Japan: Still the Developmental Japan: Still the Developmental State?State?

By: Craig By: Craig MMarcusarcus

MITI and the Japanese MiracleMITI and the Japanese Miracle

Chalmers JohnsonChalmers Johnson ““Miracle” realized in 1962Miracle” realized in 1962 Highlighted by transition away from Highlighted by transition away from

primary exports to heavy primary exports to heavy manufacturingmanufacturing

Role of Takahashi KorekiyoRole of Takahashi Korekiyo

Projectionist SchoolProjectionist School

The aim is not to explain the The aim is not to explain the Japanese miracleJapanese miracle

Examples include Examples include The Japanese The Japanese Miracle MenMiracle Men by Ralph Hewins, by Ralph Hewins, Japan Japan Surges AheadSurges Ahead by Robert Guillain and by Robert Guillain and Japan as Number OneJapan as Number One by Ezra Vogel by Ezra Vogel

Socio-Economic SchoolSocio-Economic School

““Anything-but-politics” approachAnything-but-politics” approach Four main types of analysisFour main types of analysis

1)1) National characterNational character2)2) No occurrence of a miracleNo occurrence of a miracle3)3) Unique structural featuresUnique structural features4)4) Post-WW II environmentPost-WW II environment

Which view has the most explanatoryWhich view has the most explanatorypower?power?

National CharacterNational Character

Japan possess a unique, cultural Japan possess a unique, cultural derived capacity to succeed in derived capacity to succeed in economicseconomics

““Rolling consensus” “private Rolling consensus” “private collectivism” “inbred collectivism” collectivism” “inbred collectivism” and “Japan Inc.”and “Japan Inc.”

Negatives- Over generalizes Negatives- Over generalizes especially in light of “situational especially in light of “situational motivations”motivations”

““No-Miracle-Occurred”No-Miracle-Occurred”

Normal outgrowth of market forcesNormal outgrowth of market forces Role of the government exaggeratedRole of the government exaggerated Negatives:Negatives:

1) Assumes Japanese regulatory state is the same as the 1) Assumes Japanese regulatory state is the same as the US regulatory stateUS regulatory state

2) Assumes Japanese banking system is the same as the 2) Assumes Japanese banking system is the same as the US banking systemUS banking system

Unique Structural FeaturesUnique Structural Features

““Three sacred treasures”Three sacred treasures”1)1) ““Lifetime” employment systemsLifetime” employment systems

2)2) Seniority wage systemSeniority wage system

3)3) Enterprise unionismEnterprise unionism

NegativesNegatives1)1) Not the only “special institutions” in Japanese societyNot the only “special institutions” in Japanese society

2)2) Date of their origins and their maintenanceDate of their origins and their maintenance

Post-WW II EnvironmentPost-WW II Environment

Theory of the “free ride”Theory of the “free ride”1)1) Lack of defense expendituresLack of defense expenditures

2)2) Ready access to major export market (the US)Ready access to major export market (the US)

3)3) Relatively cheap transfers of technologyRelatively cheap transfers of technology

NegativesNegatives1)1) High savings and investmentHigh savings and investment

2)2) Driven by domestic marketsDriven by domestic markets

3)3) Role of the MITI in technology transfersRole of the MITI in technology transfers

*Development State**Development State*

Economic nationalism or Neo-Economic nationalism or Neo-mercantilismmercantilism

Market Economy vs Planned EconomyMarket Economy vs Planned Economy Regulatory Orientation vs Development Regulatory Orientation vs Development

OrientationOrientation Differences Differences

1)1) Public ServicePublic Service2)2) Measurement StandardsMeasurement Standards3)3) Ability to cope with externalitiesAbility to cope with externalities4)4) ConsensusConsensus

Industrial PolicyIndustrial Policy

Industrial Rationalization PolicyIndustrial Rationalization Policy1)1) EnterprisesEnterprises

2)2) EnvironmentEnvironment

3)3) Whole IndustriesWhole Industries

4)4) International Competition StandardsInternational Competition Standards

Industrial Structure Policy- proportions Industrial Structure Policy- proportions of productionof production

ConclusionConclusion

The government (MITI) played a The government (MITI) played a critical role in the “miracle” of the critical role in the “miracle” of the 1960s1960s

Must be understood in the historical Must be understood in the historical context of pre and wartime Japancontext of pre and wartime Japan

1)1) Late comer in developmentLate comer in development

2)2) Mechanics of industrial policyMechanics of industrial policy

3)3) Children of the Showa EraChildren of the Showa Era

The US and Japan as Models of The US and Japan as Models of IndustrializationIndustrialization

Fernando FajnzylberFernando Fajnzylber Pattern of development versus Pattern of development versus

development strategiesdevelopment strategies Characterization versus explanationCharacterization versus explanation South Korea, Mexico, Argentina and South Korea, Mexico, Argentina and

Brazil as subjects of studyBrazil as subjects of study

Patterns of Development in Patterns of Development in Industrialized NationsIndustrialized Nations

Patterns of Development in Patterns of Development in Industrialized NationsIndustrialized Nations

Patterns of Development in Patterns of Development in Industrialized NationsIndustrialized Nations

Four central differencesFour central differences1)1) ConsumptionConsumption

2)2) Income distributionIncome distribution

3)3) International competitivenessInternational competitiveness

4)4) DynamismDynamism

Patterns of Development in Patterns of Development in Industrializing NationsIndustrializing Nations

Identification of eight different Identification of eight different quantifiable dimensions among quantifiable dimensions among South Korea, Argentina, Brazil and South Korea, Argentina, Brazil and Mexico:Mexico:

1)1) DynamismDynamism2)2) Social articulationSocial articulation3)3) Consumption patternsConsumption patterns4)4) International competitivenessInternational competitiveness5)5) Structure of tradeStructure of trade6)6) External borrowingExternal borrowing7)7) Capital flightCapital flight8)8) Entrepreneurial leadershipEntrepreneurial leadership

Patterns of Development in Patterns of Development in Industrializing NationsIndustrializing Nations

Dynamism- South KoreaDynamism- South Korea Social Integration- South KoreaSocial Integration- South Korea Consumption Patterns- ArgentinaConsumption Patterns- Argentina International Competition- South KoreaInternational Competition- South Korea Structure of Trade- South Korea and BrazilStructure of Trade- South Korea and Brazil External Debt- South Korea and BrazilExternal Debt- South Korea and Brazil Capital Flight- South Korea and BrazilCapital Flight- South Korea and Brazil Entrepreneurial Leadership- South KoreaEntrepreneurial Leadership- South Korea

ConclusionConclusion

General out-performance of South General out-performance of South Korea to its counterparts in Latin Korea to its counterparts in Latin AmericaAmerica

Despite economic success, emphasis Despite economic success, emphasis on futility of “reproduction” of East on futility of “reproduction” of East Asian model in Latin AmericaAsian model in Latin America

QuestionsQuestions

1)1) After the reading, which of the five forms After the reading, which of the five forms of analysis best explains Japan’s of analysis best explains Japan’s “miracle” of the post-war period?“miracle” of the post-war period?

2)2) Which aspect of South Korea did you find Which aspect of South Korea did you find most important to its out-performance of most important to its out-performance of the NICs in Latin America?the NICs in Latin America?

3)3) Do you think the MITI does plays a Do you think the MITI does plays a critical role in the economic performance critical role in the economic performance of Japan?of Japan?