Japan: Still the Developmental State

1
Japan Still the Developmental State?

• By Craig Marcus

2
MITI and the Japanese Miracle

• Chalmers Johnson
• Miracle realized in 1962
• Highlighted by transition away from primary
  exports to heavy manufacturing
• Role of Takahashi Korekiyo

3
Projectionist School

• The aim is not to explain the Japanese miracle
• Examples include The Japanese Miracle Men by
  Ralph Hewins, Japan Surges Ahead by Robert
  Guillain and Japan as Number One by Ezra Vogel

4
Socio-Economic School

• Anything-but-politics approach
• Four main types of analysis
• National character
• No occurrence of a miracle
• Unique structural features
• Post-WW II environment
• Which view has the most explanatory
• power?

5
National Character

• Japan possess a unique, cultural derived capacity
  to succeed in economics
• Rolling consensus private collectivism
  inbred collectivism and Japan Inc.
• Negatives- Over generalizes especially in light
  of situational motivations

6
No-Miracle-Occurred

• Normal outgrowth of market forces
• Role of the government exaggerated
• Negatives
• 1) Assumes Japanese regulatory state is the same
  as the US regulatory state
• 2) Assumes Japanese banking system is the same
  as the US banking system

7
Unique Structural Features

• Three sacred treasures
• Lifetime employment systems
• Seniority wage system
• Enterprise unionism
• Negatives
• Not the only special institutions in Japanese
  society
• Date of their origins and their maintenance

8
Post-WW II Environment

• Theory of the free ride
• Lack of defense expenditures
• Ready access to major export market (the US)
• Relatively cheap transfers of technology
• Negatives
• High savings and investment
• Driven by domestic markets
• Role of the MITI in technology transfers

9
Development State

• Economic nationalism or Neo-mercantilism
• Market Economy vs Planned Economy
• Regulatory Orientation vs Development Orientation
• Differences
• Public Service
• Measurement Standards
• Ability to cope with externalities
• Consensus

10
Industrial Policy

• Industrial Rationalization Policy
• Enterprises
• Environment
• Whole Industries
• International Competition Standards
• Industrial Structure Policy- proportions of
  production

11
Conclusion

• The government (MITI) played a critical role in
  the miracle of the 1960s
• Must be understood in the historical context of
  pre and wartime Japan
• Late comer in development
• Mechanics of industrial policy
• Children of the Showa Era

12
The US and Japan as Models of Industrialization

• Fernando Fajnzylber
• Pattern of development versus development
  strategies
• Characterization versus explanation
• South Korea, Mexico, Argentina and Brazil as
  subjects of study

13
Patterns of Development in Industrialized Nations
14
Patterns of Development in Industrialized Nations
15
Patterns of Development in Industrialized Nations

• Four central differences
• Consumption
• Income distribution
• International competitiveness
• Dynamism

16
Patterns of Development in Industrializing Nations

• Identification of eight different quantifiable
  dimensions among South Korea, Argentina, Brazil
  and Mexico
• Dynamism
• Social articulation
• Consumption patterns
• International competitiveness
• Structure of trade
• External borrowing
• Capital flight
• Entrepreneurial leadership

17
Patterns of Development in Industrializing Nations

• Dynamism- South Korea
• Social Integration- South Korea
• Consumption Patterns- Argentina
• International Competition- South Korea
• Structure of Trade- South Korea and Brazil
• External Debt- South Korea and Brazil
• Capital Flight- South Korea and Brazil
• Entrepreneurial Leadership- South Korea

18
Conclusion

• General out-performance of South Korea to its
  counterparts in Latin America
• Despite economic success, emphasis on futility of
  reproduction of East Asian model in Latin
  America

19
Questions

• After the reading, which of the five forms of
  analysis best explains Japans miracle of the
  post-war period?
• Which aspect of South Korea did you find most
  important to its out-performance of the NICs in
  Latin America?
• Do you think the MITI does plays a critical role
  in the economic performance of Japan?