MITI and the Japanese miracle

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stand the rigors of international competition.

¹⁵

As it turned out, the crisis was considerably overstatedfrom 1960 to 1965 exports more than doubled on a customs-clearance basis (from $4 billion to $8.7 billion), suggesting the existence of substantial international competitive strength in the economy. Nonetheless, the sense of crisis was real, and it may well have helped to motivate the economy's export performance.

The Ikeda government took many measures intended to relieve the widespread anxiety. In 1960 it created the Asian Economic Research Institute as a government organ concerned with the study of markets in underdeveloped countries, and in 1961 it set up the Overseas Economic Cooperation Fund to disburse foreign aid. Both agencies were promoted abroad as evidence of Japan's expanding contributions to allied foreign aid efforts, but domestically they were justified as export promotion agencies, since the aid Japan gave would be tied to purchases of Japanese plants and equipment. During 1960 the government also revised tariff rates and schedules to offer greater protection to liberalized industries, and it expanded the capital of the Export-Import Bank in order to finance more exports.

The most famous of the government's calmatives was Ikeda's Income-doubling Plan, formally adopted by the cabinet on December 27, 1960. The plan itself was wildly overfulfilled, and its chief importance in retrospect was the psychological effect it had in creating optimism about the future to counterbalance the pessimism about liberalization coming from the press and MITI. The Income-doubling Plan did, however, have one important bureaucratic consequence. Ikeda had assigned to the Economic Planning Agency the task of drafting the plan, and the publicity surrounding the EPA's efforts gave its so-called agency economiststhat is, career officials of the EPA rather than transferees from MITI or Financea chance to try to break free of MITI's dominance. The EPA sought to name one of its own officials, the prominent economist and future foreign minister Okita* Saburo*, to be vice-minister of the agency, rather than accept another senior MITI official. MITI successfully beat back this attempt, but in the process it had to make the EPA post a terminal position in the MITI chain of command; a MITI official sent to the EPA as vice-minister could no longer return to the ministry. As we shall see, this was important because it gave Sahashi the chance to eliminate two final rivals in his quest for the MITI vice-ministership by seeing to it that the MITI minister appointed them EPA vice-minister, where they would be out of the running for the big prize.

The most important bureaucratic response to liberalization was