The Political Economy of Japan Bradley M. RICHARDSON

Maintenence of adequate levels of exports to pay for raw material and energyimports has long been a government and private sector concern, as has also been aconcern for dependable sources of supply, Japan's foreign trade policy in the 1950swas oriented toward securing adequate supplies of foreign raw materials andmaintenance of export levels sufficient to pay for these needed imports. As thepostwar Japanese economy grew, and imports of even larger volumes of foreign rawmaterials became necessary, the concern for having secure foreign sources ofsupply accelerated. The two 1970s oil crises brought further acute realization of theimportance of secure sources of needed resources among policymakers. In asignificant shift in priorities, the Ministry of Foreign Affairs announced in 1973 thathenceforth secure access to raw materials would be a driving concern in Japan'sdiplomacy. In a related series of events, the economic ministries joined the foreignministry and private sector interests to promote policies aimed at development ofoverseas sources of raw materials. Japan signed agreements with the USSR on (a)natural gas development in the Yakutsk basin in 1973, (b) development of Siberia in1974, and (c) rights to off-shore oil deposits near Russian Sakhalin in 1975. Similarly,Japan made loans to oil-rich Abu Dhabi, lent money for development of natural gas inIndonesia, and signed an economic cooperation agreement with Iran, followed laterby a government-supported oil refinery project in that country. Rights over off-shoreoil deposits in the East China Sea and elsewhere also became major issues betweenJapan, the Republic of Korea, the People's Republic of China, and the Republic ofChina government on Taiwan as all of the countries in the Northwest Pacific realizedthe urgency of their energy needs. Elsewhere efforts were made to secure access tominerals and coal from Australia and other countries through private sectorinvestments and initiatives.Japan's policy support for industrial growth, structural change and technologyinduction through policy frameworks and government incentives declined over timeas the economy grew and other priorities emerged. Timetables for industrial policychange have been influenced by foreign pressure at times, but there were usuallyalso domestic reasons for change as well. Many of the industrial supportscharacteristic of the 1950s and 1960s have dwindled in importance as a result. AsTable 9 indicates, FILP lending to "basic" industry (including industrial technology)has declined substantially and currently totals only about one-tenth of mid-1950sshares of FILP lending. The offering of tax incentives for industrial sectordevelopment has taken a similar downward trajectory. So have cartel agreementsbetween firms, although cartels continue as a preferred instrument of marketcoordination during downturns in the economy. In addition, cartels have beenemployed more in the medium and small enterprise sector recently than in marketsdominated by large firms, and their use has been common in recessed more than indeveloping industries. At present, Japan's government continues to support researchprojects designed to insure the country's development as a high technology, highvalue-added 21st century economic power. With only a few exceptions, industrial