Beyond Industrialization: Ascendency of the Global Service Economy (review)

198 SAIS REVIEW moved forward quickly toward liberalized trade and that we have not yet taken a step backward. Professor Johnson's book explains how MITI handled the difficult process of liberalization, but, regrettably, it ends in 1975. Since then, there have been a number of important developments in trade and industrial policy. The restraints on auto exports negotiated between MITI and the United States is a very clear case in which MITI placed more importance on the defense of the free trade principle than on domestic interests. MITI has dealt with a number of instances of trade friction with a view toward avoiding protectionist measures. With the same idea, we have been encouraging overseas investment by Japanese business as a part of industrial cooperation because such investment helps create jobs, transfer Japanese technology and managerial skills, and thus reinvigorate the economies of the recipient countries. Import promotion is another area in which MITI is working diligently. I will not go into detail about the specifics of import promotion measures, but I believe that the Japanese government is the only one in the world to take actual steps to increase imports, such as sending missions and sponsoring fairs of imported goods. I wish to make a final remark about one recent development between the Japanese and U.S. governments. Last May the two governments began a dialogue on both nations' industry-related policies. So far, the dialogue has been very helpful in developing mutual understanding, even though we have not yet arrived at the point of drawing conclusions. I assume the American delegates and their staff have read Professor Johnson's book, and I would personally advise that not only U.S. government officials, but also politicians and businessmen interested in understanding industrial policy also take time to read it. Even though it is very informative about the history of MITI, readers, at the same time, must be aware that today's MITI is not what it was ten, or even five, years ago. Today, we are prepared to play an even more positive role in the maintenance of free trade and in revitalizing the world economy. Beyond Industrialization: Ascendency of the Global Service Economy. By Ronald Kent Shelp. New York: Praeger Publishers, 1981. 242 pp. Reviewed by Elizabeth Caldwell Seastrum, who received herM.A.from SAIS in 1975 and is currently a law clerkforJudge Edward Smith ofthe United States Court ofAppeahfor the Federal District. Ronald Shelp's book, Beyond Industrialization: Ascendancy of the Global Service Economy, is a thoughtful and provocative work. As it is the first in its area of such scope, it may become required reading for the international trade negotiator of the future. Shelp begins with the thesis that global political power no longer reflects economic reality. This is because, as Shelp says, "the predominant economic interest in many nations today—the service sector—has yet to translate its economic prevalence into political power." In the United States, for example, nearly two-thirds of our GNP is generated by the service (i.e., nonmanufacturing ) sector, and our balance of payments on current account, which includes a BOOK REVIEWS 199 sizable service surplus, is positive, a fact overlooked by those in Congress so preoccupied with our merchandise trade deficit. Shelp elaborates, in chapter two, upon the meaning of services and, more important, their significance in both advanced and developing economies. Although readers of this chapter will not be surprised to learn that the United States is the most advanced service economy, they may be surprised to discover that services in the developing world play a significantly greater role than generally recognized and that a few developing countries are even primarily dependent upon services as their economic base. By contrast, Shelp points out, the socialist economies have shunned heavy involvement in services on the theory (rooted in Marxism) that such activity is nonproductive. Shelp also draws upon a U.N.-sponsored study by Wassily Leontief, entitled The Future ofthe World Economy, to support his thesis that services will become a more important component of the world economy at least through the year 2000. The importance of this trend for political economy presents, as Shelp stresses through his book...