Introduction
The period after the Second World War saw the rise of Japan through the development of its economy, mainly because of the Ministry of International Trade and Industry’s effective trade and industrial policies. In the aftermath of the war, Japan was ranked as a less developed nation with significantly low national income, unstable economy and weak human capital (Kohama 2007). In order to understand the MITI and Japan’s success, it is important to critically analyse the role that the ministry played in the development of economic and industrial policies.
The important role of the MITI
The poor situation compelled the government to implement measures with a long-term view of developing the economy and sustain its population. Then, under the Ministry of International Trade and Industry, the government developed a comprehensive strategy for opportunity creation and growth both locally and internationally. In order for the MITI to achieve excellent results, it worked with other ministries and government agencies in Japan. In addition, it did not ignore the important role played by the private sector in industrialization and development of countries.
The role of the MITI after the World War II was very remarkable in helping the country to rebuild from the negative impact of the war. For example, it played crucial roles in reducing the rate of inflation, increasing the number of job opportunities, providing the government with pragmatic solutions with regard to improving the quality of lives of the citizens. The ministry played a leading role in collaboration with the ministries of finance and foreign affairs as well as other stakeholders to formulate and execute international policies for conduction of trade. Together with the economic planning stakeholders, the ministry coordinated policy development on aspects that affect Japan’s interests. As time progressed, other government departments played a growingly significant role in bargaining at the international level.
The ministry was important in managing export and important matters of the country, which were aimed at increasing the GDP of Japan. It also supported locals business to acquire equipment and other assets vital for businesses. In order to ensure that customers were being provided with high quality products, the ministry documented complaints from customers and approached the affected businesses so that they could increase the quality of products or customer services. The position achieved in the coordination of different areas of business and industry enabled the ministry to reconcile conflicting policies. Conflicting policies included export competitiveness and control of pollution, with the main goal of not affecting the export sector significantly. The integral role of MITI in Japanese business and industry enabled the ministry to play a leading role in the development of industrial policy, arbitrating in case of disputes and problems, and ensuring general regulation for stability in the country’s industrial development. Noteworthy is that the ministry did not focus on developing a centrally managed economy; the goal was to provide administrative guidelines for modernisation, application of technology, competition in the foreign and domestic market, and investment is modern and highly efficient equipment (Shibata & Takeuchi 2006).
At all times, the MITI focused on developing the entire industry through foreign and domestic policies that protected the local industry against importation, foreign technology licensing, assistance in mergers, foreign exchange accessibility, and technological intelligence. MITI policies were strongest in the initial periods and as the country embraced international policies and industries grew, the ministry changed its policies to reflect Japan’s global position and new long-term objectives (Tsuru 1961). The ministry introduced measures of self restrain automobile exportation to the United States because of criticism from manufacturers’ unions in America. Furthermore, in a move away from the protectionist approach in policy development, the ministry liberalised Japanese import policies. For example, the ministry in the 80s established import promotion and market-opening measures, which contributed to further development of the country and leadership in many industries. The effective relationship between industry and the ministry made the role of facilitation easier, although it focused on creating the right balance between protecting local industries and opening the market for importation.
It is clear that the government under the MITI provided industrialists with task incentives to facilitate the business and industrial process. For instance, tax incentives covered importation of new production equipment having high efficiency, which improved production significantly. In developing the Fiscal investment and loan program, the MITI in collaboration with the Ministry of Finance established a platform for people to save their money without being taxed. The measure significantly raised money, which was used for economic development. With a huge saving under the postal savings system, the government had money, which it loaned to industries involved in long-term development. Furthermore, the loan network helped in policy development for industries, which aligned the country’s development policies and goals. The loan and fiscal investment plan were the basis of industrial development, especially in the manufacturing sector. With policy guidelines developed by MITI, Japan established distinct groups that spearheaded the country’s success in the subsequent years. For instance, there was close cooperation between lending institutions, suppliers, manufacturers and distributors under the umbrella of keiretus, which included enterprise unions and close relationship with bureaucrats (Kohama 2007).
Partnership and collaboration between the government and industries was important in ensuring economic development. For instance, in 1957, the government under the MITI enforced the law that stipulated temporary measures to develop and support the electronic industry. Through this law, the ministry considered the role of economic aspects such as the economies of scale and high levels of productivity in ensuring economic success and sustainability of industries. Furthermore, other than improving product and economies of scale in the electronic industry, the government charged lower interest rates for importation of highly efficient and modern equipment. To improve the manufacturing industry further, the Japan Management Association, under the MITI was proactive in improving efficiency as a major factor for economic development (Shibata & Takeuchi 2006).
Although by 1970 Japan was one of the world leaders in the assembly of robots, the MITI did not stop there. To foster more development and growth in the industry the ministry promoted research and development projects across the nation with the goal of making manufacturing more flexible in factories. Flexibility in manufacturing is important in increasing productivity, which is a factor for growth. Research and development ushered in the roadmap for development of computer based integrated manufacturing projects. Computer-integration was a major step, which enhanced automation in industries and improved manufacturing output in addition to reducing costs significantly. Contributions from industry associations were important in determining the policy directions developed by the ministry. In 1985, the ministry created the Factory Automation Association and the International Robotics, which enhanced the process of communication between vendors and improvement of systems.
The Ministry of International Trade and industry had major divisions, which were critical in enhancing Japan’s international agenda. Key areas of international relations included international trade, strategic planning, and legal advisory on international business, industrial development, management services, and internal auditing. With international orientation in its operations, the ministry played an integral role in planning, developing and implementing policies and programs aimed at fostering industry development and growth. The ministry facilitated investments of companies in Japan and in other countries as well as development of trade. The ministry achieved cooperation from the international community by promoting products and services in foreign markets and encouraging foreign investors. Using Japan’s friendly relations with international partners such as the United States and the European, the ministry successfully negotiated for bilateral and multilateral agreements, which enhanced industrial development, cooperation and regional trade relations. Participation in international trade meant the ministry had to implement measures aimed at making country compliant to global trade requirements, which contributed significantly to Japan’s global leadership in various industries.
Conclusion
In conclusion, the Ministry of International Trade and Industry was a major player in the success of Japan. The ministry contributed to the Japanese prosperity by having a long-term orientation, developing and implementing policies aimed at industrial development as well as effective management of importation and exportation to spur growth. As time progressed and Japan attained global leadership in various industries, the ministry transformed policies, particularly in line with market liberalisation. From the role of MITI in the success of Japan discusses above, key aspects of success included the political good will, a solid long-term strategy, as well as the partnership and coordination between the government, industry and other stakeholders. The fruitful relationship between Japanese industry and the ministry developed foreign policies that completed the government’s effort to grow the local manufacturing objectives.
References
Kohama, H, 2007, Industrial development in postwar Japan. Routledge, London, United Kingdom.
Shibata, T, & Takeuchi, H, 2006, Japan, moving toward a more advanced knowledge economy. World Bank, Washington, D.C.
Tsuru, S, 1961, ‘Growth And Stability Of The Postwar Japanese Economy’, American Economic Review, vol. 51, no. 2, p. 400.