Abstract
Japan, known around the world as a small, resource-poor island country, has experienced a greater than tenfold increase in its gross national product (GNP) in real terms since 1950. Annual growth rates ranging from 10 percent during the 1960s to approximately 3–4 percent in the 1980s have not only resulted in continually increasing world GNP shares but will also enable Japan to match the Soviet Union as the second largest economy behind the United States by the beginning of the twenty-first century.
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Notes
The Japanese fiscal year (FY) begins of April 1 of each year and ends on the following March 31.
Ezra F. Vogel, Japan as Number One (Cambridge: Harvard University Press, 1979 ); Marvin Wolf, The Japanese Conspiracy ( New York: Empire Books, 1983 ).
Thomas Pepper, Merit E. Janow, and Jimmy W. Wheeler, The Competition: Dealing With Japan (New York: Praeger Publishers, 1985); James C. Abegglen and George Stalk, Jr., Kaisha: The Japanese Corporation (New York: Basic Books, Inc., 1985); Bela Balassa and Marcus Noland, Japan in the World Economy Washington D.C.: Institute for International Economics, 1988 ).
The New York Times (May 3, 1986), p.1.
While both “restructuring” and “internationalization” are used to refer to the changes expected in Japan, hereafter the term internationalization will be used because it is more comprehensive and better conveys the intent of the changes.
Clyde V. Prestowitz, Jr., Trading Places: How We Allowed Japan to Take the Lead (New York: Basic Book, Inc:, Publishers, 1988. Martin and Susan Tolchin, Buying Into America (New York: Time Books, 1988 ). Karel van Wolferen, The Enigma of Japanese Power ( New York: Alfred A. Knopf, 1989 ).
Rethinking Japan,“ Business Week (August 7, 1989), p. 44.
Daniel Burstein, Yen! Japan’s New Financial Empire and Its Threat to America ( New York: Simon and Schuster, 1988 ).
Paul Kennedy, The Rise and Fall of Great Powers ( New York: Random House, 1987 ).
The Japan Economic Journal (May 3, 1986), p. 4.
For a more detailed exposition of this theme, see Richard Rosecrance, The Rise of the Trading State (New York: Basic Books, Inc., 1986 ).
The term “Japan Inc.” was used sarcastically to characterize the close and systematic cooperation between the Japanese government and business community that prevailed for many years.
Bruce R. Scott, “National Strategies: Key to International Competition,” U.S. Competitiveness in the World EconomyBruce R. Scott and George C. Lodge, eds. (Boston: Harvard Business School Press, 1985), p. 72.
Abegglen and Stalk, Kaisha: The Japanese Corporationop. cit., pp. 5–6.
Scott “National Strategies ” op. cit.p. 93.
Scott Ibidp. 96.
A case in point is Brazil. In 1984 it passed a law that prohibited the import of small computers for eight years, and then it supplemented this action with an industry development plan. This United States responded with a Section 301 (unfair trade practices) action in the fall of 1985. The Brazilians, however, maintained that domestic law is sovereign and cannot be changed under foreign pressure. The disagreement was resolved in 1989.
Abegglen and Stalk Kaisha: The Japanese Corporation op. cit.pp. 33–34.
Beginning in the mid-1960s, the yen was undervalued until 1971. During the following years, it was periodically undervalued to various degrees.
Ryutaro Komiya, “Industrial Policy’s Generation Gap,” Economic Eye, March 1986, pp. 22–24.
For a detailed discussion of MITI and its role, see Chalmers, Johnson, MITI and the Japanese Miracle (Stanford, CA: Stanford University Press, 1982 ).
For a detailed discussion of the various policy measures and their application over time, see chapter III in Pepper et al., The Competition,op. cit.
Ibid., p. 117. Other important public financing institutions were the Industrial Bank of Japan and the Long-Term Credit Bank of Japan.
Figures received during personal interviews with Fair Trade Commission officials in Tokyo, May 1986.
U.S. Congress, Joint Economic Committee Industrial Policy Movement in the United States: Is It the Answer? (Washington, D.C.: U.S. Government Printing Office, 1984), pp. 44–47.
For a detailed discussion of how the kaisha continually increased productivity and how the “winner’s competitive cycle” develops, see Abegglen and Stalk Kaisha: The Japanese Corporation op. cit.chapter 4, 5, and 3, respectively.
The Wall Street Journal (December 13, 1985), p. 34.
Annual statistical summaries of Japan by the Keizai Koho Center.
For a detailed discussion of the narrow national economic policies that distorted international economic relations, see Balassa and Noland, op. cit.
For a detailed discussion of the specific issues involved in these conflicts and of their resolution, see I.M. Destler, Haruhiro Fukui, and Hideo Sata. The Textile Wrangle: Conflicts in Japanese-American Relations 1969–1971 (Ithica, N.Y.: Cornell University Press, 1979), I.M. Destler and Hideo Sato Coping with U.S.-Japanese Economic Conflicts (Lexington, MA: D.C. Heath, 1982).
The following data were obtained from the various annual issues of the International Financial Statistics of the International Monetary Fund and U.S. Department of Commerce publications.
For a detailed discussion of these issues, see C. Fred Bergsten and William R. Cline The United States-Japan Economic Problem (Washington, D.C.: Institute for International Economics, 1985), pp. 3–13. This study was updated in a minor way in 1987.
See, for example, C. Fred Bergsten “What To Do About the U.S.-Japan Economic Conflict,” Foreign Affairs (Summer 1982), pp. 1059–1075; and Gary R. Saxonhouse, “The Micro-and Macroeconomics of Foreign Sales to Japan,” in Trade Policy in the 1980s, edited by William R. Cline ( Washington, D.C.: Institute for International Economics, 1983 ), pp. 259–304.
There were, of course, voices of reason as well. A good example is the General Accounting Office, which in its 1979 report on United States-Japan Trade: Issues and Problems (Washington, D.C.: General Accounting Office, 1979) presented a measured appraisal of U.S.Japan trade relations to Congress.
See previous discussion regarding slower growth of the agriculture, textiles and shipbuilding industries.
See, for example, 1983 World Bank Atlas ( Washington, D.C.: The World Bank, 1983 ).
See, for example, Kazuo Ogura, U.S.—Japan Economic Conflict ( Tokyo: Nihon Keizai Shimbun, 1982 ).
For a detailed discussion of the process, see Chikara Higashi, Japanese Trade Policy Formulation ( New York: Praeger Publishers, 1983 ).
The repetitive pattern is discussed in appendix A.
Prior to the mid-1980s, the only major agreement that tried to address some of the fundamental causes of the bilateral trade imbalances was the Strauss-Ushiba communique of 1978. The agreement committed both the United States and Japan to take certain measures and to work together on others designed to achieve high levels of noninflationary growth, improve their respective balance of payments position, bring the MTN negotiations to a successful conclusion, and to increase assistance to developing countries.
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Higashi, C., Lauter, G.P. (1990). The Path to Economic Power. In: The Internationalization of the Japanese Economy. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7891-2_1
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