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This paper provides an alternative insight into Japan's current economic problems. We concentrate upon the role played by the economy's central actors, namely Japan's transnational corporations. Since the early 1980's, Japan's transnationals have become dominant players in the global economy, and now have a higher rate of physical investment in new, overseas greenfield sites than their competitions. This has had detrimental consequences for Japan's domestic economy, particularly for small firms who operate in keiretsu networks. This has led to concerns about the 'hollowing out' of Japan's domestic industry raising the possibility of long-term industrial decline and 'strategic failure.' [ABSTRACT FROM AUTHOR]

Presents information on a study which estimated the net capital gains of household wealth in Japan, and analyzed their impact on consumption by using data from the National Accounts from 1955-93. Previous research on capital gains; Statistics on the capital gains and household savings; Results of an econometric analysis on the impact of capital gains on consumption.

This article presents information on the impact of oligopolies on productivity and market structure in Japan. It is commonly believed that increasing competition amongst firms contributes positively to national welfare. However, under oligopoly with uneven technologies, elimination of minor firms improves average efficiency of production in the industry, though at the same time it causes a more oligopolistic market structure. This paper will show that the improvement in production efficiency may well exceed diseconomies of changes in market structure. In this model, an uneven technical level amongst firms provides the key ingredient. In order to highlight the difference in the mechanisms, existence of fixed cost is ignored. It is commonly believed that harder competition among firms is beneficial to the country. Conversely, it is said that exit of minor firms and policies that impair them, strengthen the oligopoly position of major firms and consequently decrease national welfare. In this paper, it is shown that by eliminating or impairing minor firms a government can actually increase welfare. This happens primarily because elimination of a less efficient firm, shifts production from it to more efficient ones and thus increases total profits.

This paper is complementary to the recent cross-country studies of Jeffrey Sachs (1979), and William Branson and Julio Rotemberg (1980), which document the contrast between nominal wage inertia in the postwar United States and real wage inertia in Europe and Japan, and examine the theoretical and policy implications of this contrast. Here I begin with another procedure for documenting the difference in nominal wage behaviour among the United Kingdom, United States and Japan, and then concentrate on explaining its causes rather than its consequences. Real wage inertia plays no role in my analysis, reflecting my finding that the real wage rate in quarterly postwar data for the United Kingdom and Japan displays more variability than in the United States. The basic argument of this paper comes down to three main points: (1) Macroeconomic instability in the United States has been aggravated by the unusually sluggish behaviour of nominal wages during the postwar era. Whether measured as the standard deviation of wages relative to hours worked, or the ratio of the respective response coefficients of wages and hours worked to changes in nominal GNP, wages in Britain and Japan are five to ten times more responsive than in the United States. Thus, of any given fluctuation in aggregate nominal demand, a larger fraction takes the form of a change in real output and employment in the United States than in the United Kingdom or Japan. (2) The drastic decline of American wage responsiveness in the postwar period as compared to the years between 1892 and 1940, together with the 1948 invention of the three-year staggered wage contract in the American unionised industrial sector, seems to be more than coincidental. It is not only the long duration of US contracts, but also their staggered nature, that makes wage changes relatively unresponsive to expansions or contractions in nominal GNP growth. (3) Japanese labour market institutions look much more like those suggested a... [ABSTRACT FROM AUTHOR]

The article explores the main areas in contention in relation to Great Britain's competitiveness policy vs. Japanese industrial policy. Industrial policy embraces all acts and policies of the state in relation to industry, be they economic, social or environmental. To the extent that the authorities controlling competition policy possess a certain amount of discretion, they may well practice an implicit industrial policy. Anti-dumping regulations would not normally fit in the definition, because their main purpose is to promote fair competition in all sectors exposed to the dangers of international competition. It refers to enhancing the strength of national industries' relative to their foreign competitors, it follows that certain industries or firms will be afforded special treatment either to enhance their export performance or their domestic performance relative to the foreign counterparts operating within the same territory. Japan's post-war industrial policy is a product of government intervention in the private sector during the war and the period of turmoil that ensued.

The article presents the findings of a study which suggests corruption and investment is promoted when there are active industrial policies in place. One of the major debates today is about whether or not active industrial policy plays a substantial role in promoting economic growth. The case in favor of active industrial policy uses arguments that range from the traditional notions of externalities and learning curves to more colorful ideas about the benefits of supporting investment in high value added sectors using sophisticated technologies. A popular argument brandished is that investment can be heavily promoted through active industrial policies, with the experience of Japan and Korea usually cited as evidence. The case against active industrial policy points out the lack of convincing empirical evidence on the benefits of industrial policy and the lack of agreement on practical issues such as the criteria to use in the process of picking the companies to be favored, sometimes called 'national champions'. One example of the interactions between active industrial policy and corruption is provided by the US$37 billion South Korean Yulgok defence-procurement programme. The programme represented one third of government spending during the 1970s and 1980s. At the heart of the programme were two policies that gave an extraordinary amount of discretion to government procurement officials.

This paper estimates the contribution of net saving for each of twelve motives to overall household saving in Japan using micro data from a Japanese Government survey and finds that net saving for the retirement and precautionary motives, both of which are consistent with the life-cycle model, are of dominant importance. It also finds that the saving motives of Japanese households vary greatly by age and that (hey save at each life stage for motives that are appropriate for that life stage. These findings suggest that the life-cycle model is highly applicable in the case of Japan. [ABSTRACT FROM AUTHOR]

The concepts of σ-convergence, absolute β-convergence and conditional β-convergence are discussed in this paper. The concepts are applied to a variety of data sets that include a large cross-section of 110 countries, the sub-sample of OECD countries, the states within the United States, the prefectures of Japan, and regions within several European countries. Except for the large cross-section of countries, all data sets display strong evidence of σ-convergence and absolute β-convergence. The cross-section of countries exhibits σ-divergence and conditional β-convergence. The speed of conditional convergence, which is very similar across data sets, is close to 2% per year. [ABSTRACT FROM AUTHOR]

This paper addresses the question: How should the developing countries view the prospects of significant MFN tariff reductions in light of their existing tariff advantages under the GSP? Our calculations of the static effects, based on a differentiated product model, indicate that the developing countries stand more to gain from MFN tariff cuts than they will lose from the simultaneous erosion of their GSP preferential tariff margins.[1] Their gross trade expansion during the preference period amounts to $401 million annually and consists of $106 million to beneficiaries from MFN cuts on products restricted by GSP value limits, $27 million to beneficiaries from MFN cuts on products not included under the GSP schemes, and $268 million to non-beneficiaries; the annual loss due to the erosion of GSP tariff margins is only $32 million. Then why is it that the developing countries have expressed such concern that the forthcoming MFN negotiations hold the prospect of adversely affecting their world trading interests? It could be that the beneficiary developing countries are optimistic about future improvements in the GSP schemes. If such improvements include the elimination of value limits on GSP trade and an extension beyond the initial 10 year duration of the GSP, MFN tariff reductions would impose a net cost to beneficiaries of some $40-50 million annually in foregone trade flows. A final consideration for the developing countries may be a desire to keep the GSP alive with improvements being negotiated in the UNCTAD forum which has proved to be sympathetic to the trade problems of developing countries. In contrast, MFN negotiations would come under the auspices of the GATT, a forum which has generally downplayed the objective of economic development and instead concentrated on reconciling the trade problems of the industrial nations. But with UNCTAD playing an advisory role to the developing countries as they approach the GATT negotiations, we should expect t... [ABSTRACT FROM AUTHOR]

We estimate local government spending multipliers using annual data for 47 Japanese prefectures during the 1990s. Our main findings are as follows: the average local government spending multiplier is positive and significantly different from zero but not larger than one; there are large and significant differences in the output effects of different types of government expenditures: transfers to firms have the highest multiplier, significantly larger than one, while transfers to households have the lowest multiplier, significantly below zero; firms' financial distress has a significant negative effect on the local government spending multiplier, in contrast to economic slack that has a significant positive effect. [ABSTRACT FROM AUTHOR]

We build a single-country, two-city, model with nominal rigidities and transport costs which predicts that variation of LOP deviations is lower for goods with infrequent price adjustment after controlling for distance. We adapt the Engel and Rogers (1996) regression to analyse Japanese retail prices at the city level and find that results are consistent with the theoretical predictions. The regression results also suggest that the distance equivalent of nominal rigidities can be as large as the ‘width’ of the border found in the literature on international LOP, casting doubt on casual interpretations of distance as a metric for market segmentation. [ABSTRACT FROM AUTHOR]

We propose new proxy variables for monetary policy shocks in Japan for the period from July 1989 to March 2001 and investigate the effects of changes in the policy target variable on stock prices and the term structure of interest rates. We find that changes in the surprise component of the target variable significantly affect both intermediate-term and long-term interest rates. A surprise decrease in the target rate of 1% leads, on average, to a 3% increase in stock prices. The magnitudes of estimated reactions of financial variables are similar in Japan and the US. [ABSTRACT FROM AUTHOR]

Using a sample of Japanese firms in the chemical industry, we show that concentrated shareholding is associated with lower expenditure on activities with scope for managerial private benefits. We interpret this as evidence of a hitherto undocumented form of monitoring by large shareholders. We examine whether such monitoring is also performed by banks and other creditors. The results in the metal product industry are roughly similar, but we find no evidence of this type of monitoring in the Japanese electronics industry, and suggest a number of explanations. [ABSTRACT FROM AUTHOR]

Examines the relationship between exchange rate changes and Japanese export pricing behavior. Measurement of pricing and the cost of impact of exchange rate changes; Incomplete pass-through of exchange rate changes; Reliance of Japanese export firms on pricing to market strategies.

Presents an article which focuses on multitasking and technical changes within Japanese firms. Problems faced by employees of large corporations when the come up with an idea; How multiskilled workers exhibit lower turnover levels.

Presents the book "Economic Picture of Japan 1967," a recent development of the Japanese economy.

The article presents information about the book "Growth and Cycles in the Japanese Economy," by M. Shinohara. Shinohara examines post-war recovery factors, export growth potential and the effects of the concentration of capital in large firms against the background of the 20-year Kuznets cycles.

The article focuses on the book "Foreign Direct Investment in Japan," edited by Masaru Yoshitomi and Edward M. Graham. The book arises from a conference held at the Wharton School, University of Pennsylvania in October 1994, in which American and Japanese scholars and company executives grappled with the question of why foreign direct investment into Japan appears to be so low. The questions discussed in the book are complex and the contributions in this book open them up admirably.

The article focuses on the book "Financial Systems, Innovations and Development," by V.V. Bhatt. The book discusses a primarily institutional treatment of the issues, problems and possibilities currently faced by developing countries when trying to foster a financial system appropriate to their development needs. The lead bank system of India is outlined and compared with the main bank system of Japan and there is an unusually upbeat discussion of development banking and its potential as a catalyst for industrial and technological progress.