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State Competance and Economic Growth in Japan State Competence and Economic Growth in Japan In economics, few issues are more central than the role of the state in the economy; in Japanese studies, few are more central than the role that the Japanese government has played in postwar economic growth. With exquisite attention to theory and meticulous attention to detail, this book focuses on both these topics with startling results. Yoshiro Miwa asks whether a state can correct market failures, and in particular he critically analyses the performance of the Japanese economy as a result of state intervention in it. In order to examine the capacity of the state to promote growth, Miwa examines the Japanese machine tool industry, the government’s role in promoting this sector and government efforts to achieve growth in small and medium-sized enterprises in Japan. Despite the huge interest worldwide in Japan’s economic history and industrial performance, there is no other book that has approached this important topic in such a theoretically rigorous and incisive manner. Yoshiro Miwa is Professor of Economics at the University of Tokyo. RoutledgeCurzon Studies in the Growth Economies of Asia 1 The Changing Capital Markets of East AsiaKy Cao (ed.) 2 Financial Reform in ChinaOn Kit Tam (ed.) 3 Women and Industrialization in AsiaSusan Horton (ed.) 4 Japan's Trade PolicyAction or Reaction?Yumiko Mikanagi 5 The Japanese Election SystemThree Analytical PerspectivesJunichiro Wada 6 The Economics of the LatecomersCatching-up, technology transfer and institutions in Germany, Japan and South KoreaJang-Sup Shin 7 Industrialization in MalaysiaImport Substitution and Infant Industry PerformanceRokiah Alavi 8 Economic Development in Twentieth Century East AsiaThe International ContextAiko Ikeo (ed.) 9 The Politics of Economic Development in IndonesiaContending PerspectivesIan Chalmers and Vedi Hadiz (eds) 10 Studies in the Economic History of the Pacific RimSally M.Miller, A.J.H.Latham and Dennis 0.Flynn (eds) 11 Workers and the State in New Order IndonesiaVedi R.Hadiz 12 The Japanese Foreign Exchange MarketBeate Reszat 13 Exchange Rate Policies in Emerging Asian CountriesStefan Collignon, Jean Pisani-Ferry and Yung Chul Park (eds) 14 Chinese Firms and Technology in the Reform EraShi Yizheng 15 Japanese Views on Economic DevelopmentDiverse Paths to the MarketKenichi Ohno and Izumi Ohno 16 Technological Capabilities and Export Success in AsiaDieter Ernst, Tom Ganiatsos and Lynn Mytelka (eds) 17 Trade and Investment in ChinaThe European ExperienceRoger Strange, Jim Slater and Limin Wang (eds) 18 Technology and Innovation in JapanPolicy and Management for the 21 st CenturyMartin Hemmert and Christian Oberländer (eds) 19 Trade Policy Issues in Asian DevelopmentPrema-chandra Athukorala 20 Economic Integration in the Asia Pacific RegionIppei Yamazawa 21 Japan's War EconomyErich Pauer (ed) 22 Industrial Technology Development in MalaysiaIndustry and Firm StudiesK.S.Jomo, Greg Felker and Rajah Rasiah (eds) 23 Technology, Competitiveness and the StateMalaysia’s Industrial Technology PoliciesK.S.Jomo and Greg Felker (eds) iii 24 Corporatism and Korean CapitalismDennis L.McNamara (eds) 25 Japanese ScienceSamuel Coleman 26 Capital and Labour in JapanThe Functions of Two Factor MarketsToshiaki Tachibanaki and Atsuhiro Taki 27 Asia Pacific Dynamism 1550±2000A.J.H.atham and Heita Kawakatsu (eds) 28 The Political Economy of Development and Environment in KoreaChung Jae-Yong and Richard J.Kirkby 29 Japanese Economics and Economists since 1945Aiko Ikeo (ed.) 30 China's Entry into theWorld Trade OrganizationPeter Drysdale and Song Ligang (eds) 31 Hong Kong as an International Financial CentreEmergence and Development 1945–1965Catherine R.Schenk 32 Impediments to Trade in Services: Measurement and Policy ImplicationChristoper Findlay and Tony Warren (eds) 33 The Japanese Industrial EconomyLate Development and Cultural CausationIan Inkster 34 China and the Long March to Global TradeThe Accession of China to the World Trade OrganizationAlan S.Alexandroff, Sylvia Ostry and Rafael Gomez (eds) 35 Capitalist Development and Economism in East AsiaThe Rise of Hong Kong, Singapore, Taiwan, and South KoreaLi Kui-Wai 36 Women and Work in Globalizing AsiaDong-Sook S.Gills and Nicola Piper (eds) 37 Financial Markets and Policies in East AsiaGordon de Brouwer 38 Developmentalism and Dependency in Southeast AsiaThe Case of the Automotive IndustryJason P.Abbott 39 Law and Labour Market Regulation in East AsiaSean Cooney, Tim Lindsey, Richard Mitchell and Zhu Ying (eds) 40 The Economy of the PhilippinesElites, Inequalities and Economic RestructuringPeter Krinks 41 China's Economic TransformationThe Rise of the Private EconomyRoss Garnaut and Song Ligang (eds) 42 The Vietnamese EconomyAwakening the Dormant DragonBinh Tran-Nam and Chi Do Pham (eds) 43 Restructuring Korea Inc.Shin Jang-Sup and Chang Ha-Joon 44 Development and Structural Change in the Asia-PacificGlobalising Miracles or End of a Model? Martin Andersson and Christer Gunnarsson (eds) 45 State Collaboration and Development Strategies in ChinaThe Case of the China—Singapore Suzhou Industrial Park (1992–2002)Alexius Pereira iv 46 Capital and Knowledge in AsiaChanging Power RelationsHeidi Dahles and Otto van den Muijzenberg (eds) 47 Southeast Asian Paper Tigers?From Miracle to Debacle and BeyondK.S.Jomo (ed.) 48 Manufacturing Competitiveness in AsiaHow Internationally Competitive National Firms and Industries Developed in East AsiaK.S.Jomo (ed.) 49 The Korean Economy at the CrossroadsTcha Moon Joong and Suh Chung-Sok (eds) 50 Ethnic BusinessChinese Capitalism in Southeast AsiaK.S.Jomo and Brian C.Folk (eds) 51 Exchange Rate Regimes in East AsiaGordon de Brouwer and Masahiro Kawai (eds) 52 Financial Governance in East AsiaPolicy Dialogue, Surveillance and CooperationGordon de Brouwer and Wang Yunjong (eds) 53 Designing Financial Systems in East Asia and JapanJoseph P.H.Fan, Masaharu Hanazaki and Juro Teranishi (eds) 54 State Competence and Economic Growth in JapanYoshiro Miwa State Competence and Economic Growth in Japan Yoshiro Miwa LONDON AND NEW YORK First published 1998 in Japanese by Yuki-Kaku Publishing Co., Ltd. Address 2–17, Kanda Jimbo-cho, Chiyoda-ku, Tokyo 101–0051, Japan This edition published 2004 byRoutledgeCurzon 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada byRoutledgeCurzon 29 West 35th Street, New York, NY 10001 This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” RoutledgeCurzon is an imprint of the Taylor & Francis Group © 1998,2004 Yoshiro Miwa All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN 0-203-39101-2 Master e-book ISBN ISBN 0-203-67203-8 (Adobe eReader Format) ISBN 0-415-32875-6 (Print Edition) To my wife, Kazuko Contents List of illustrations x List of abbreviations xi Preface xii PART I Wartime control 1 1 The machine tool industry under wartime control 2 1.1 The issues 2 1.2 The Precision Tool Control Association and the machine tool industry 11 1.3 The behavior and function of the state before the Precision Tool Control Association 54 1.4 Concluding remarks 86 PART II The high-growth era 91 2 The machinery industries under the 1956 statutory regime 92 2.1 The issues 92 2.2 An outline and evaluation of the 1956 Act: preliminaries 99 2.3 The effectiveness of the 1956 statutory framework 113 2.4 The machine tool industry under the 1956 statutory regime 149 2.5 Concluding remarks 162 PART III Contemporary Japan 168 3 Policies for small businesses 169 3.1 The issues 169 3.2 Preliminaries 171 3.3 The policies of the central government 176 3.4 The policies of local governments 188 3.5 Conclusion: an overall evaluation of small business policies 195 ix 4 Who actually determines the substance of policies and how? 198 4.1 The issues 198 4.2 The determination of ‘policy’ substance: Anti-monopoly Act regulation of abuses of 202 positions of authority and responsibility 4.3 An outline of the political decision-making process 204 4.4 Bureaucratic sections and deliberative councils 208 4.5 Devices for realizing and maintaining the interests of relevant parties 211 4.6 Illustration 1: the campaign against the abolition of enterprise tax exemption for 214 newspapers 4.7 Illustration 2: background to the JNCA’s campaign against the repeal of RPM 217 exemptions for publications in the Anti-monopoly Act 4.8 Illustration 3: the JNCA’s campaign against the repeal of RPM exemptions for 223 publications in the Anti-monopoly Act 4.9 Concluding remarks 229 Appendix 1 Outline of the RPM exemptions for publications and legislative intent 230 Appendix 2 The treatment of RPM exemptions for publications, the FTC, 31 March 1998 232 Conclusion 234 Notes 237 References 251 Index 259 Name Index 270 List of Illustrations Figures 1.1 Machine tool production in Japan, 1930–94 6 1.2 The number of metalworking machinery factories in each size category, 1931–42 72 1.3 Indexed number of metalworking
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