1. Japan: A Strategy for Economic Growth ManEc 358

2. Context Japan, 1945  Dependence on US for  Trade  Defense umbrella  Sponsorship for OECD, GATT membership

3. Context Politics  Numerous political parties, mostly conservative  Leftists in labor, intellectuals  Open education system for better jobs, higher pay  Protected, small farms, esp. rice

4. Context Labor  Unions not very militant  Low wages early, higher later  High degree of job security  Loyalty of workers, lifetime employment  Unions politically active  Early retirement  Consensus vs. Conflict in employment

5. Context Social Security  Underdeveloped social security system.  High rate of savings, finding new jobs after retirement  Lump-sum retirement payment of 2 to 4 years earnings.

6. Context Japan, 1945  The Occupation and industry structure objectives  MITI got the Anti-Monopoly Law relaxed.  Revised law legalized cartels when necessary to avert recession or for rationalization.  150 cartels in 1957, 836 eleven years later.

7. Strategy

8. Strategy Japan, 1945  Corporate governance and investment  Industrial policy, cartel policy  Export promotion  Targeting U.S. export market  Foreign trade policies  Corporate focus  Mkt. share vs. return to equity  Profit subordinated to growth

9. Strategy Japan, 1945  Concern about inadequate scale greater than that about undue concentration  The Japanese government stood behind the debt position of major Japanese companies  It also tried to determine the nature and direction of growth.

10. Strategy Institutions  Occupation  Established banks to make public loans to key industries  Demanded a National Planning Agency  Put controls on foreign trade, etc.

11. Strategy Institutions  MITI  Power to sanction imports, esp. foreign technologies  Decision center on industrial policy (picking “winners”)  Power now diluted

12. Strategy  Develop capital-intensive industries of high technology for export  Directed, rather than free trade  Laws to develop machinery and electronics industries  Protection of industries and enterprises, but let in high-tech goods

13. Strategy  Permit mergers in steel, motor vehicles, and computers  Limit imports to essential products  Tariffs, quotas, Exchange controls  Limit foreign investment to  Balance of payments  Sophisticated technologies

14. Performance

15. Performance  GNP growth  Manufacturing Growth compared to U.S.  Defense expenditures  Shares for investment and consumption

16. Performance  Social security Benefits  Savings  Fixed Capital Formation

17. Japan, Inc. Bank of Japan City Banks Big Industry DIET, PRIME MINISTER