The Political Economy of Japan Bradley M. RICHARDSON

Government policies also played a direct but also hard-to-measure role inspecific industry development. The steel industry, for example, went through twomajor renovation plans during the time that it was "targeted" for modernization, withthe result that Japan had the most advanced steelmaking equipment in the world bythe beginning of the 1960s. Government lending and leadership appear to havefacilitated this development. The Japanese automobile industry was protected fromforeign competition in its postwar period of infancy and was able to import foreigntechnology at a critical juncture in its own development, even though it didn't receivemuch in government loans. Government supported "rationalization" in the automobileparts industry also may have had beneficial effects for the automobile industry. Later,when development of automated machinery was a government priority in the 1960sand 1970s, the automobile industry had higher levels of automation than industries inother countries because of heavy investments in robots and other types of automatedequipment. These investments in improved facilities in some industries facilitatedrapid and dramatic increases in labor productivity, resulting in Japan's leading theindustrialized world in productivity increases in most recent years.Frequent Japanese government policy adjustments in response to changingmarket situations were also a plausible strength in some cases. Plans were reviewedbefore their terminal dates and new plans were promulgated as growth outpacedplan targets, or other planning parameters changed. An allededly frequentadjustment of targets accords with a view which sees pragmatic, market followingbehavior as a major advantage of Japanese government planning regimes (120).Large amounts of market information were collected and used to define andredefine targets and this extensive dependence on market indicators is also seen byquite a few persons as one of the most positive contributions of the government'spolicy-making (121). In essence, the policy environment itself became a componentin the overall environment to which individual firms and industries responded in theirown corporate strategies.In some "macro" sense, the government provided a network of supportiveframeworks which may have facilitated industry success. However, there were alsomany other factors influencing economic performance besides goverment actions,and the government role should not be seen as the sole or even single strongestinfluence on success in most instances. Indeed, as research shows, decisions at thefirm level reflect many concerns, and government policy is only one (at times large, attimes small) part of such environments. If Richard Samuels' findings on energyindustries are generalizable, the real issue for businesses in government-businesspolicy relationships is (a) how much the government can be persuaded to do whatthe private sectors prefers and (b) how much government policy tools can beexploited for private enterprise advantage. We have cited many examples ofunintended policy consequences reflecting private sector subvention, avoidance and