Japan's Role in Asian Economic Development

Abstract

In April 1964 Japan officially announced her readiness to comply with Article 8 of the Charter of the International Monetary Fund, and became a full member of the Organization for Economic Cooperation and Development. Acceptance of Article 8 meant that she was no longer allowed to practice exchange restrictions on current merchandise transactions with the outside world, while joining the O.E.C.D. obliged her to remove, in a series of steps, control over capital transactions and to allocate 1 % of her national income as economic to the developing countries. After a long period of protectionism, Japan thus declared herself as a nation ready to engage in closer international economic cooperation than in the past, and to render economic assistance to the less developed countries. According to the United Nation's (optimistic) guide-line for development, by 1970 the presently underdeveloped countries should have reached a stage where they become capable of achieving a 5 % yearly growth of national income. However, this necessitates a 6% annual increase in their imports, whereas only a 2 % annual increase is expected. This in turn implies that the overall deficit in their external trade will be in the magnitude of some $20 billion in 1970 which must be financed by means other than exports. On the assumption that economic (including credit) from the developed countries continues to increase at the present pace, there will be a deficit of approximately $11 billion that can be removed only if the developed nations greatly increase the scope of their participation in foreign economic assistance. Leaving aside the reliability of these aggregate statistics of long-range projections, there seems to be a general consensus among development economists that the present rate of expansion of is not sufficient to fulfill the desired goal.' The slogan trade, not aid has often been voiced as a common aspiration of the underdeveloped countries, and there are several reasons why export expansion is preferred to economic as a means of acquiring foreign exchange to finance imports of resources for development. First, if is granted in the form of long-term loans, this merely postpones the present burden to the future. The difficulty in meeting interest payments and redemption of principals may grow cumulatively. The recipient country will find itself in greater need of increasing exports in order to settle a growing external debt. Second, if is given as a unilateral