Transcript PowerPoint プレゼンテーション

Economic Development of Japan
Review
Topics for Review
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Umesao Theory (evolutionary history)
Edo—preparation for modernization
Meiji—private sector dynamism
Free market vs. industrial policy
Coping with post-bubble recession
Politics
Discussion and Q&A
Dr. Tadao Umesao’s View of the World
Eurasian Continent
Russia
The
Western
MeditterraEurope
nean and
(UK)
Islamic
States
Dry Area China Japan
India
Evolution of Peripheral Society
Interaction between Internal and External Forces
Foreign
systems
Base society
Period of internalization
& stability
Period of adjustment
& rapid change
Failed adjustment:
social instability, economic
crisis, foreign dominance, etc.
External stimuli
Failed adjustment
I. Emperor’s Rule
II. Samurai’s Rule
1603
X
III. Modern
-ization
PP.16-17
IV. Postwar
1867
Rapid
recovery
and
growth
NARA
Centraliz
ation
MEIJI
EDO
Jinshin War × 671
Taika Reform × 645
Clan
fights
HEIAN
Nobles,
Decentra
lization
KAMAKURA
MUROMACHI
SENGOKU
Hunting &
gathering
Internal
wars,
dynamic
& fluid
society
xxxx
Chinese culture &
Rice
Buddhism political system
Tokugawa
Shogunate
Peace,
isolation,
conserva
tive class
society
Westerniz
ation,
industriali
zation,
militariliza
tion
xxxx
WEST: guns &
Christianity
WAR
xxx
WEST!!!
US occupation
1945-52
P.23
Edo: Pre-conditions for Industrial Take-off
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•
•
•
•
•
•
Political unity and stability
Agricultural development and commercialization
Development of transportation and nationally unified markets
Rise of commerce, finance and wealthy merchant class
Rise of pre-modern manufacturing
Industrial promotion by local governments (policy capability)
High level of education (HRD)
P.56
Cumulative history, Edo achievements,
national unity and nationalism
Japan’s economic growth was driven mainly by private
dynamism while policy was also helpful
Private-sector dynamism
and entrepreneurship
(primary force)
Policy support
(supplementary)
Rapid
industrialization
esp. Meiji and
post WW2 period
Policy was generally
successful despite criticisms:
--Power monopoly by former
Satsuma & Choshu politicians
--Privatization scandal, 1881
--Excessively pro-West
--Unfair by today’s standard
P.47
Rise and Fall of Merchants and Enterprises
Q: Who were the main drivers of Meiji industrialization?
A: All types of entrepreneurs including Edo gosho, Yokohama
merchants, Meiji zaibatsu, and company boom millionaires.
Persons
250
Millionaires of Edo period
New millionaires in company
boom period
200
New millionaires of Late Edo
150
► Japan’s industrial
revolution: from
1880s to 1900s
New millionaires
in early Meiji
100
50
0
1849
1864
1875
1888
► Survival game
was severe: many
entries, many exits
1902
Source: Computed from Miyamoto (1999）, p.53. Each line shows how many of
the new millionaires emerging each period survived in later periods.
► Japan-China War,
Japan-Russia War
also accelerated
industrialization
Dynamic Business Leaders and Managers
Yataro Iwasaki
1835-1885
Eiichi Shibusawa
1840-1931
Tosa samurai; founder of
Mitsubishi Zaibatsu
Super business coordinator
who created 500 companies
Rizaemon Minomura
1821-1877
Takeo Yamanobe
1851-1920
Super manager and
reformer of Mitsui Zaibatsu
Super factory manager and
founder of Osaka Spinning
Company
Saihei Hirose
1828-1914
Tomoatsu Godai
1836-1885
Super manager of
Sumitomo Zaibatsu and
Besshi Copper Mine
Satsuma samurai; super
business coordinator for
Kansai Area
PP.65, 179-181
Monozukuri (Manufacturing) Spirit
• Mono means “thing” and zukuri (tsukuri) means “making” in
indigenous Japanese language.
• It describes sincere attitude toward production with pride,
skill and dedication. It is a way of pursuing innovation and
perfection, often disregarding profit or balance sheet.
• Many of Japan’s excellent manufacturing firms were founded
by engineers full of monozukuri spirit.
Sakichi Toyota
1867-1930
Konosuke Matsushita
1894-1989
Soichiro Honda
1906-1991
Akio Morita (Sony’s
co-founder)
1921-1999
“J-Model” vs. “Global Standard”
Industrial View
Free Market View
Motivation
Long-term firm growth
(industrial engineers)
Quick result orientation
(financial investors)
Skill and
technology
Internal accumulation by
permanent staff
Task-based contract or
outsourcing
Concept of
“firm”
Long-lasting community
for achieving excellence
Restructure, buy or sell
for best performance
Role of
Government
Assist industries with
Set laws and rules only;
technology, management, let private sector operate
finance, etc.
freely without meddling
Competition
& integration
Raise competitiveness
before integration;
temporary official help
Open up and compete
from the beginning;
level playing fields
PP.140-41
Origin of the Post-WW2 Japan System
• Featuring long-term commitments and official intervention
Government-led industrial drive, administrative guidance,
subcontracting, lifetime employment, keiretsu, mainbanks,
friendly trade unions, BOJ window guidance, etc.
• Negative view—this system was installed artificially after
1937 to execute war. It continued to work reasonably well in
the 1950s-60s, but it is now obsolete.
• Positive view—advanced industrialization requires such
features. Free markets do not generate high-tech or heavy
industries. Japan needed such a system to develop.
 This means laissez-faire policy supports light industries and
simple processing only; to go further, developing countries
need above features even today.
Average Tariff Rate
Calculated as (tariff revenue)/(import value)
25
%
20
1899 Restoration of
tariff rights
15
10
5
All commodities
Average of non-zero tariff commodities
1990
1980
1970
1960
1950
1940
1930
1920
1910
1900
1890
1880
1870
0
Industrial Policies in Postwar Japan
(From Prof. Akira Suehiro’s 2006 Slides)
• The fiscal investment and loan program (FILP, p.165fn)
promoted trade and industry until early 1960s
• Loans by Japan Development Bank and Exim Bank was
relatively small, but had two important effects
--Catalyst for larger commercial bank loans
--Information sharing between business and government
• Cooperative policy formulation and implementation
• The “return match game” and learning effect—firms
could apply many times for JDB and SME loans
 Japan’s IP contributed to development of the market
mechanism rather than distorting the market.
Figure 4 Mechanism of FLI and
the Role of MITI and JDB
Policy
Implementation
Ministry of International
Trade and Industry
(MITI)
Ministry of Finance
(MOF)
Fiscal Fund Bureau
Department of Heavy
Industry
technology advice
Japan Development
Bank
Fiscal Finance
managerial advice
Individual Firms
applied to fiscal finance
Policy Making
Business Associations
for each industry
Government Officers,
Academicians,
Specialists
Industrial Council on Specific
Industry or Target
Source: Drafted by Akira Suehiro
Late 1950s - 1960s
How to Cope with Post-Bubble Recession?
Inefficient
firms & banks
Bad debt
restructuring
Macro policy
stance
After WW1
Bubble
(1920s)
Rescue with
BOJ credit
Hide problem
until 1927
crisis
Neutral?
Heavy
industry drive
After Korean
War Bubble
(1950s)
No rescue
Not necessary
Moderately
tight
Rationalizatio
n (investment,
technology)
After Heisei
Bubble
(1990s)
Rescue Jusen
(real estate
nonbanks)
Restructure
after 1997-98
banking crisis
Fiscal activism Not much
& zero-interest
rate policy
US-led global Rescue big US
financial crisis banks, auto
(2008-09)
makers, etc.
Effort begun in Global effort
US
to ease macro
policies
Real sector
policy
New energy
policy?
Causes of the Banking Crisis, 1927
Kamekichi Takahashi & Sunao Morigaki, History of Showa Financial Crisis, 1968.
Fundamental causes (more important)
• Internal problems in the banking system
(kikan ginko)
• Rescuing weak businesses generously without
serious restructuring after the bubble burst.
• The 1923 earthquake and exchange rate instability
further weakened Japanese economy.
Immediate causes
• Political fights over the unsettled earthquake bills.
• Minor misstatement by Finance Minister Kataoka.
PP.162-65
Rationalization 合理化 (1950s)
• Korean War inflation reduced Japan’s cost
Anti-rationalization
negotiation, 1955
competitiveness, especially coal & steel.
• Competitiveness was regained by investing
in mass production and new technology.
Industry must exit if uncompetitive (coal).
• Funds: profits from the Korean War boom.
• Tight macroeconomic policy under a fixed
Anti-rationalization
rally, 1961
exchange rate to force rationalization.
• 1956 Economic White Paper: “We are no longer in the
postwar period”—the recovery phase is over, new
sources of growth must be found.
PP.211-212
Debate on Fiscal Stimuli, 1990s-Now
• During the 1990s, large fiscal spending was used to stimulate
the economy. But there was no strong recovery, while the
government debt skyrocketed.
• Some argued for even bigger stimuli; others said that would
only worsen the situation.
• PM Koizumi (2001-06)
set limits on spending
(infrastructure, welfare).
• PM Aso (2008-) returned
to big fiscal spending to
combat recession.
Government debt in % of GDP
180%
160%
140%
168%
120%
Bubble burst
100%
80%
60%
40%
20%
Koizumi
Abe
Fukuda
Aso
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
0%
Democratic
institution
(Form)
Constitution
Laws
Parliament
Election
Court
Full
democracy
US rule
Showa2
1960
Now
1945-51
Democratization
New constitution
LDP dominance
Lack of policy debate
Military rises
1931 Democracy
movement,
Party cabinet
1937
Defeat
War
Male suffrage 1925
Showa1
Taisho
Constitution 1889
Parliament
Fascism 1937-45
Edo
Pure
dictatorship
Meiji
Political fights
Reform vs conservatism, big vs small
government, other policy debates
(Content)
Political
competition
Flexibility in Coalition Building, 1858-1881
Industrialization
Fukoku Kyohei
(rich country, strong military)
Naichi Yusen
(internal reforms first)
Constitution
Okubo (Satsuma)
1830-1878
Foreign
expedition
Parliament
Kido (Choshu)
1833-1877
Saigo (Satsuma)
1827-1877
Seikanron
(Korean expedition plan)
Kogi Yoron
(democratization)
Itagaki (Tosa)
1837-1919
Source: Banno (2007), edited by presenter.
Two-party Politics 1924-1932
PP.130-32
Minsei Party 民政党
Seiyukai 政友会
(Kenseikai until 1927)
(Estab. in 1900 by Hirobumi Ito)
Economy
Small government, free market,
fiscal austerity & industrial
restructuring for return to gold
Big government, fiscal activism,
local public works for securing
votes
Foreign
policy
Oppose militarism, protect
Japan’s interest by diplomacy,
promote disarmament
To attack Minsei Party, support
military and fascism if necessary,
even deny democracy
Remark
Peace orientation is laudable,
but stubborn deflation policy
caused fascism to gain force
Economic recovery policy was
welcomed, but its opportunism
severely undermined democracy
Seiyukai statements:
“Prof. Minobe’s theory denies the supreme dignity of Emperor. Just banning his
books is not enough.”
“Go, go, Japan, the leader of Asia, the vast land of Manchuria and Mongolia is
waiting for you!!!” (election campaign song)”
The 1955 Regime (LDP dominance)
P.178
• The Liberal Democratic Party (LDP) formed in 1955,
held power until now (except 1993-96).
• Securing rural votes by subsidizing agriculture and
building rural infrastructure (firmly established by
PM Kakuei Tanaka 1972-74)
• LDP has many factions and zoku-giin groups
(politicians promoting subsidies in particular fields)
• Opposition parties are too weak
LDP
to challenge LDP’s rule.
• Reform movement inside LDP
Factions & zoku-giin
Koizumi reform—how successful?
Other parties
Abe, Fukuda, Aso too weak