MITI and the Japanese miracle

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Eight

Internationalization

During the decade from the recession of 1965 to the recession after the first "oil shock" (1974), the paths of MITI and of Japan first diverged and then came back together again. Japan attained the zenith of its postwar economic growth, but MITI suffered from a classic case of the greatest bureaucratic infirmity of allfulfillment of mission and loss of function. One issue after another plagued the ministry in this eraindustrial pollution, revolts against its administrative guidance, charges of corrupt collusion with big business, inflation, public dismay at some of the consequences of its industrial location policy (especially the virtual depopulation of some Japan Sea coast prefectures, such as Shimane, and the overcrowding of the Tokyo-to-Kobe industrial zone), and serious damage to relations with Japan's main economic partner, the United States, because of trade imbalances, an undervalued yen, and Japanese procrastination in implementing capital liberalization.

By the mid-1970's the ministry began to show renewed strength: it successfully redefined its mission, changed its personnel, gave itself a new structure, and shed the parts of its heritage that were no longer relevantand all the while it reasserted those elements that Japan still needed. The oil crisis and all of its ramifications gave the ministry a new lease on life. MITI's primary problem at the time was to understand what changes were needed, to answer its critics, and to hold off rivals, such as the Ministry of Finance, who saw advantages for themselves in MITI's weakened influence. One official characterized 196869 as the worst year in MITI's history, and Vice-Minister Morozumi Yoshihiko (197173) referred to the years leading up to the basic reform of the ministry in July 1973 as a "long, dark tunnel."

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