MITI and the Japanese miracle

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resign as custom would normally have dictated. The result was a ceremonial meeting, presided over by the great senior Shiina Etsusaburo *, in which it was decided that Imai would become vice-minister, Sahashi would take Imai's old job at the Patent Agency, Imai would hold the top spot for only a year (he actually stuck it out for 15 months), and Sahashi would succeed him. Sahashi has written that this affair was his most unpleasant experience in 30 years of government service, and one can believe him. Nonetheless, he did have the satisfaction of seeing his ideas for the economy accepted and implemented, even if he and his law were none too popular.

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Throughout this period foreign pressure on Japan to speed up liberalization increased in intensity. At the first Joint Meeting of Economic Ministers of Japan and the United States at the end of 1961, the Americans asked for a faster pace of liberalization than the 80 percent Ikeda had promised; and in September 1962 the IMF recommended a level of 95 percent (the IMF and Japan compromised on 90 percent). Then, on February 20, 1963, the IMF Board of Directors met, rejected Japan's stated reasons for not having shifted to article 8 status, and insisted on a pace of liberalization greater than 90 percent. Japan really had no choice if it intended to continue to participate in international trade. It therefore gave notice that it would formally become an article 8 nation on April 1, 1964, and would simultaneously stop rationing foreign exchange through MITI-controlled budgets.

Pressure from GATT also developed. Before the British would sign a basic treaty of commerce and navigation with Japan, they insisted that Japan accept article 14 of GATT (no governmental subsidies of exports); and Japan's acceptance of IMF article 8 was tantamount to adhering to GATT's article 11 (no trade controls because of balance of payments deficiencies). Therefore, with its ratification on April 4, 1963, of the Anglo-Japanese treaty, Japan notified GATT that within a year it would shift to article 11 status. During July 1963 Japan also applied for membership in the Organization for Economic Cooperation and Development (the first Asian nation to do so), and it was admitted on April 29, 1964but with some seventeen temporary reservations to the OECD's code of behavior for members. Nonetheless, membership in the OECD meant that Japan was committed not only to trade liberalization but also to the removal of controls on capital transactions. The "fully opened economy" was at last on the nation's agenda.

Simultaneously with the acceptance of these new international obligations, the economy itself began to decline into its worst postwar recession. During October 1964, the same month that Sahashi replaced