The Public Corporation: A Potent Japanese Policy Weapon

Abstract

The Japan Electronic Computer Company (JECC) has no sales division, only a couple hundred employees, and at best earns profits of one to two million dollars a year; it is not surprising that few Japanese have ever heard of it. Yet, this quasi-private computer rental company has played a critical role in the development of a modern Japanese computer industry. Japan, like other industrialized nations, has used public corporations to provide important public services such as railroads and airlines. But the bureaucracy has also used an array of public corporations as operating arms of specific ministries to serve their purposes.' Some, like JECC, have been key players in Japan's efforts to target strategic industries. JECC, which was created by the Ministry of International Trade and Industry (MITI) to promote the development of an economically viable computer industry, has been the most important single institution spurring the industry's development. Analysis of how it was established and how it influenced the demand, supply, price, and technological sophistication of domestic computers offers new insight into Japan's government-business relationship and the ways in which state intervention can spur rather than stifle industrial development. To the all-star team of Japanese computer companies that jointly own JECC Fujitsu, Hitachi, NEC, Toshiba, Mitsubishi, and Oki -the rental company is a conduit for a generous flow of subsidized government loans. Between 1961 and 1981 the Japanese government poured some $2 billion in low-interest loans into