And Yet the Times Move on...

(From Journal of Japanese Trade & Industry (JJTI))

Byline: Wakamatsu Kenji

If we restrict ourselves to the tone of the media, the year 2003 dawned in Japan amid an unprecedented mood of impending crisis. One reason for these fears is that the structural reforms announced by Prime Minister Koizumi Jun-ichiro have not produced the expected economic growth. And the increasingly held view is that deflation will get worse, and usher in a situation similar to that of the Great Depression of the 1930s. This opinion says that there are lessons to be learned from President Herbert C. Hoover's stubborn adherence to balanced finances, which precipitated the 1929 Wall Street crash and the worldwide depression. There is also uncertainty over Iraq. War with Iraq might have already started by the time this edition of the Journal of Japanese Trade & Industry appears. How and when might this war be resolved? And what are the prospects for a postwar settlement? North Korea's nuclear program also poses a direct threat to Japan. There will hopefully be more cooperation amongst Tokyo, Washington and Seoul, as well as more international lobbying with the help of Beijing and Moscow, to put a stop to the program. The real private sector economy has been subject to globalization since the end of the Cold War, while ferocious corporate competition is changing ideas about the international division of labor. Internationally, there has been a considerable shift from the vertical arrangement of the production process, the type of arrangement we saw in the past involving parent and subsidiary companies, to a horizontal arrangement, which allows a diverse range of options in planning and development, production of components, assembly, marketing and office management. There was once a lot of talk about Japanese corporations shifting their manufacturing offshore. Their shift into the Association of South-East Asian Nations (ASEAN) countries, in order to reduce manufacturing costs, signals such an arrangement. In Europe also, more than a third of German corporations have transferred their manufacturing bases to Eastern Europe, which has worsened employment and brought economic stagnation in Germany. Major North American, European and Japanese corporations are meanwhile shifting into China in search of huge markets, and are showing the sort ...