• 99 of the population speaks Japanese.
• Foster national identity and unity.
• Issue of conformity.
• Yamato people (plain around Kyoto).
• Distrust of foreigners.
• Literacy rate of 99.
• Immigration
• Ethnic homogeneity does not favor immigration.
• Would need 400,000 immigrants a year to stabilize
  population.

16
Demography
3

• Aging
• Population peaked to 127 millions.
• Expected to decline by 2006-07.
• Highest life expectancy in the world
• 83 years for females.
• 77 years for males.
• More people over 65 than children under 15.
• Older age of marriage, around 27 years.
• Many Japanese women do not marry (subservient
  relation).
• Low fertility rate, about 1.34 children per
  woman.
• Net decline of the active age population since
  1997.

17
Population of Japan, 1870-2050
3
18
Population Pyramid of Japan, 2000
3
19
Life Expectancy at Birth, 1910 and 1998
3
20
Resources
4

• Small resource base
• Limited quantities of minerals and fossil fuels.
• Japan needs to import most of its resources
• Favored the development of trade.
• Industrial corporations and banks are controlling
  a significant array of foreign resources.
• Small territory makes agricultural self
  sufficiency difficult
• One of the highest agricultural productivity.
• 40 of all food is imported.
• Issues
• Stability and reliability of partners.
• Price fluctuations.
• Must produce something in exchange.

21
Resources
4

• Energy
• Dependence on fossil fuels.
• Hydroelectricity and geothermal energy have good
  potential.
• Japan relies on nuclear energy.
• Issue of energy security
• Imports 80 of its energy.
• Diversify energy supplies notably from new
  regional producers (Indonesia, Brunei).
• Nuclear facilities are now producing 25 of
  electricity needs.

22
Dependency of Japan over Raw Materials and
Agricultural Goods, 1992
4
23
Japanese Development
B

• 1. Feudal Japan (before 1868)
• What characterized the Japanese society before
  its modernization?
• 2. Japans First Transformation (1868-1945)
• How Japan was able to become an industrial power
  while most Pacific Asian countries failed?
• 3. Japans Second Transformation (1946-1989)
• How Japan was able to become a global economic
  power?
• 4. Economic Downturns (1989-)
• Why Japan has recently been facing economic
  difficulties?

24
Feudal Japan
1

• Mythical origins
• Japanese are descendants of the Sun Goddess
  Amaterasu (660 B.C.)
• Major Kami (divinity) of Japan.
• Mother of the first emperor (so divine origin).
• The emperor symbol of the people and the unity
  of the nation.
• Archeological origins
• Migration from the Korean peninsula around 400
  B.C.
• Brought rice culture from China.
• Overthrown Ainu tribes present since the
  Neolithic era.
• Fragmented country that took a long time to be
  unified (1603).

Yamato Plain
Core area
25
Feudal Japan
1

• The Tokugawa era (1603-1868)
• Brought stability and ended civil wars.
• Unified Japan in a strong feudal system.
• Strict partition of the society in social
  classes
• Samurai warriors and administrators.
• Peasant.
• Craftsman.
• Merchant.
• Rise in the population and cultivated land.
• Heavy taxes
• Peasants forced to give about 50 of the harvest
  to the landlord (Daimyos).
• Wealth mainly measured by rice production.

26
Basic Hierarchy of Feudal Japan (Tokugawa Period)
1
Emperor
Shogun
Alternate attendance system (Edo)
Real power
Symbol
Daimyos and Samurais (7)
Mostly located in fortified towns.
Artisans and Merchants (13)
Peasants (80)
Several peasants had a sideline.
27
Feudal Japan
1

• Isolation
• Self-imposed isolation (until the 19th century).
• Ethnocentrism.
• Xenophobia travel abroad subject to death
  penalty.
• Chauvinism.
• Closed to foreign trade (1630-1854)
• Trade allowed with China (Nagasaki) and the
  Netherlands (Deshima).
• Christian religion implemented by Portuguese
  missionaries
• About 500,000 adherents.
• Failed as 100,000 Christian Japanese were killed
  in 1612 by repression.
• Felt as a tool of foreign control.
• Very strict social and political regime with
  almost no mobility.
• Isolation was seen as a way to maintain the
  regime.

28
Feudal Japan
1

• Feudal Economy
• Power measured by rice production
• Rights to a share of the crops.
• Large cities
• Edo (imperial capital that will become Tokyo)
• Osaka (merchant city).
• Powerful merchant families
• Such as in Europe, merchants were becoming
  powerful actors.
• Large commercial houses such as Mitsui and
  Somitomo.
• These houses will become Japanese conglomerates.
• Several factors favorable to industrialization
• High urbanization 16 by 1850.
• Strong fiscal income.
• Active internal trade.
• High literacy (25) of the population (40 for
  males).
• Economic specialization of regions.

29
Feudal Japan
1

• The end of feudalism
• Intervention of the United States in 1853
  (Commodore Perry).
• Increased European military presence in the
  region
• England just won the Opium War with China.
• Considerable technological advance prevented
  Japanese opposition.
• Unequal trade treaties signed (1858)
• With the United States, Russia, Netherlands,
  England and France.
• Commercial privileges, extra-territoriality for
  Western residents, presence of diplomatic
  representatives, low tariffs set by treaty,
  opening of new ports.
• A sense of humiliation rose
• The Shogun was not able to rectify the situation.
• Chinese proverb Change in dynasty occurs when
  there are interior problems and threats from the
  outside.

30
Japans First Transformation
2

• Context
• New emperor ended 250 years of military regency
  (1868)
• Meiji stands for enlightened government.
• From feudal to industrial society in less than 40
  years.
• End of the Tokugawa period (1603-1868)
• Overthrowing the Shogun with a civil war.
• Internal rebellion to change Japan in order to
  survive.
• Political reforms
• Feudal system abolished
• Country divided in prefectures (1872).
• Landlords no longer had power and became
  administrators.
• The Samurai class disappeared
• Became government leaders, educators and
  businessmen.
• Literacy rate of 90 in 1900.
• Parliamentary monarchy formed (1889)
• Conscription formed a civilian army.
• Capital relocated from Kyoto to Tokyo Easier
  access to the ocean.

31
Japans First Transformation
2

• Indigenous modernization
• Acquisition of western technologies and ideas
• Japanese spirit, Western science.
• More than 3,000 foreigners invited to teach
  science, mathematics, technology, and foreign
  languages.
• Urbanization, transport and communication
• Rail system (1872).
• Market economy.
• Formal schooling.
• Also a few wrong ideas
• German theories of racial purity.
• European rationale for colonialism (moral
  superiority).
• Christian single deity The Emperor.

32
Japans First Transformation
2

• Government / corporate dualism
• The cession by the state of large industrial
  infrastructures.
• Concentration of economic power in the hands of
  large conglomerates.
• National achievements, private profits.
• Zaibatsu (financial cliques) emerged
• Controlled by merchant families
• Mitsui (16th century).
• Mitsubishi (1873).
• Sumitomo (16th century)
• Notable Japanese conglomerates that gained
  tremendous power during the Meiji era.
• Supported the establishment of the emperor.

33
Japans First Transformation
2

• Territorial expansion and resources acquisition
• Japan solved its problems by territorial
  expansion.
• Limited raw materials and internal market.
• Taiwan annexed (1879) after the Sino-Japanese
  war.
• Victory in the Russo-Japanese war (1904-1905)
• Korea annexed (1910).
• Access to Manchuria (Port Arthur Dalian).
• Manchuria (1932)
• Vast supplier of resources, especially minerals.
• Vast weapon construction programs.
• Transformation of colonies (Korea and Taiwan) to
  produce agricultural commodities needed in Japan.

34
Japans First Transformation
2

• Imperialist Japan
• New Emperor, Hirohito (1926)
• Showa period enlighten peace.
• Government dominated by the military.
• Japan as the dominant country of Asia
• A mandate to govern.
• Territorial expansion
• Government Establish a political control zone in
  the Pacific zone.
• Military Reinforce Japanese power and prestige.
• Zaibatsus External markets for Japanese goods
  facing Western protectionism.

35
Japans First Transformation
2

• Territorial expansion during WWII
• Look at the outside to solve internal problems
• War declared in 1941 against the Allies.
• Initial successes in 1941-1942 gave to Japan a
  large economic sphere of influence.
• Several new raw materials sources
• Indonesia oil.
• Malaysia rubber and tin.
• Lacking for the Japanese economy.
• Access to a vast market and labor pool.
• The industrial organization of conquered
  countries was done by the zaibatsu.

36
World War II in Pacific Asia
2
Japanese Empire by 1930
Manchukuo, annexed in 1933
Major stronghold taken 1941-1942
Extent of empire, August 1942
37
Synopsis Japans First Transformation
2
Taiwan (1879) Korea (1910) Manchuria (1932)
Military
Technology assimilation
Isolationism
Feudal Japan
Imperial Japan
Expansion
Social stratification
Govt. / corp. dualism
Resources / Markets
Southeast Asia (1941)
Zaibatsus
United States (1853) Unequal Treaties
(1858) Civil War (1868)
38
Japans Second Transformation
3

• Defeat of 1945
• Ended Japanese imperialism in Pacific Asia.
• The state of the Japanese economy was in
  shambles.
• Territory
• Lost all its conquest of the last 60 years.
• Parts of its national territory was occupied for
  the first time in history (American bases at
  Okinawa).
• Population casualties and migration
• 7.1 million deaths.
• 4 million workers of weapon industry were laid
  off.
• 2.6 million people moved abroad (Korean and
  Chinese workers).
• 1.2 million Japanese were repatriated (military
  personnel, administrators, traders,
  industrialists).

39
Japans Second Transformation
3

• Economic damage of WWII
• Main cities (Kobe, Tokyo and Osaka) were
  destroyed over more than 50 of their surface.
• Hiroshima and Nagasaki were a total loss.
• 25 of housing was destroyed, 75 of oil
  refineries.
• 90 of the merchant fleet and 30 of roads and
  railways.
• The industrial capacity was at 60 of if 1935
  level.
• 13 million unemployed.
• Material losses estimated at 25 of GDP.

40
Japans Second Transformation
3

• Marshall plan (1948)
• The United States established an aid plan to help
  the Japanese economy recover.
• Fear about instability promoting civil unrest.
• About 2 billion dollars of aid
• Sony started with American financial help.
• Political and Economic Changes
• Political
• The emperor became again a symbol.
• Adoption of a constitution similar to the United
  States.
• No involvement in foreign wars permitted.
• Economic
• Break-off of the Zaibatsus.
• Advantageous parity of the yen (1 dollar for 360
  yen).

41
Japans Second Transformation
3

• The Korean War (1950-1953)
• Benefited the Japanese economy.
• Japan served as a depot for the UN army
• Only allied country in the region.
• Subcontracting to the American army
• More than 1 billion in contracts for the national
  industry.
• Mazda started as a jeep manufacturer for the US
  army.
• Related industries (energy, steel and chemistry)
  benefited.
• Japan recovered its sovereignty (1951).
• Several Zaibatsus reformed as Keiretsus (groups
  of bosses).
• Mutual defense treaty signed with the United
  States (1954).
• Growth was based by imitating western
  technologies and exports.

42
Japans Second Transformation
3

• 1) Geographical context of Japan
• Paradox in itself.
• Small-sized country (very little available
  space).
• Average-sized population (126 millions).
• Very limited array of resources.
• Creative pressure perspectives
• Incitements at miniaturization.
• 2) Promotion of exports
• The world economy entered in a period of post-war
  expansion.
• Important growth of international trade.
• Japan entered the GATT (1955).
• Development of the national market and of the
  promotion of exports.

43
Worlds 3 Largest Exporters, 1980-2000
3
44
Japans Second Transformation
3

• 3) Labor
• Good labor relations in the Japanese economy
• Post war hardships.
• Good management.
• Strikes are virtually unheard of.
• Highly skilled, disciplined and trained.
• Continuous improvement in qualifications, part of
  the corporate experience.
• Longer weeks, weekdays and more overtime.
• More willing to avoid conspicuous consumption.
• Less space (housing) for the accumulation of
  consumption goods.

45
Japans Second Transformation
3

• 4) Technology
• Imports, notably from the United States.
• Licensing, patent purchases, and imitation and
  improvement.
• Imitation of successful technologies.
• Japan then became an innovator (1980s).
• 5) Consumption and wages
• Internal demand growth because wages were growing
  faster than inflation but less than productivity
  growth.
• Fast adoption by the market
• Preferences on national products.
• Short product life cycle.
• Exports can occur over economies of scale.
• Spread the gains in the society.

46
Adoption of Consumption Goods by Japanese
Consumers, 1970s
3
47
Japans Second Transformation
3

• 6) Investments
• Done in productive forces instead of consumption.
• High technology and heavy capital investment
• 20 of GDP.
• Steel, petrochemicals, cameras, televisions,
  motorcycles and automobiles.
• Saving rates
• Between 15 and 25 of income compared to less
  than 3 in the United States.
• 13 of GPD in 1970 as opposed to 6 for the
  United States
• Policies to favor savings, unlike borrowing for
  the US.
• The government provided financial assistance to
  banks and invested in infrastructures such as
  road and railways.
• Investment needs came from 90 of national
  capital.

48
Japans Second Transformation
3

• 7) Educational system
• Longer schooling year.
• Very competitive system.
• High level of discipline.
• Emphasis of technical issues.
• 8) Military expenses
• Much smaller than most countries.
• Security guaranteed by the United States.
• Japan has however a significant defense force.
• Resources can be allocated elsewhere.

49
Japans Second Transformation
3

• 9) The role of corporations (Keiretsus)
• High level of loyalty to corporations and other
  institutions.
• Cradle to grave employment
• Once graduated from school, a person's position
  with a corporation may last for life.
• Corporations often provide housing, recreational
  opportunities, vacation travel, and, sometimes,
  even marriage opportunities.
• Japanese corporate strategies
• Coordination of investments, production and
  exports.
• Unwillingness to buy from abroad even when the
  price is lower.
• Spends a great deal on research and development
  to keep at the cutting edge of new technologies.
• Corporations somewhat replaced the government for
  foreign policies.

50
Japans Second Transformation
3

• 10) Adaptation and ambivalence
• Tradition since the Meiji restoration.
• Able to borrow ideas and technologies and
  incorporate them into the society.
• Celebration of Christian holidays, such as
  Christmas.
• Favorite drinks are Sake and Scotch.
• Favorite sports and Sumo wrestling and golf.

51
Synopsis Japans Second Transformation
3
Imports
Government
Geography
Corporate Japan
WWII
Trade
Labor / Education
Keiretsus
Exports
Technology
Investments
Added Value
Military occupation Political changes Economic
changes
52
Japans First and Second Transformation
3
53
Economic Downturn (1989-)
4

• The Bubble Economy
• Fast growth in the late 1980s High confidence
  and high expectations.
• Evaluation of the yen after 1985 (3 times its
  1971 value).
• Asset prices inflation (stock and real estate)
• Real estate as the guarantee to borrow for stock
  market investment.
• At the peak of the bubble in 1990, Japanese
  real-estate was worth four times the value of all
  property in the US.
• Unsustainable process.
• Economic and financial crisis
• Began in the 1990s a period of stagnation.
• In 1990, the Nikkei lost 38 of its value (2
  trillion US).
• Since 1991, 2.5 million manufacturing jobs have
  disappeared (25 decline).
• 1990s labeled as Japans lost decade.

54
Economic Downturn (1989-)
4

• Factors
• Speculation
• Real estate and stock market.
• Many loans could not be paid back.
• Relocation of several factories to cheap labor
  nations
• 15 of the manufacturing of Japanese corporations
  is done abroad.
• The high value of yen favors imports more than
  exports.
• China, Vietnam, the Philippines, etc.
• Competing directly with Japan.
• Relocation to Mexico, Canada and the USA (NAFTA).
• High production costs
• Undermines international competition.
• Difficulties to adapt to the information society.
• Opening of the internal market to foreign
  competition
• Its trading partners were asking for a more
  opened Japanese market.

55
Costs Comparison, 1996
4
56
Nikkei Index, 1950-2001
4
57
GDP of Japan and the United States, 1970-2002
(billions US at current prices)
4
58
The Corporate and Industrial Hegemony
C

• 1. Corporate System
• What is the nature and structure of the Japanese
  corporate system?
• 2. Labor and Technology
• What is specific to the Japanese workforce?
• 3. Trade and the Financial System
• What is the commercial and financial strength of
  Japan?
• 4. Mega-Urban Regions Tokaido
• How Japanese urbanization is structured?

59
Corporate System
1

• Political Economy
• Government / keiretsus dualism.
• Economic power is concentrated in a limited
  number of corporations.
• More the case in Japan than any other parts of
  the world.
• Corporatism and society
• Difficult to separate the corporation and the
  society as they are embedded.
• Corporations are part of important economic and
  political decisions in Japan.
• Dualism between the government and the
  corporations.

BOJ
Government
MOF
MITI
Keiretsus
60
Corporate System
1

• The Keiretsu
• Group of leaders.
• Complex structure of more or less linked
  corporations.
• Vertically and horizontally organized.
• Six main horizontal conglomerates (keiretsu)
• Mitsubishi.
• Mitsui.
• Sumitomo.
• Fuyo.
• Dai-Ichi Kangyo (DKB).
• Sanwa.
• The first five conglomerates have a net worth of
  1,000 billion, 25 of the Japanese GDP.

61
Corporate System
1

• Horizontal keiretsu
• Highly diversified function.
• A trinity or core
• A bank at the core.
• A trading company.
• A manufacturer.
• Cluster of affiliates and subsidiaries
• From related and unrelated industries and
  services.
• Major manufacturers.
• Large service providers like life insurance
  companies.
• 10-15 equity ownership.

Bank
Trading Company
Manufacturer
Affiliates and subsidiaries
62
Major Keiretsu
1
63
Corporate System
1

• Vertical keiretsu
• Centered around a major manufacturer that is not
  part of an horizontal keiretsu.
• Consist primarily of supplier and distributor
  relationships.
• Service the large manufacturer at the core of the
  keiretsu.
• The Automobile Industry
• Toyota Group, Nissan Group, Honda Group, Daihatsu
  Motors, Isuzu.
• Electronics
• Hitachi, Toshiba, Sanyo, Matsushita, Sony.

Suppliers
Manufacturer
Wholesaler
Retailers
64
Automobile Production, United States, Japan and
Germany, 1950-2004 (in millions)
1
65
Global Production per Car Manufacturer, 2001
1
66
Corporate System
1
67
Labor and Technology
2

• Research, Development and Labor
• Technology is of strategic importance to increase
  productivity
• About 3 of the GDP as compared to 2.5 for the
  United States.
• Priority to scientific and technological
  research
• 110 scientists and technicians per 1,000 people.
• Only 55 per 1,000 in the U.S.
• Much of this research is funded by the private
  sector, usually by the industry, rather than by
  the government.
• Far more emphasis placed on applied research than
  on basic research.
• Must generate income for the corporation.

68
Researchers per 10 000 Labor Force, 1981-99
2
69
Average spending in Research and Development,
of GDP, 1985-95
2
70
Labor and Technology
2

• Lower unemployed rate than many other economies
• 2 to 3 unemployment rate on average.
• Hides underemployment problems.
• Massive sub-contracting to absorb market
  fluctuations.
• Women labor absorbs most of the fluctuations.
• Strict employment hierarchy.
• Secure employment for large corporations

71
Labor and Technology
2

• Lifetime Employment System
• A company guarantees its new employees a job
  until retirement.
• Recruitment takes place directly after education
• Training is provided on the job.
• May take a few years for the employee to become
  productive.
• Most characteristic of large firms and government
  agencies.
• About one-third of the workforce.
• Raises
• Mainly a function of seniority.
• Usually given to a whole level or group at the
  same time.
• Especially at the lower ranks where there are
  more employees and less distinction between them.

72
Labor and Technology
2

• Flexibility
• Strict prohibitions against firing except under
  extreme circumstances.
• During difficult times
• Across-the-board salary cuts rather than
  downsizing the workforce.
• Quitting
• A company is seen as a family and close
  relationships of trust must be built with
  co-workers.
• Disgrace and dishonor to quit a company.

73
Labor and Technology
2

• Automation
• The Japanese economy relies heavily on
  mechanization
• Accumulation of equipment goods.
• 46 of all industrial robots were in Japan
  (2002).
• Related to the geographical attributes of Japan.
• High labor costs and the search for quality.
• Kaizen system.
• Limits to robotisation.
• Sony investing massively in robots as consumer
  goods
• AIBO (dog).
• QRIO (small humanoid).

74
Operating Industrial Robots, 1995-2002
2
75
Trade and the Financial System
3

• International trade
• Very important for Japan
• Japan is the 3rd largest trader in the world.
• Fills the needs of the Japanese economy in raw
  materials and energy.
• Trade system
• Import raw materials at a low cost.
• Perform value added activities (notably
  technology related).
• Export at competing prices.
• Systematic positive trade balance of Japan.
• Increasing importance of the national market and
  relocation of some industries abroad.
• Japanese economy increasingly linked with the
  Chinese economy.

76
Worlds 10 Largest Exporters and Importers, 2003
3
77
Major Japanese Exports and Imports, 1999 (in
millions of US)
3
78
Japans Trading Partners
3
79
Tokaido
4

• Tokaido
• Considerable accumulation of infrastructures and
  productive forces in the Tokyo-Osaka corridor.
• Refers to the imperial road that linked Edo
  (Tokyo) to Kyoto.
• Now refers to an urban region accounting for more
  than 90 million people, 70 of the Japanese
  population.
• Tokyo 26 million population.
• Nagoya and Osaka (6 and 10 million population).
• Several cities are over 1 million (Kobe, Kyoto
  and Yokohama).

80
Tokaido Megalopolis
4
Kanazawa
Tokyo
Narita
Nagoya
Kyoto
Osaka
Kobe
Hamamatsu
Kansai International Airport
Airport
81
Tokaido
4

• Functions and specialization of Tokaido
• Tokyo
• Tertiary and quaternary functions.
• 70 of wholesaling, finance and insurance.
• Head offices of several conglomerates.
• 1990 between 45 and 50 of the global financial
  capitalization.
• Nagoya and Osaka
• Industrial, financial and port centers.
• Massive accumulation of multimodal transport
  infrastructures.
• Support the external dependency of Japan.
• Several large airports supporting the trading and
  financial network.
• Shinkansen
• High-speed train network.
• Opened in 1964.
• Operates at speeds of more than 200 km/hr.
• 300 km/hr trains are now entering in service.

82
The Shinkansen High Speed Rail Network
4
Operational
Under Construction
Hokkaido
Planned
Sapporo
Hakodate
Aomori
Hachinohe
Akita
Morioka
Shinjo
Yamagata
Sendai
Niigita
Fukushima
Nagano
Takasaki
Kanazawa
Omiya
Honshu
Tokyo
Nagoya
Okayama
Shimonoseki
Osaka
Shikoku
Fukowa
Nagasaki
Kyushu
kagoshima