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Home > Media Reiews > News Review Last Updated: 14:52 03/09/2007
News Review #44: June 27, 2002

Japan's Economy Faces Competition

Reviewed By Hitoshi URABE

"Japan's Economy Faces Competition"
New York Times / AP

Related Article:
"Japan backs integrated approach on trade"
Financial Times


The Ministry of Economy, Trade and Industry submitted and, in accordance with regular practice, was approved by the cabinet the fiscal 2002 white paper on international trade. The two articles listed above reports on this same topic, but it is interesting to note the different way they captioned it.

The while paper, as explained briefly in either article, shows somewhat different nuance from that of last year. It last year indicated concerns on the economic growth of, and in due course challenges from, the neighboring countries such as China and South Korea, expressing it as an era of regional competition. This year it suggests Japan should deepen ties with neighboring countries in order to benefit from being geographically close to these rising economies.

Analysis in the paper show that manufacturing power of some regions within these countries supercede those in Japan for certain and specific products, but in comparison Japanese cities have within them assortments of industries, a characteristic to indicate excelling abilities for planning and coordination. The paper then recommends Japan to seek growth together with neighboring countries by consolidating the strengths.

While not necessarily objecting to the conclusion of the paper, the two articles listed above raise concerns to the practicality of the recommendation from different aspects which may be summarized as follow.

One is the consistency of policy. Japan was one of the very few countries which had no specific economic ties with any other and stuck to the global negotiations lead by WTO. The policy was changed in mid-90's and began to seek bilateral and regional economic relations only to succeed this year by signing a free trade agreement with Singapore. But none seems to follow even though announcements have been made that negotiations with others are going on. It raises doubts as to the government's will to pursue the policy.

Another concern is the opposing forces. As Japanese companies relocated their factories away from Japan to other Asian countries in order to benefit from lower labor costs, fear among the old guard heightened, especially politicians whose constituencies are established manufacturing industry. They have successfully launched a campaign to prevent "hollowing out" of Japanese economy. So long as the thinking occupies a place in the minds of policymakers, it would not be easy to go ahead with the paper's suggestions.

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