- Picking Winners? From Technology Catch-up to the Space Race in Japan
In slightly more than two hundred pages, Saadia Pekkanen is determined to answer one seemingly simple question that has plagued students of Japanese industrial development and policy for years: How did the postwar Japanese government decide which industries [End Page 695] to support? More specifically, was the government's choice of which industry to favor based on economic or political considerations? To accomplish this task, Pekkanen has cast her net widely by relying on three analytical methodologies: econometrics, structured data analysis, and case studies. In choosing these different approaches, Pekkanen moves from a general examination of "technology and/or industrial policy," what she refers to as TIPs, of the twelve standard industrial sectors (processed food, textiles, paper and pulp, chemicals, petroleum and coal, ceramics, basic metals, fabricated metals, general machinery, electrical machinery, transport equipment, and precision equipment), to a more detailed look at a single industry, the commercial space launch industry. While this book moves from a generalized industrial overview toward a specific case study, the author extrapolates a general argument from a highly complex situation
One of this book's greatest strengths is the clear and relatively jargon-free presentation of the quantitative material. The author has distilled a great many secondary sources in an effort to provide background history and a detailed analysis of the postwar government's industrial selection policy. Relying on a single data set, Pekkanen's econometric analysis is designed to identify which, and to what extent, various criteria influenced the government's selection of industries for preferential treatment. Government economic incentives, such as subsidies, tariffs, and preferential loan rates are measured against political criteria such as lobbying, votes, and institutional linkages between government and industry, in an effort to determine which set of variables had greater significance in determining policy. Turning to structured data analysis in the third chapter, the author identifies which industrial sectors were actually targeted for preferential government treatment, the benefits each sector received, and why. For both types of analysis, Pekkanen argues that economics, not politics, were determinant in granting most-favored industry status.
Supplementing her statistical analysis, the author presents two chapters of case studies. The first case study is an historical survey of ten industries—aircraft, automobiles, coal, computers, machine tools, petrochemicals, semiconductors, shipbuilding, steel, and textiles—which is designed to determine whether there is a correlation between the theory and practice of Japanese industrial policy. In addition to synthesizing the secondary literature, Pekkanen incorporates material from more than one hundred interviews with Japanese government officials, primarily from the Ministry of International Trade and Industry, into a brief, yet highly readable narrative of the industrial development selection process that focuses on the economic and political criteria examined in the second and third chapters. In general, most-favored [End Page 696] industries had the potential for high growth rates and technological linkages to other industries.
Pekkanen's second case study is of the commercial space launch industry. Although fully a third of this chapter is dedicated to the U.S. space launch industry, the relative scarcity of information on this subject makes the chapter valuable. This readable account complements the earlier chapters by concentrating on the economic and political factors that helped determine policy. It also is revealing of the complexity of the issue where national pride and security perhaps influenced policy as much as economics.
This book is not without its shortcomings. The quantitative data, for example, do not provide clear evidence to support the tidy conclusions that Pekkanen seems to favor. In fact, in both sets of data analysis and the general industry case studies, Pekkanen demonstrates that there are numerous factors beyond economics and politics that motivated government officials to favor certain industries. She mentions, for example, but tends to discount, national security. The iron and steel industries, shipbuilding, and aircraft were considered essential to Japanese national security and as such received preferential treatment through government policy...