Subject Index

ADB. See Asian Development Bank (ADB) (ASEAN): ASEAN Automotive Federa- Aerospace industry, Japan, 253-54.261.269, tion (AAF), 205-7; free trade area 27 1-72 ( I992), 221 ; Industrial Joint Venture Aid. See Economic assistance (AIJV) program, 206-7; Japanese invest- Aid mercantilism, 344 ment in member nations, 219; manage- Aircraft industry: in Japan, 253-54, 258, 261; ment of foreign investment funds, 205-7; technology transfer in Japanese, 274-8 1; as political entity, 220-21 ; Preferential in United States, 253,268,272-73, 278- Trade Area Agreement (1977), 44; as re- 80. See also Diffusion; Indigenization; gional entity, 3; total GNP of, 220; trade Nurturing initiatives by, 117 Alliance for Progress, 359 Automotive industry, East Asia, 178-8 I, 185, AOTS. See Association for Overseas Techni- 202,205-6 cal Scholarship (AOTS) APEC. See Asia Pacific Economic Coopera- Basic human needs (BHN), 342-44 tion (APEC) Bias: intra- and extraregional East Asian Arbitrage: East Asian commodity, 107; effect trade, 103-7, 117-18; in intraregional on interest rates of potential, 69; exis- trade, 79-80; trading bloc intrabloc, 22 tence of barriers to commodity, 114; pric- Bloc formation: argument against Japan’s inter- ing with barriers to, 108 est in, 387-88; dynamic nature of, 22; Ja- ASEAN. See Association of Southeast Asian pan’s perceived role in, 386; model of, 28 Nations (ASEAN) Burdensharing: concept of, 324; Japan as free Asian Development Bank (ADB): roles of Ja- rider, 323-31; Japan’s philosophy of, 387 pan and United States in, 219, 363-67, 375; as source of project funding, 235 Canada4J.S. Free Trade Agreement, 2.54.63, Asian Finance and Investment Corporation 125. See also North American Free Trade (AFIC), 366-67 Agreement (NAFTA) Asian Pacific Economic Cooperation (APEC): Capital flows: into Japan, 455; from Japan to activities of, 117,238-39; effect of, 63; East Asia, 182-86,218-20; from Japan members of, 80-81; mission of, 27, to Indonesia and Thailand, 221; from Ja- 45-46; need for strong, 124 pan to United States, 454-55 Association for Overseas Technical Scholar- Caribbean Basin Initiative, 54 ship (AOTS), 188, 189 China: future role of, 248; Japanese influence Association of Southeast Asian Nations in, 31-32, 33; Japanese investment in, 5;

467 468 Subject Index

China: (continued) 42, 334-37; from Japan to build infra- as recipient of Japanese economic assis- structure, 5.42, 229-38, 355, 359; from tance, 347 Japan to Indonesia, China, and Philip- Comparative advantage: of East Asian nations pines, 221, 224, 235-36, 347; from Japan in labor-intensive industries, 164, to Philippines, 360-62; shaping of Ja- 169-7 1; shifts in NIC and ASEAN-Four, pan’s, 335, 337; from United States to 173, 178,207 Asia, 337-38. See also Aid mercantilism; Cooperation: among East Asian firms, Military assistance, Japan; Official devel- 192-97; of public-private sectors in East opment assistance (ODA); Tied aid Asia, 192; regional East Asian, 238-39 Economic integration: in East (Pacific) Asia, Cooperation, Japan: associations, consortia, 5, 26,51; world, 53-54 and networks for, 257-58, 261-67; clubs Economic performance: of East Asian econo- for, 195-96; in lean production systems, mies post-World War 11, 37-39; of the 160 Philippines, 352 Enterprise of the Americas Initiative, 54, 123, DAC. See OECD, Development Assistance 359 Committee (DAC) European Community (EC): East Asian and Data sources: for East Asian intratrade analy- Japanese exports to, 105, 107; Single sis, 24; for price discrimination analysis, Market, 53-54 110-1 1 European Monetary Union, I, 54 Debt, external: of Indonesia, 224-25,229; of Exchange rate policy: adjustments to changes Thailand, 226-29; yen-denominated, 79, in (1980s). 39-41, 107; role of yen in 435 Asian, 75-78. See also Dollar; Yen ap- Defense sector, Japan: capability of, 300-302, preciation (endaka);Yen-Dollar 328; growth of, 30-36,241,300-301; Agreement (1984) spending for, 251-52,300-301,323-24, Exports: differences in East Asian intra- and 376-8 1. See also Japan Defense Agency extraregional, 103-7; from East Asian (JDA) countries to United States, 414-15; East Developing member countries (DMCs), 364, Asian markets for Japanese, 220, 347, 367 415; East Asian markets for US., 347; Development assistance. See Economic assis- from East Asian recipients of Japanese tance FDI, 171-73, 176-81; from Japan to Diffusion (haykuu),Japan: of information, United States, 452; promotion in Indone- 196; in Japanese aircraft industry, sia and Thailand, 225-26; ratio of aid to 281-91; of technical knowledge, 252, trade, Japan and US., 348-5 1 254-56 Divison of labor: changes with labor-intensive FDI. See Foreign direct investment (FDI) industries, 174, 177; in East and South- FHI. See Fuji Heavy Industries (FHI) east Asia, 4, 159, 165; Japanese influence FI. See Foreign investment (FI) on East Asian, 177-81; regional, 205-7 Financial markets: cooperation or conflict in DMCs. See Developing member countries regional, 424-42; deregulation in Japan’s, (DMCs) 398; deregulation of US., 439-40; grow- Dollar: currencies pegged to, 75; in interna- ing Japanese role in international, 450; in- tional financial transactions, 439 fluence of Japan in, 80-81; influence on East Asian interest rates, 69-74; influ- East Asian Economic Caucus (EAEC), 45, ences in world, 69-75; Japanese domina- 62-63 tion of international, 3,434-35; Japanese East Asian Economic Group (EAEG), 45, influence in East Asian, 67-75,80; liber- 418-19 alization of East Asian, 3 Economic assistance: distribution of US., Flying geese analogy, 4, 173 335,336-37; Japan’s philosophy of, Foreign direct investment (FDI): basic pat- 386-87; from Japan to ASEAN nations, terns of Japanese, 161; changing composi- 219,221-22.337; from Japan to Asia, 5, tion of East Asian, 4; as component of 469 Subject Index

foreign investment, 159; by East Asian Imports: by Japan from ASEAN, 221; from countries, 40-42, 185, 228; effect in host Thailand and Indonesia to Japan, country of, 215-16; effect of Japanese in 22 1 Asia, 174-81; effect on protection, 147- Import substitution: infant industry argument, 48, 153-54; impact on protectionism, 43, 140; in Japan, 410; in Thailand and 153-56; Japanese, 4,7, 120-2 I ; of Japa- Indonesia, 186, 223-26 nese in East (Pacific) Asia and ASEAN Independence: Japanese ideology underscor- nations, 161-81,218-20,450-51; of Ja- ing, 253-58; Japanese manufacturing, pan in United States, 454; of Japan world- 252. See also Diffusion; Indigenization; wide (1951-91). 67-69 Interdependence; Nurturing Foreign investment (FI):in East Asia by Japa- Indigenization (kokusanka),Japan: in aircraft nese, 161-97; of East Asian NICs, 7; industry, 274-81; for national security, host country influence on, 197-207; in- 254-56.302-3; principles of, 252, centives for Japanese, 120 Japanese, 256-57 159-60; by Japanese private sector, 190; Indonesia: policies toward Japan, 223-29 by Japan in Thailand and Indonesia, 223, Industrial policy: imitation of Japan’s, 6; in in- 224-25,228; by NICs in Thailand and In- dustrialized countries, 356; international- donesia, 228; in Thailand, 225 ization of Japan’s, 12 1 Free rider: argument against Japan as, Industrial sector: in ASEAN-Four country 360-68; argument of Japan as, 9-10, labor-intensive, 164, 173-74; forces in 321-23,328,424; Japan’s burdensharing East Asian, 356-57 responsibility, 323-3 1 Industrial sector, Japan: combined military Free trade agreements, 28,239,440 and civilian production in, 25 1-67; indi- Free trade zones, 43-44; proposed, 362 genization, diffusion and nurturing in, Fuji Heavy Industries (FHI), 274, 282 252-56; shift of firms in, 186-87. See also Aircraft industry, Japan; Manufactur- GATT. See General Agreement on Tariffs and ing sector Trade (GA’IT) Industrial sector, US.:interests in East Asia, GEACS. See Greater East Asia Co-prosperity 207-9; separate defense and civilian pro- Sphere (GEACS) duction, 251-52. See also Manufacturing General Agreement on Tariffs and Trade sector (GATT): question of trading bloc compat- Information: diffusion in subcontracting, 196; ibility with, 12-13, 90; role of, I, 89, sharing in Japanese industries, 262. See 154; Uruguay Round, 11,46, 123,392, also Knowledge 40 1 Infrastructure: development in newly devel- General trading companies (GTCs): Korea, oping countries, 222-23; Japanese eco- 193; Taiwan, 193 nomic assistance to build, 5, 42, 229-38, Government intervention: in East Asian econo- 355,359; World Bank loans to build, mies, 43; Japanese, 121 355. See also Ministry of International Greater East Asia Co-prosperity Sphere Trade and Industry (MITI) (GEACS): effects in Southeast Asia, Institute for Developing Economies, Japan, 34-36; memories of 220,238; perceived 188 revival of, 35 1-60,440,45 1 Institutions: diffusion of Japanese-style, 207-9; innovation in Pacific Asian, 5-6; role in regional development by Japa- Human capital: effect on trade of accumula- nese, 187-91 tion of, 38; incentive for investment Interdependence: determinants of, 26-29; in in. 27 East Asia, 21-22, 39-42; historical East Asian, 22-23.29-36; levels of, 3, 25; IADF. See International Aircraft Development measures of, 23-26 Fund (IADF) International Aircraft Development Fund IHI. See Ishikawajima Harima Heavy Indus- (IADF), Japan, 258,273,282 tries (IHI) International Monetary Fund (IMF), 435 470 Subject Index

Ishikawajima Harima Heavy Industries (IHI), anese response to, 41 1-12; pressure from, 267,272,282 404,407-8; targets of, 392 Metalworking and Machinery Industries De- Japan-ASEAN Investment Corporation, I89 velopment Institute (MIDI), Thailand, Japan as regional economic hegemon, 226, 192-93 244-46,386,393-94,424,45 1-52 MHI. See Mitsubishi Heavy Industries (MHI) Japan Defense Agency (JDA), 278; aircraft Military assistance, Japan, 377, 379 production for, 267; competitions for con- Military sector, Japan. See Defense sector, tracts of, 282; high-altitude test facility Japan of, 273; spending of, 300; Technical Re- Ministry of International Trade and Industry search and Development Institute, 275 (MITI), Japan: New Aid Plan, 5, 188, Japan External Trade Organization (JETRO), 229-32,240,353-55; New Asian Indus- 188, 189 tries Development Plan, 223 Japan Federation of Economic Organizations Mini-trading areas (MTAs), 43-44. See also (Keidanren), 231,257,260, 281,283 Free trade zones Japan International Cooperation Agency Mitsubishi Heavy Industries (MHI), 272,282 (JICA), 189, 233 MNEs. See Multinational enterprises (MNEs) Japan-U.S. relations: with collapse of Soviet MOSS. See Market-Oriented Sector Selective Union, 16,452-54; conditions precipitat- (MOSS) talks ing conflict, 8-9,441-42; factors affect- MTAs. See Mini-trading areas (MTAs) ing change in, 144,454-57; global part- Multilateral Assistance Initiative (MAI), nership principle, 330-31 36 1-62 JDA. See Japan Defense Agency (JDA) Multinational enterprises (MNEs): incentives JICA (Japan International Cooperation in Thailand for, 226; in Thailand and In- Agency), 192-93 donesia. 223-24 Joint ventures, 203, 236-37 Nationalism: conditions for United States, 438, 440-41; in Indonesia, 236; of Pa- Kawasaki Heavy Industries (KHI), 274,282 cific Asian nations, 388 Keidanren. See Japan Federation of Economic Nationlism: in China (1920s). 33 Organizations (Keidanren) Networks, Japan. See Cooperation, Japan KHI. See Kawasaki Heavy Industries (KHI) New Aid Plan, Japan. See Ministry of Intema- Knowledge: diffusion in Japan, 260-62; from tional Trade and Industry (MITI) licensed production activities, 278-79 Newly industrialized countries (NICs): for- eign investment of, 7; investment by, 228; Labor force mobility, East Asia, 177. See also investment in East Asia, 161-65 Divison of labor Nonexclusion, 327111.5 Licensing agreements: assets from, 184; of Nonmanufacturing sector, East Asian, 183 host country with Japanese investment, Nonrivalness, 327n 15 202-5; of Japanese firms with foreign North American Free Trade Agreement firms, 274-75; used by Japanese firms for (NAFTA), 2, 54, 123; effect as trading production, 277-81 bloc, 123; predicted effect of, 415 Nurturing (ikusei), Japan: in aircraft industry, MAI. See Multilateral Assistance Initiative 291-98; for technology security, 252, (MAI) 254-56 Manufacturing sector: East Asian automobile industry, 178-81, 185; East Asian textile ODA. See Official development assistance and apparel industries, 177-78; Japanese (ODA); Overseas Development Assis- FDI in East Asian, 165, 169-71, 182; Jap- tance (ODA), Japan anese foreign investment in, 185-86, OECD, Development Assistance Committee 223; in NICs and ASEAN-Four, 173 (DAC): disbursements of, 334, 338, Market-Oriented Sector Selective (MOSS) 342-43; member contributions to, 332, talks: conflicts initiated by, 398-402; Jap- 340 471 Subject Index

Official development assistance (ODA): as in- benefit. 141-46; effect of cross- ternational public good, 329; Japanese, investment on, 147-48, 153-54; model 120-2 I, 35 1-60.45 1; as method of Japa- among trading blocs, 127-40 of semicon- nese burdensharing, 322 ductor industry, 142-44 Omnibus Trade and Competitiveness Act Protectionism: to help domestic industries, (1988): with super 301 clause, 392-93, 140; information of trading bloc, 12; in 401.408-9,412 sectors with large trade blocs, 140-44; us- Orderly marketing agreements (OMAs), ing infant industry argument, 43, 140 394-95 Protocol system, Japan, 252-53,263,291,302 Ordinary Capital Resources (OCR), Asian De- Public goods: Japanese-aided infrastructure velopment Bank, 363,366 as, 355; U.S. defense as 326-29; US.- Overseas Development Assistance (ODA), Ja- Japan cooperation to provide, 9-14 pan, 230-33. See also Economic assis- Public-private sector links, East Asia, 6, 192, tance; Official development assistance 204-5 (OD4 Overseas Economic Cooperation Fund Quota system, Japan, 399,401-2 (OECF), Japan: loans to Indonesia, 235, 238; loans to Thailand, 237; role in New Aid Plan, 230; role outside Japan, 189 Regionalism: characteristics of current, 238; East Asian, 159; evidence for growing Pacific Association for Trade and Develop- East Asian, 228; meaning of, 48-59; pre- ment (PAFTAD), 45 sumed effect of, 8-9.50-5 1 Pacific Basic Economic Conference (PBEC), Regionalization: causes of Asian, 85; defined, 45 48-49; evidence in East Asia of, 5 1 Pacific Economic Cooperation Council Research, Japanese, 38 1 (PECC), 45 Research consortia, Japan, 261-62 Philippine Assistance Program (PAP), 360-67 Physical capital: effect on trade of accumula- Security, national: Japanese vision of, 241 ; tion, 38; incentive for investment in, 27 possible threat to U.S., 455-57; pro- Political system, Japan: conflicting ideologies tecting Japan’s, 254-56, 302-3; threats in in, 13-14,427-29,437-38,445-46; ef- East Asia to U.S., 209 fect of party change in, 455-56; effects Shenzhen Free Trade Zone, 43-44 of power shifts in, 437-38; leadership SII. See Structural Impediments Initiative and action in, 421-22 (SW Preferential Trade Area Agreement ( 1977). Single European Act (1985). 1, 125 ASEAN, 44 Society of Japanese Aerospace Companies Price discrimination model, 108-17 (SJAC), 269,274,286 Prices: conditions for international, 108-9; fac- Spending, defense, 323-31; of East Asian tors influencing relative, 109-10 method newly industrialized countries, 325; of Ja- to lower, 185; resopnse to exchange rate pan, 10-11,251-52,300-301,323-24. changes (1980s). 107-8. See also Arbi- 376-81; of United States, 10, 300, trage 376-78 Private sector: foreign investment by Japanese, Spending, R&D: of Japan, 381; of United 355,357,362; in Indonesia, 236-37; in States, 381 Korea, 202-5; in Taiwan, 203; technol- Structural Impediments Initiative (SII), 1990: ogy absorption by East Asian, 204-5; in effect of, 154,410 as form of US.-Japan Thailand, 237 negotiation, 1 I ; Japanese response to, Privatization: in Thailand, 226, 234, 237 411-12; with MOSS, 404,407-8; U.S. Production, incentives to shift overseas, pressure on Japan, 391, 393,398-402 185-86; marginal cost of, 130-3 1; mobil- ity of factors of, 126-27; use of foreign factors of, 132-33 Taiwan: Japanese influence in, 30-31 Protection: circumstances for domestic market Technical assistance. 203 472 Subject Index

Technology: absorption by countries receiving 117-18; in East Asia with yen apprecia- Japanese investment, 202-5; central to Ja- tion, 39-40; in Southeast Asia during and pan’s national security, 254; diffusion in post-World War 11, 36-39,46; stability Japan, 258-62; imports by recipients of of bilateral, 26; test for East Asian trade Japanese investment, 203-5; Japanese bloc, 56-66. See also Interdependence; view of advanced, 301; level of Japanese Trade, intraregional development of, 381; U.S. and Japanese Trade policy: semiconductor industry with pro- strategies for, 252, 260-61; US. vulnera- tective, 142-44; in telecommunications bility to sales of, 455-57. See also Diffu- industry, 149-52 sion; Indigenization; Nurturing Trade theory. new wave, 12 Technology agreements: of host country with Trading blocs: collision of regional with multi- Japanese investment, 202-5; of Japanese lateral trading system, 89-90; effect of firms with foreign firms, 275-77 size on degree of protection, 140-52, Technology transfer: arrangements for, 277; 154; effect on trade incentives, 127-40; competition for control of, 203; in Japa- impact of regional, 90-98, 117; intrabloc nese aircraft industry, 274 bias of, 22; predicted circumstances for Thai-Japan Technological Promotion Associa- Asian, 415; probability in Pacific Asian tion (TPA), 1881125 region for, 450; as public bads, 13. See Three-bloc world, 122-23 also Greater East Asia Co-prosperity Tied aid. 344-46 Sphere (GEACS) Trade: analysis of bilateral, 98-102; changing Trading company development, 193 structure of Japanese, 393; diversification Transaction costs: in international trade, 27; and homogenization of East Asian, intrabloc, 22,28 37-38; East Asian extraregional, 103-7; Treaty of Nanking (1842). 29 growing importance of East Asian, 98, Treaty port system, 29-30 117; intensity as measure of interdepen- Triad power, 122 dence, 23-24; Japan’s pattern of intra- and extraregional, 103-7; multilateral, U.S. Agency for International Development 89; US.-Japanese conflicts in, 394-413. (US. AID), 351 See also General Agreement on Tariffs U.S. Export-Import Bank, 351 and Trade (GATT); Market-Oriented Sec- tor Selective (MOSS) talks; Omnibus Voluntary export restraints (VERs), 391, 393, Trade and Competitiveness Act (1988); 394-95; automobile, 396,408-9, 41 I; as Structural Impediments Initiative (SII); party approach in United States, 404 Voluntary export restraints (VERs) Trade, intraregional: analysis of, 56-66; bam- Yen: in Asian country central bank reserves, ers to East Asian, 115-17; bias in level 78-79; as exchange rate peg, 3.75-78; of, 79-80; in East Asia, 23-25,55-56, role as international currency, 435 79-80,90,97-98, 103-7, 117-18; in Eu- Yen appreciation (endaka),4; effect of, 120, ropean Community, 55,79,98; growth 393,405; effect on East Asian trade, 39- in, 98; in late 1980s, 39-42; in North 40,42, 172; effect on Japanese FDI, 188; America, 97-98; volume in trading blocs, effect on price, 109, 185; effect world- 97-98. See also Interdependence wide of, 120 Trade, managed, 410 Yen-Dollar Agreement ( 1984). 11, 80, 39 1, Trade flows: bias in East Asian, 103-7, 398