The Political Economy of Japan Bradley M. RICHARDSON

targeted for growth, as is often believed, initial Japanese government lendingpriorities were a policy response to the needs of the early postwar economy.Industries which provided important inputs or services for other industries, and whichneeded very large amounts of loans, received the most support and in turndepended the most on government lending. Postwar shipping capacity was limiteddue to the loss of ships during World War II, and large government loans wereprovided in the 1950s to replace these losses (37). Electric power receivedconsiderable funds from the JDB for development of hydroelectric capacity and tosupport the continued use of domestic coal in power generation (38) . Coal receiveda sizable share of government financing in an effort to increase productivity andlower costs so as to compete with imported oil and conserve foreign currency (39).Iron and steel was given funds because of the importance of steel to other industriesas well as its potential as an export industry.The "basic" industries, especially electric power and shipping, unquestionablyneeded very large amounts of funds in the early postwar era, a time when privatebanks were unable or in some cases probably reluctant to provide funding on thescale needed. Nevertheless, three of four basic industries continued to receivepriority attention in the 1960s even after the early postwar justifications haddisappeared to a considerable degree. In the same period, several of the industriestargeted by government plans did not receive substantial government loans.Automobiles received only a negligible portion of government bank loans, with aresulting dependency ratio of less than one percent in the period in which it was a"targeted" industry (40). Other machinery industries likewise failed to come near theleading "infra-structure" industries in terms of either shares of JDB lending or levelsof dependency on government funds. Machinery industries, which includingautomobile parts and machine tools, received $285 million while a "targeted" industryin the 1960s and the computer industry was given $39 million in the 1960s when itwas targeted as part of electric machine industries (41). In contrast, loans providedshipping, coal and the power industries totalled $3.64 billion between 1951 and 1969.The allegedly superior, technocratically rational Japanese planners could not predictmarket trends in these instances.Several factors in addition to a concern for purely economic growth seeminvolved in the setting of lending priorities. Government lending priorities and industrydependencies on government loans imply that the "developmental state" was afollower as much as a leader. Important policy instruments were as much problem as"target" driven. The figures indicating dependency on government loans areespecially relevant here since they indicate where industries actually neededgovernment loans due to lack of available private sector funds. Government lendingin the early 1950s responded to the needs of infra-structure industries which requiredvery big investments at a time when capital was in short supply. Dependency ongovernment loans also reflected the size of risk involved in lending very large