Japanese Economic Policy Research Articles

Politics, Pressure, and Economic Policy: Explaining Japan's Use of Economic Stimulus Policies

While supplementary budgeting has long been part of the Japanese fiscal cycle, substantive and procedural aspects of the process have changed. First, since the late 1970s, supplementary budgets have been used to fund government economic stimulus efforts (keizai taisaku), and second, since the late 1980s, these budgets have been assembled several months after the announcement of the actual stimulus packages. Such stimulus policies do not fit the prevailing model of the Japanese electoral business cycle, which emphasizes the targeting of benefits by the Liberal Democratic Party (ldp) at its constituents at election time. This article addresses this anomoly by developing a theory of how governing parties use the economic policy process to serve their electoral interests, particularly through broadly gauged policies designed to improve macroeconomic conditions. The authors amend the prevailing model to allow an adequate test of their electoral theory to be conducted. The results suggest that Japanese economic stimulus policies were the result of governing parties' attempts to expand their support at election time and to satisfy U.S. pressure to usefiscalpolicy to stimulate domestic demand.

An empirical analysis on the stability of Japan’s aggregate import demand function

This paper empirically analyzes the stability of the Japanese import demand function based on the concept of cointegration. The standard cointegration tests and the test developed by Gregory and Hansen (1996) are performed. These empirical results do not support the presence of a stable cointegrating relation among real GDP, real imports and relative import prices. Thus, we cannot say that there is a stable import demand function in Japan during the period analyzed. As a result, stimulation of domestic business conditions in Japan will not necessarily link to the quantity of imports. This is an important finding from the viewpoint of Japanese economic policy.

Craig Freedman (ed.) Japanese Economic Policy Reconsidered, Edward Elgar, Cheltenham UK, 1998, xviii + 276pp.

Review(s) of: Japanese Economic Policy Reconsidered, by Craig Freedman (ed.), Edward Elgar, Cheltenham UK, 1998, xviii + 276pp.

Japan's fiscal policy and the East Asian financial crisis

Japanese economic policy has been identified as one possible cause of the East Asian financial crisis that began in July 1997. In this article, Yoichi Okita, Professor of Economics at the National Graduate Institute for Policy Studies, Tokyo, discusses Japan's role in the recovery of East Asian economies. Can and should Japan contribute to that recovery? To what extent is the recession in Japan an important cause of slow recovery in the region? Okita explores and develops the concept of economic policy coordination. Although changes in the Japanese economy were not the origin of the East Asian crisis, he says, prolonged stagnation in Japan is, nevertheless, a drag on the economies that are in trouble. However, one country's fiscal actions alone cannot solve the crisis; rather, all countries in the region should work together to redress the problem.

Financial System Reform and the Currency Crisis in East Asia

The 1997 crisis, including the collapse of currencies, stock, and real estate prices, may have far-reaching implications for financial reform-and more generally for the nature of capitalism-in a region that until recently was often believed to offer a superior alternative to the Anglo-Saxon model of liberal capitalism. In the wake of the crisis, South Korea, Thailand, Malaysia, and Indonesia have all announced that they will adopt financial reforms that were either mandated by the International Monetary Fund (IMF) or at least follow along similar lines. It is generally, though not universally, agreed that weak financial systems were a common factor in the currency, stock market, banking, and real estate collapses that collectively are known as the Asian Crisis. This article assumes that this is so, and goes on to examine the implications. Financial system reform has been high on the list of prescribed remedies for the crisis, but there is considerable disagreement about how to go about such reforms. The experience of Japanese financial reform may inform other cases in Asia because it helps policy makers to understand whether financial system reform is more likely to be successful if it is attempted in good times or bad. There are two competing views about this question. The first suggests that reform is politically painful; therefore, it should only be attempted with a strong economy and in the absence of problems such as, say, an existing banking crisis. Reform should be deferred if these conditions do not hold. Japanese economic policy since 1991 clearly has been informed by this mindset. The government has made increasingly desperate attempts to reflate the economy before pushing ahead with financial reform. According to the second view, financial system reform is politically very painful, therefore it can

Japanese Economic Policies and Growth: Implications for Business in Canada and North America

Japanese Economic Policies and Growth: Implications for Business in Canada and North America

Japanese Economic Policies and Growth: Implications for Businesses in Canada and North America.

Japanese Economic Policies and Growth: Implications for Businesses in Canada and North America.

Economic structure and crime: The case of Japan

Despite a high rate of industrialization, crime rates in Japan have declined overall since World War II. This is inconsistent with the “Durkheimian-Modernization” respective which argues that rapid socioeconomic changes increase crime rates. Although a number of qualitative studies investigate possible reasons for Japan's low and declining crime rates, few employ quantitative analyses with aggregate data. This paper systematically examines the impact of poverty, economic inequality and unemployment, on homicide, robbery and larceny rates among the 47 prefectures in Japan. The multiple regression analysis reveals a significant positive relationship between unemployment rates and homicide and robbery and between the degree of economic inequality and larceny. The poverty level is significantly and positively correlated only with homicide, but this relationship vanishes when controls for unemployment rate, the percent of young males and the level of industrialization are introduced. The implications of these findings for Japanese economic policy are discussed.

The formation of the pribumi business élite in Indonesia, 1930s-1940s

pelago and suggested that Japanese companies should contact European, indigenous, and Arab merchant houses. The newspaper stated that, were the Japanese to take natives as their business partners, this would indubit ably stimulate indigenous commercial interest, which would benefit the progress of native society.2 This call for closer Japanese-indigenous business cooperation came at a time when Japan had emerged as the engine of the modern Asian economy (Sugihara 1990). Since the 1880s the industrial heart of the country, the Kobe-Osaka area, had developed into a dynamic, new industrial centre for Asia, redirecting existing trade patterns and commodity flows, and attracting Chinese, Arab, Indian, and local indigenous business groups in the region (Post 1993b). Recently Man Hou Lin (1993) has shown how Taiwanese merchants, who had hardly any experience in direct foreign trade prior to 1895, were able to play an important economic role in Fukien (South China) during the Japanese colonial period in Taiwan. She thereby revised the convential wisdom that the Japanese colonization of Taiwan suppressed indigenous enterprise and that the Japanese Government-General and the zaibatsu monopolized the foreign trade of the colony. The rise of the Korean chaebol, too, was closely related to Japanese economic policy in that country. Human resource development was an important aspect of Japanese policies in Korea and indigenous entrepreneurs were given extensive training in Japanese companies and then enabled to start large

Review: Japanese Economic Policies and Growth

Review: Japanese Economic Policies and Growth

Japanese Economic Policies and Growth: Implications for Business in Canada and North America

Japanese Economic Policies and Growth: Implications for Business in Canada and North America

Recent Japanese Economic Diplomacy in China: Political Alignment in a Changing World Order

Japanese economic relations with China have experienced many twists and turns since diplomatic normalization in 1972. Despite the importance of economic motivation, the political interestachieving a solid and stable bilateral relationship-appears to explain much of Japan's economic policy toward China in the 1980s and early 1990s. This article attempts to describe the nature of Japanese economic policy toward China and consider why stable relations with China are so important to Japan. How relations with the United States have affected Japan's policy toward China is also discussed.

Japanese Direct Investment and Economic Development Policy

The increasing number of Japanese manufacturing plants locating in the United States presents new opportunities for state and local economic development policy. This article compares the location decisions of Japanese start-ups in manufacturing with counterpart domestic industry and concludes that there are substantial distinctions between Japanese and American firms. Except for a few industries, Japanese firms are not locating in those states that are most attractive to counterpart domestic industries, but are more often choosing average-to low-growth states. Interviews with a small sample of Japanese plants and industrial recruiters suggest that Japanese location decisions in many industries are based on a set of intangible considerations that differ from those that are important to domestic firms.

Contemporary Japanese economy and economic policy

Contemporary Japanese economy and economic policy

Professor Michio Hatanaka

This interview with Michio Hatanaka is the first in this series given in the East, of which we are very proud. Hatanaka is a pioneer of econometrics in Japan. In the early 1950s he traveled to the United States to study as a graduate student at Vanderbilt University. That step was really unusual in the Japanese profession at that time. His stay in the States was extended to 1966, during which time he taught at Princeton and Rochester. His pathfinding behavior influenced and encouraged many Japanese scholars. Hatanaka started his academic career as a mathematical economist. This may partly explain why his research papers suggest deep economic thought as well as deep understanding of mathematics and statistics. His early contributions to econometrics are concerned with applying the spectral method to various economic problems. These contributions include the associate authorship of Spectral Analysis of Economic Time Series by C. W. J. Granger. His other contributions cover theoretical work on identification and estimation problems for dynamic econometric models, among which Hatanaka's efficient two-step estimator is well known. His research also includes empirical work on the Japanese economy and economic policy, which is relatively less known to people outside of Japan. His attitude toward research has set a standard for Japanese econometricians. His research papers are always a product of deep and full thought, and imbued with his own originality.His achievements in administration are also impressive. During 1969–1971 and 1979–1980, he was director of the Institute of Social and Economic Research of Osaka University. And during 1983–1985 he was the dean of the faculty of economics at the same university. In addition, he served on the boards of several committees for the Japanese government and the Council of Science of Japan. Among his achievements in administration is the reform of the university entrance examination system, which was notoriously competitive and selective. This was really pathbreaking and led other universities to reform their systems.This interview, which was given in Japanese, took place on November 20, 1989 in the Economics Department of Osaka University. What follows is a translated version of an edited transcript of that interview. We hope that the readers will share with us the privilege of hearing about the evolution of econometrics as encountered by him since just after the second world war.

Future information cities: Japan's vision

Japanese economic policy is highly predicated on the future dominance of information industries. This outlook finds particular expression in urban planning, with a strong attachment to the concept of information cities supported by the intensive development of communications and information technologies. An international workshop on information cities took place in Kawasaki in August 1988, in which the author participated. This article reviews the formal and hidden agendas of the Japanese planning process. It presents outcomes of the workshop and discusses their relevance to urban planning in Australia, including the Australian government's current examination of Japan's proposal to build a multi-function polis in Australia.

The Kim Dae June issue: A case study in Japanese foreign policy-making

The governmental policy-making process is a perplexing topic for studies of Japan. While pluralist theorists believe that the masses are an indispensable factor shaping domestic as well as foreign policies,1 elitist theorists propound that the bureaucracy makes major policy decisions and is free from the influence of the societal interest groups. 2 It is to this issue of policy-making that this article is directed. It aims at using a case study to explore the foreign policy-making process in Japan. Generally speaking, elitist theorists agree that a group of powerful politicians and businessmen controls the foreign policy-making in Japan. Pempel observes that a "conservative coalition" of the government, big business and finance defines the national interests and determines the Japanese foreign economic policy. 3 Like Pempel, who conceives that elites monopolize the foreign policy decisions, Scalapino expounds that "the process of formulating, executing and defending Japanese foreign policy today is in the hands of a conservative elite. ''4 An example illustrating the domination of elites in the foreign policymaking process was Prime Minister Tanaka Kakuei's visit to China. According to Fukui, the foreign policy-making process was controlled by "the Prime Minister and the Foreign Minister in a commanding position and a few individual Liberal Democratic Party (LDP) and opposition party politicians and half a dozen Foreign Ministry officials in supporting roles. ''5 The number of the key foreign policy-makers who arranged for Tanaka's visit to Beijing was about twelve. Moreover, the LDP, the bureaucracy and big business, to Fukui, were internally divided and their roles were subordinated to the major policymakers. Though elitist theorists concur that the number of the major foreign policymakers is small, they disagree on who is the most important actor. Ogata noticed that the business community began to pressure the Japanese government to establish diplomatic relations with China only when the foreign policy-makers advocated the implementation of such diplomacy. 6 Yanagihashi even observes that the LDP determines foreign policy-making because the "bureaucracy and big business. . , surely do not have controlling influence. ''7

Japanese Economic Policy toward Indochina during the Second World War

In the first section, the author reviews decisions and draft plans made by the Japanese authorities from 1936 to 1940, with a special attention to the documents in September 1940. By so doing, he analyzes the policy makers' intentions and various internal and external conditions which determined the Japanese economic plan toward Indochina.The second section is a part of the discussion how the Japanese tried to carry out this plan. First, they started negotiations with the French in September 1940 and concluded economic agreements in May 1941, which enabled Japan to obtain necessary natural resources and to break the decades-long French monopoly system of Indochina's economy. Second, Japan sent a large-scale investigation team to gather first-hand information and establish future plans concerning the Indochinese economy.In the concluding section, the author emphasizes that the Japanese actual economic activities toward Indochina essentially aimed to obtain necessary resources and funds without paying enough returns. Japan did not and could not carry out many of future plans proposed by the above-mentioned research mission. In other words, Japanese actual investments tended to focus on commercial and transportation sectors and not to sufficiently go to mining and industrial sectors. This fact demonstrates that Japan concentrated her economic efforts on the mere acquisition of necessary resources which the French and Indochinese produced with their own finances and labours. At the same time, the Japanese tried to import goods from Indochina without spending foreign currency. For that purpose, however, the 1941 agreements turned out soon to be insufficient and, therefore, in January 1943, Japan introduced another financial arrangement. It is noteworthy that this new arrangement was not only applied to the liquidation of trades. It also functioned to be a system of loans in piastres which the Japanese staying in Indochina needed for their military and non-military purpose. With this system they could get huge amount of piastres without substantial returns. To conclude, those Japanese economic activities invited dreadful inflation in the Indochinese society.

Yoshio Ando, Studies on the History of Japanese Economic Policy

Yoshio Ando, Studies on the History of Japanese Economic Policy

Japanese Economic Policy in the Inter-War Period

Japanese Economic Policy in the Inter-War Period