MITI and the Japanese miracle

Page 302

stood economically and where it had to go in order to continue to prosper. The vision also introduced the concept of a "plan-oriented market economy." This is essentially Sahashi's old "public-private cooperation formula" as institutionalized within the government; it gives the Industrial Structure Council the responsibility for annual coordination of budget priorities, investment decisions, and research and development expenditures.

⁵²

Capital liberalization was finally achieved in the years following the first "vision" statement. On May 1, 1973, the government had announced that Japan was "100 percent liberalized"except that it still protected some 22 industries as exceptions, still applied all the old rules about joint ventures and subsidiaries, and still maintained numerous administrative restrictions on both trade and capital transfers ("nontariff barriers," as they are called). Four of the exceptional industries were the standard "sacred cows" of all countriesagriculture, mining, oil, and retail tradeand one was leather goods, included in order to protect the livelihood of a Japanese underclass, the burakumin. But the other 17 were the new strategic industries that MITI was nurturing.

Computers were the best-known case. Since the late 1960's MITI had poured money into domestic computer research, pushed companies into keiretsu, licensed foreign technology, and held off the competitionin short, MITI had formulated and administered a standard development program on the pattern of the 1950's. Its creation of the Machinery and Information Industries Bureau reflected this campaign: the bureau specifically linked computers and machines in order to prepare the way for the industries that the ministry had identified as export leaders after automobilessemiconductors, numerically controlled machine tools, robots, and advanced consumer electronic goods such as videotape recorders. However, by the mid-1970's MITI realized that protectionism could no longer be used as one of its policy tools, and it therefore scheduled full liberalization of the computer industry for April 1, 1976. Most of the other 17 exceptional industries were opened at the same time, as was retail trade.

The next major sign of internationalization was the ministry's decision to dismantle its main statutory powers, the Foreign Exchange and Foreign Trade Control Law of 1949 and the Foreign Capital Law of 1950. On November 11, 1979, almost 30 years to the day after SCAP approved it as a temporary measure, the Diet enacted MITI's revision of the Trade Law. This revision, which went into effect a year later, abolished the Foreign Capital Law, altered the language of the "basic purpose" of the Trade Law from "prohibition in principle" to "free-