Country Listing

Japan Table of Contents



Although Japan's economic development is primarily the product of private entrepreneurship, the government has directly contributed to the nation's prosperity. Its actions have helped initiate new industries, cushion the effects of economic depression, create a sound economic infrastructure, and protect the living standards of the citizenry. Indeed, so pervasive has government influence in the economy seemed that many foreign observers have popularized the term "Japan Inc." to describe its alliance of business and government interests. Whether Japan in the mid-1990s actually fit this picture seems questionable, but there is little doubt that government agencies continue to influence the economy through a variety of policies.

Japanese attitudes towards government have historically been shaped by Confucianism (see Cultural Developments and the Establishment of Buddhism , ch. 1; Religious and Philosophical Traditions , ch. 2). Japan often has been defined as a Confucian country, but one in which loyalty is more important than benevolence. Leadership stemmed from the government and authority in general, and business looked to government for guidance. These attitudes, coupled with the view of the nation as a family, allowed government to influence business, and businesses worked hard not only for their own profits but also for national well-being. There was a national consensus that Japan must be an economic power and that the duty of all Japanese was to sacrifice themselves for this national goal. Thus, the relationship between government and business was as collaborators rather than as mutually suspicious adversaries.

Government-business relations are conducted in many ways and through numerous channels. The most important conduits in the postwar period are the economic ministries: the Ministry of Finance and the Ministry of International Trade and Industry, known as MITI (see Trade and Investment Institutions , ch. 5). The Ministry of Finance has operational responsibilities for all fiscal affairs, including the preparation of the national budget (see table 11, Appendix). It initiates fiscal policies and, through its indirect control over the Bank of Japan, the central bank, is responsible for monetary policy as well. The Ministry of Finance allocates public investment, formulates tax policies, collectes taxes, and regulates foreign exchange.

The Ministry of Finance establishes low interest rates and, by thus reducing the cost of investment funds to corporations, promotes industrial expansion. MITI is responsible for the regulation of production and the distribution of goods and services. It is the "steward" of the Japanese economy, developing plans concerning the structure of Japanese industry. MITI has several special functions: controlling Japan's foreign trade and supervising international commerce; ensuring the smooth flow of goods in the national economy; promoting the development of manufacturing, mining, and distribution industries; and supervising the procurement of a reliable supply of raw materials and energy resources.

The Ministry of Transportation is responsible for oversight of all land, sea, and air transport. The Ministry of Construction is charged with supervising all construction in Japan and Japanesesupported construction abroad. Its responsibilities also include land acquisition for public use and environmental protection as it related to construction. The Ministry of Health and Welfare is responsible for supervising and coordinating all health and welfare services, and the Ministry of Posts and Telecommunications is responsible for the postal service and electronic communications.

Data as of January 1994