When we examine what Japan has accomplished in the past century, its technological achievement shines out like both a model and a trophy. This was the century in which the nation, led by a strong governmental policy, aided by western and especially U.S. willingness to share and exchange, applied its strong work ethic and other societal values to make Japan a first-place competitor in the world industrial market. This technological modernization is most often given as evidence of Japan's success; examining the factors which enabled the transformation gives great insight into the position Japan now holds as a world leader, and whether or not it will retain that position; now that it has assimilated, copied, and improved upon almost every available western industry, Japan must redirect its efforts to invention. All around the world people are watching the Japanese enter a competitive slump and doubting they can make that transition. One of the influences on this trend people may not consider is the western study of Japanese techniques and how it enables western industry to compete.
In the Meiji period in Japan, the government viewed the development of heavy industry as a matter of national security. Aided by a flock of strong entrepreneurs, the government fostered a selection of young companies, which became Japan's representatives in the world market. The government and the banks provided a large amount of readily-available capital, often at great risk.
There are two major contributors to the success of Japanese corporations: government policy, or outside influence, and corporate policy, or internal systems. Other factors include a high level of available investment capitol, favorable trade conditions, the exploitation of the farmer and miner which provided low cost labor and raw materials, and the period of colonial imperialism, which permitted Japan to use the resources of Korea and Manchuria to jump-start its resource-poor economy. Growth as a modern nation has accelerated since the foreign occupation of the late 40s-early 50s.
In the 1960s the Ministry of International Trade and industry (MITI) had control of foreign exchange and the ability to block both imports and direct foreign investment. They also initiated some cooperative programs of research and development. During this decade the Japanese government had very protectionist policies toward both imports and foreign investment, aided by Western willingness to trade, and in particular the investment of U.S. interest in Japanese industry (and military) during the Korean war. In terms of outside influence, Duus mentions the somewhat ironic point that the destruction of outdated manufacturing plants in the Pacific War left Japanese industry free to invest in new modes of production. The late 50s through the 70s showed such rapid growth that by the end of the third decade Japan was ranked third in the world by Gross National Product (GNP).
In the late 1970s, American manufacturers flocked to japan to learn the secrets of its success. They saw there an emphasis on firm-specific organizational skills, listed by Adler: "a sense of discipline and loyalty to one's firm, better teamwork among workers, 'right attitudes' toward work and the company, better interdepartmental coordination, better communication between labor and management, and better human relations in the organization" (p 190). Chie Nakane argues that these are the result of the 'vertical' structure of Japanese society. In her description, strong links of loyalty and protection are made between superior and worker, resulting in unquestioning obedience, fast communication, and high overall efficiency. A result of the vertical structure is less individual competition and status-seeking, but also more intense competition between corporate groups.
The keiretsu ('business groups') system follows from this vertical structure; a complex web of interaction and mutual assistance generally centers on a head corporation. Americans and Europeans complain that this system, now more than government restrictions, prevents foreign entry into Japanese industry. Even during the 1980s, with governmental influence lessened, Japanese imports of manufactured products were low, and they had few foreign-owned manu-facturing plants. At the same time, the well-organized keiretsu system provided high labor productivity (Ostry, p74). Now that Japan had become equal to the Western powers, it intended to surpass them. (Ostry/Nelson)
In the late 80s, however, it came upon a great barrier: the need to develop new technologies rather than making cheaper, dependable versions of pre-existing products. Florida describes this as the transition from 'follow-through' to 'breakthrough'. Japan has historically spent a great deal on Research and Development (R&D) of products, but very little on basic scientific research. It is argued that in this field the hierarchical Japanese society stunts creativity and cripples itself. The appearance of Japanese Nobel Prize winners highlights this question; in 1987 Tonegawa Susumi won Japan's first Nobel Prize in medicine, only after doing research in the United States and Switzerland for 24 years, and publicly doubted his chances of having won the award had he stayed in Japan. We can see a recent example of the pitfalls of this problem in the leap that the U.S. development of High Definition Television (HDTV) has taken over that in Japan: Japan led the world market until U.S. firms made the fundamental switch from analog to digital processes.
In addition to falling behind in certain high tech developments, such as HDTV, Japanese industry is hampered by having to turn its attention to domestic problems. The domestic situation in Japan has been getting a lot of press lately, with impressive statistics like the fact that only 15% of Japanese homes are connected to sewers (Ozawa, p 107). Exports are subsidized, while imports face a trade imbalance and severe importation restrictions. Heavy industry, which is hard on the environment, has been given precedence over light industry, which provides domestic resources. Forms of domestic capital, such as roads, have not been well-provided.
In the last decade, Japan has been backpedaling a bit, cleaning up their industry (in an impressively effective manner), and addressing domestic needs. According to Ostry and Nelson, "in the past three or four years Japanese growth has come to a virtual standstill, and there is now little talk of companies increasing their basic research spending (p 52)." The U.S. and Europe have benefited from Japanese industry through imitation, by increasing teamwork in their R&D processes, and also through transplant industry. Transplant industry is where corporations become multi-national by constructing sites in other countries, often initially to avoid import barriers.
Japan has always been quick to adapt. Now it must adapt itself to the revitalized Western industry and also to new demands from its home population. The potential for a successful transition from follow-through to breakthrough industry should not be underestimated. However, it seems that this process will have to accompany a change in societal structure, toward a freer, more merit-based (rather than rank conscious) system.
The Japanese government is suffering a shift in polity. In the Meiji period, the motto was 'Strong Army, Rich Country'. Now Japan is very rich; The value of the yen has skyrocketed, and even the Gross Domestic Product (GDP) exceeds that of all other nations. The Army is very small, a result of the Pacific War, but is a strong and efficient defense force. Using only one percent of the national budget, military defense is no longer a prime focus of National dreams. The strong perception is that the Japanese, with their abiding resentment of European powers and U.S. occupation, intended to control the world through economic dominance once they recovered from the war.
Japan successfully challenged the West by entering and in three decades dominating the high technology industries (such as Superconductor manu-facturing, microelectronics, and bioelectronics). This process stemmed in the rapid adaptation of its commercial system at the turn of the century to encourage entrepeneurship while retaining vertical structures of management, and flowered through making economic growth first priority in mid-century governmental policy. As government priorities shift to more domestic, less imperialist issues, Japan will take a more stable position in the global economy. It is now recognized as an able competitor, and is still a leader in many areas. It is recognized that certain institutional changes will be necessary to redirect resources towards invention and global cooperation. All eyes will be on Japan to see whether or not it will dominate future technology as we enter the 22nd century.