1. Japan: Still the Developmental State? By: Craig Marcus

2. MITI and the Japanese Miracle Chalmers Johnson Chalmers Johnson “Miracle” realized in 1962 “Miracle” realized in 1962 Highlighted by transition away from primary exports to heavy manufacturing Highlighted by transition away from primary exports to heavy manufacturing Role of Takahashi Korekiyo Role of Takahashi Korekiyo

3. Projectionist School The aim is not to explain the Japanese miracle The aim is not to explain the Japanese miracle Examples include The Japanese Miracle Men by Ralph Hewins, Japan Surges Ahead by Robert Guillain and Japan as Number One by Ezra Vogel Examples include The Japanese Miracle Men by Ralph Hewins, Japan Surges Ahead by Robert Guillain and Japan as Number One by Ezra Vogel

4. Socio-Economic School “Anything-but-politics” approach “Anything-but-politics” approach Four main types of analysis Four main types of analysis 1)National character 2)No occurrence of a miracle 3)Unique structural features 4)Post-WW II environment Which view has the most explanatory power?

5. National Character Japan possess a unique, cultural derived capacity to succeed in economics Japan possess a unique, cultural derived capacity to succeed in economics “Rolling consensus” “private collectivism” “inbred collectivism” and “Japan Inc.” “Rolling consensus” “private collectivism” “inbred collectivism” and “Japan Inc.” Negatives- Over generalizes especially in light of “situational motivations” Negatives- Over generalizes especially in light of “situational motivations”

6. “No-Miracle-Occurred” Normal outgrowth of market forces Normal outgrowth of market forces Role of the government exaggerated Role of the government exaggerated Negatives: Negatives: 1) Assumes Japanese regulatory state is the same as the US regulatory state 2) Assumes Japanese banking system is the same as the US banking system

7. Unique Structural Features “Three sacred treasures” “Three sacred treasures” 1)“Lifetime” employment systems 2)Seniority wage system 3)Enterprise unionism Negatives Negatives 1)Not the only “special institutions” in Japanese society 2)Date of their origins and their maintenance

8. Post-WW II Environment Theory of the “free ride” Theory of the “free ride” 1)Lack of defense expenditures 2)Ready access to major export market (the US) 3)Relatively cheap transfers of technology Negatives Negatives 1)High savings and investment 2)Driven by domestic markets 3)Role of the MITI in technology transfers

9. *Development State* Economic nationalism or Neo- mercantilism Economic nationalism or Neo- mercantilism Market Economy vs Planned Economy Market Economy vs Planned Economy Regulatory Orientation vs Development Orientation Regulatory Orientation vs Development Orientation Differences Differences 1)Public Service 2)Measurement Standards 3)Ability to cope with externalities 4)Consensus

10. Industrial Policy Industrial Rationalization Policy Industrial Rationalization Policy 1)Enterprises 2)Environment 3)Whole Industries 4)International Competition Standards Industrial Structure Policy- proportions of production Industrial Structure Policy- proportions of production

11. Conclusion The government (MITI) played a critical role in the “miracle” of the 1960s The government (MITI) played a critical role in the “miracle” of the 1960s Must be understood in the historical context of pre and wartime Japan Must be understood in the historical context of pre and wartime Japan 1)Late comer in development 2)Mechanics of industrial policy 3)Children of the Showa Era

12. The US and Japan as Models of Industrialization Fernando Fajnzylber Fernando Fajnzylber Pattern of development versus development strategies Pattern of development versus development strategies Characterization versus explanation Characterization versus explanation South Korea, Mexico, Argentina and Brazil as subjects of study South Korea, Mexico, Argentina and Brazil as subjects of study

13. Patterns of Development in Industrialized Nations

15. Four central differences Four central differences 1)Consumption 2)Income distribution 3)International competitiveness 4)Dynamism

16. Patterns of Development in Industrializing Nations Identification of eight different quantifiable dimensions among South Korea, Argentina, Brazil and Mexico: Identification of eight different quantifiable dimensions among South Korea, Argentina, Brazil and Mexico: 1)Dynamism 2)Social articulation 3)Consumption patterns 4)International competitiveness 5)Structure of trade 6)External borrowing 7)Capital flight 8)Entrepreneurial leadership

17. Patterns of Development in Industrializing Nations Dynamism- South Korea Dynamism- South Korea Social Integration- South Korea Social Integration- South Korea Consumption Patterns- Argentina Consumption Patterns- Argentina International Competition- South Korea International Competition- South Korea Structure of Trade- South Korea and Brazil Structure of Trade- South Korea and Brazil External Debt- South Korea and Brazil External Debt- South Korea and Brazil Capital Flight- South Korea and Brazil Capital Flight- South Korea and Brazil Entrepreneurial Leadership- South Korea Entrepreneurial Leadership- South Korea

18. Conclusion General out-performance of South Korea to its counterparts in Latin America General out-performance of South Korea to its counterparts in Latin America Despite economic success, emphasis on futility of “reproduction” of East Asian model in Latin America Despite economic success, emphasis on futility of “reproduction” of East Asian model in Latin America

19. Questions 1) After the reading, which of the five forms of analysis best explains Japan’s “miracle” of the post-war period? 2) Which aspect of South Korea did you find most important to its out-performance of the NICs in Latin America? 3) Do you think the MITI does plays a critical role in the economic performance of Japan?