JAPAN: GROWTH AFTER THE WAR AND DECLINE

An Analysis

THE ROLE OF MITI

The Ministry of International Trade and Industry (Tssho-sangyo-sho or MITI) was the single most powerful agency in the Japanese government during the 1950s and 1960s. At the height of its influence, it ran Japan as a centrally-managed economy, funding research and directing investment. The Ministry of International Trade and Industry (Tssho-sangyo-sho or MITI) was the single most facilitator in powering industrial growth in a nonsocialist economy

THE ROLE OF MITI

At the time it was created, Japan was still recovering from the economic disaster of World War II. With inflation rising and productivity failing to keep up, the government sought a better mechanism for reviving the Japanese economy. Tokyos population of 6.7 million had shrunk to 2.8 million by the end of the war

THE ROLE OF MITI

MITI was responsible not only in the areas of exports and imports but also for all domestic industries and businesses not specifically covered by other ministries in the areas of investment in plant and equipment, pollution control, energy and power, some aspects of foreign economic assistance, and consumer complaints. This span has allowed MITI to integrate conflicting policies, such as those on pollution control and export competitiveness, to minimize damage to export industries. MITI served as an architect of industrial policy, an arbiter on industrial problems and disputes, and a regulator. A major objective of the ministry was to strengthen the country's industrial base.

THE ROLE OF MITI

It did not manage Japanese trade and industry along the lines of a centrally planned economy, but it did provide industries with administrative guidance and other directions, both formal and informal, on modernization, technology, investments in new plants and equipment, and domestic and foreign competition

ROLE OF MITI
The close relationship between MITI and Japanese industry led to foreign trade policy that often complemented the ministry's efforts to strengthen domestic manufacturing interests. MITI facilitated the early development of nearly all major industries by providing protection from import competition, technological intelligence, help in licensing foreign technology, access to foreign exchange, and assistance in mergers.

THE MISSION OF JAPANESE INDUSTRY

The World is our Market- for the first time a country had given its economy such a mission Under the guardianship of MITI Japan managed a 10% annual growth between mid 50s & 1973 The close relationship between MITI and Japanese industry led to foreign trade policy that often complemented the ministry's efforts to strengthen domestic manufacturing interests.

MISSION OF JAPANESE INDUSTRY

MITI facilitated the early development of nearly all major industries by providing protection from import competition, technological intelligence, help in licensing foreign technology, access to foreign exchange, and assistance in mergers. These policies to promote domestic industry and to protect it from international competition were strongest in the 1950s and 1960s. As industry became stronger and as MITI lost some of its policy tools, such as control over allocation of foreign exchange, MITI's policies also changed.

MISSION OF JAPANESE INDUSTRY

The Zaibatsu system had been abolished by the American occupation government But it was replaced by the informal keiretsu system-groups of industries aligned to each other The big companies practised all the world famous Japanese principles of management from recruitment to retirement etc. The less obvious allied industries took the brunt of retrenchment etc.

MISSION OF JAPANESE INDUSTRY

The success of Japanese exports and the tension it has caused in other countries led MITI to provide guidance on limiting exports of particular products to various countries. Starting in 1981, MITI presided over the establishment of voluntary restraints on automobile exports to the United States to allay criticism from American manufacturers and their unions

MISSION OF JAPANESE INDUSTRY

Thus far the protectionist stand of MITI had Japanese businesses exporting all over the world and seeing its strategies getting successfully implemented Declining influence of MITI from the 80s onwards made it organise conditions for opening Japanese markets to foreign manufacturers and also helping foreign industries to come into Japan

DECLINE OF JAPANESE INDUSTRY

Growth rates for sales and profits of Japanese companies lag behind those of companies in the US and EU, making Japanese industry less competitive Japanese companies never recovered from the lost decade 2000 Japanese companies in terms of global sales and operating profits showed that they had lost competitiveness

DECLINE OF JAPANESE INDUSTRY

Japans banks led by their Post Office deposits have not helped much Much of the banks advances are bad debts and the new entrepreneurs are unable to get credit Post Office savings are like a mousetrap