Japan Tries Cloning Its Economic Model In Willing Nations

WITH an economy that is the envy of the world, Japan is also trying to make it the model.

In the West, capitalism is just capitalism. Not so to Japanese leaders, who shaped a powerful market economy with a strong government hand after World War II. Their tactics -- sanctioned cartels, price-fixing, forced savings, import barriers, and cheap loans to targeted industries -- are now legendary, but hardly universal.

Officials in Tokyo are newly aggressive in spreading the message of Japanese capitalism. ''We must not remain silent,'' says Masaki Shiratori, a top foreign-aid official.

Mr. Shiratori is the vice president of Japan's Overseas Economic Cooperation Fund, which dispenses most of Japanese low-interest loans to developing nations.

As executive director for Japan at the World Bank in the early 1990s, Shiratori says that finance officials from developing countries would beg him to use his influence to counter the Bank's free-market ideology. ''They wanted to learn the Japanese experience,'' he says.

Japanese officials say they have willing students of their ideas among countries fed up with Western economic prescriptions.

Asian-style capitalism, unlike that in Europe or North America, ''has again become an alternative after 200 years'' of Western domination, says Eisuke Sakakibara, president of the Finance Ministry's premier research institute.

In a government video used to train other Asians, a voice intones: ''As a result of the reforms in the former Soviet Union and the countries of Eastern Europe, the tendency throughout the world is toward the market economy. But the market economy has taken on different forms, in Japan, the USA, and Europe.''

The video uses a backdrop of fireworks and the fall of the Berlin Wall to imply a revolution. It then deals with ''harmonious competitive'' ties between Japanese businesses -- in other words, cartels.

China learns from Japan

Who are the biggest students of the Japanese model? ''The Chinese everywhere are shifting to the Japanese model,'' says Chalmers Johnson, president of the Japan Policy Research Institute in Santa Monica, Calif.

In the last five years, Japan has begun to channel its huge foreign-aid budget -- $12 billion -- to the task of projecting its economic values, especially in Asia. And last November, at the second summit of Asia Pacific Economic Cooperation leaders in Indonesia, Japan unveiled a plan for economic cooperation that hinted at a blueprint for Japanese-led development in the region.

Critics say that Japan, host to this year's APEC summit, may try to steer the group away from the trade liberalization favored by the US and toward growth funded by Japan.

Any changes in Japan, notes Dr. Johnson, are probably toward a role for Japan as headquarters for East Asia.

Japanese officials argue that they are not imposing their ideas of industrial policy on developing countries -- only offering a choice.

Japan is also trying to use its financial muscle to reorient global economic policy. Shiratori was behind Japan paying $1.2 million for a World Bank study on the role of industrial policy in eight so-called miracle economies in East Asia.

The 1993 report, which only endorsed the Japanese government's efforts to foster export industries, had ''zero impact'' on the opposition of the Bank's senior management toward government intervention and industrial policy, says Shiratori. So he had OECF do its own studies. Shiratori says that a 20-country survey of privatization in the telecommunications sector, for instance, shows that ''World Bank prescriptions are not appropriate.''

Other Japanese agencies are pouring money into intellectual projects to define Japanese economic prescriptions and into training officials from developing countries. Oddly, there seems to be little coordination between the Japanese agencies.

Mr. Sakakibara's institute at the Ministry of Finance has a 50-person ''study group for the socioeconomic system of the 21st century.'' Under the auspices of Japanese big business and the Foreign Ministry, the five-year-old Foundation for Advanced Studies on International Development (FASID) is funding yet another three- to four-year research program with about $1 million annual budget.

Although the Japanese were disappointed with the World Bank's report, they are getting their money's worth by using it as a platform for their own studies.

In early April, FASID, along with the US Agency for International Development, is providing funding for a conference in Hawaii that will bring together some of the key figures who wrote the World Bank report, along with Japanese and US academics, and aid agency officials to ponder the nature of the East Asian ''paradigm.'' The World Bank report explicitly rejected the notion that East Asia has a paradigm -- a common success formula.

Trying to articulate its policy

Despite Japan's efforts, the effectiveness of its theoretical research remains to be seen. So far, only Japan's Economic Planning Agency (EPA) has tried to articulate the government's case in a 92-page report. While the language of the study is murky, it claims the World Bank's report missed important aspects of Japan's industrial policy. The report maintains that the keys to Japanese development were in ''participatory interaction'' between government and business, and ''self-help'' -- a code word for government loans to a business.

According to Ed Lincoln, a Brookings Institution in Washington, DC economist who currently advises the US ambassador to Japan, the EPA report does little more than dress up standard economic ideas in creative language. ''All the things they emphasized were things the World Bank emphasized ,'' Mr. Lincoln says. ''There are some lessons from East Asia, but we know these lessons already. If they think Japan is unique, they're ignorant of world economic history.''

John Page, the economist who led the World Bank study, calls the EPA project an ''attempt to go beyond the war stories and pharmacology of how the Japanese economy works and begin to put together an analytical framework.''

Even so, all Japan's efforts are likely to be muted by the fact that Japan itself is rapidly abandoning industrial policy.

Dr. Page argues that Japanese bureaucrats have begun to pay so much attention to theory -- which they largely ignored during Japan's own period of rapid growth in the 1950s and '60s -- partly because they are under attack at home.

''The reason why it's become so important is that the most dirigiste parts of the Japanese bureaucracy are under sustained attack from both the politicians and the people,'' Page says. ''Where's the pride for these people? The pride is in saying, we played an important role in the development of our country.''

You've read  of  free articles. Subscribe to continue.
QR Code to Japan Tries Cloning Its Economic Model In Willing Nations
Read this article in
QR Code to Subscription page
Start your subscription today