The Political Economy of Japan Bradley M. RICHARDSON

about the nature of Japanese government investments in the economy must beaddressed. The first point to remember is that the size of government financialinterventions in particular industries, as well as in the economy in general, is oftenexaggerated. As Edward Lincoln has stated (32):"Many of the writings about Japan are very short on numbers, and therebyslip into an exaggeration of this role by failing to understand the relative sizeof government financing of the private sector."Chalmers Johnson asserts that the Japanese government provided betweenone quarter and one third of all industrial capital in the 1950s and a sizable amount offunds in the 1960s (33). Other studies have also cited similarly substantial levels ofsupport and/or large government investments and subsidies stated in Japanese yenwhich inevitably appear to be much larger amounts than they would if the figureswere quoted in dollars (34). Moreover, Japanese government statistical series,indicate a more modest state role in direct investment than that suggested byJohnson or implied elsewhere (35). In Table 3 we calculate the importance ofgovernment bank lending relative to commercial bank lending and also the shares ofgovernment bank loans for equipment investments compared to commercial bankloans for the same purpose. Specifically, the Japan Development Bank and theExport-Import Bank, the two Japanese government banking institutions whichtypically lend to big business, contributed between 3 and 8 percent of all industrialloans in the 1950s, and roughly the same amounts in the 1960s. The share ofgovernment lending actually peaked in the 1970s at between 9 and 11 percent, atime when recessed industries made heavy claims on government. Relatedly, theJapan Development Bank, the main government "policy" bank supportive ofmodernization of production facilities, provided industry between 5 and 6% of itsequipment investment needs in the 1950s and between 3 and 5 percent thereafter.Although the relative amounts of government lending are not insignificant,government lending was considerably smaller in scale than the earlier informationindicated or implied (36).A second important qualification on the Japanese government's role in theeconomy concerns the priorities represented by government bank loans to specificindustries and the implications of these priorities. Here two kinds of information arerelevant, the shares of Japan Development Bank Loans provided to specificindustries and the degree to which these industries were dependent on governmentfinancing (Table 4). Four industries -shipping, electric power, coal and iron and steelreceivedthe lion's share of government loans in the 1950s. These same industrieswere also more dependent on government finance than other industries. Otherindustries generally received very small shares of government loans and were notespecially dependent on the JDB as a result.Rather than guiding growth through sizable investments in all industries