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close this bookConflict over Natural Resources in South-East Asia and the Pacific (UNU, 1990, 256 pages)
close this folder3. The Japanese economy and South-East Asia: the examples of the Asahan aluminium and Kawasaki Steel Projects
View the document(introductory text...)
View the document3.1 The Japanese miracle
View the document3.2 Eyed of the miracle?
View the document3.3 A new vision of economic: development
View the document3.4 The vision in action: Asahan
View the document3.5 Japan's overseas steel industry
View the document3.6 Kawasaki in Mindanao: the export of pollution
View the document3.7 Conclusion: the comprehensive security system - What price?
View the documentReferences

3.1 The Japanese miracle

POST-WAR overseas investment by Japanese corporations began in the mid-1960s, when Japan experienced a major sustained burst of rapid economic growth. Japanese textile, electrical appliance, and food-processing industries began production in Taiwan, South Korea, Hong Kong, and other Asian countries. In most instances, the manufacturing was undertaken by factories subcontracted to produce parts and components for parent companies in Japan. In the synthetic textile and auto industries, Japanese companies supplied raw materials or auto parts to their subsidiaries in the host countries, where finished goods were produced and sold in local markets. These operations were financed by Japanese 'export-substitution' investment, designed to replace the export of finished goods from Japan by local production. In every case, Japanese direct investment in manufacturing in these industries and countries was designed to exploit cheap Asian labour.

Japanese overseas investment in the mid-1960s featured small amounts of capital committed per project and a concentration in the light industries. Consequently, these Japanese manufacturing operations competed with already-developed local industries, driving them out of business. In particular, since a large part of Japanese direct investment overseas was located in Asia (Table 3.1), the Japanese presence in the region was strongly resented and attacked. Popular opposition to the penetration of Japanese corporations culminated in 1974 in the massive anti-Japanese uprisings which broke out in Indonesia, Malaysia, the Philippines, and Thailand.

TABLE 3.1 Trends in Japan's Direct Overseas Investment (US$ million)

Region/
Country

19741

19831

Percentage
Change
Cases Amount Per Cent Cases Amount Per Cent
United States 3,345 2,571 23.8 10,846 16,535 27.5 6.7
Indonesia 443 1,190 10.9 1,237 7,641 12.7 1.8
Hong Kong 819 274 2.5 2,180 2,387 4.0 1.5
South Korea 813 495 4.6 1,150 1,442 2.4 -2.2
Singapore 316 226 2.1 1,557 1,705 2.8 0.7
Philippines 241 190 1.8 603 786 1.3 -0.5
Malaysia 374 250 2.3 816 904 1.5 -0.8
Thailand 468 194 1.8 926 593 1.0 -0.8
Taiwan 649 174 1.6 1,317 582 1.0 -0.6
Asia Total 4,123 2,993 27.7 9,786 16,040 26.6 1.1
Middle East 96 780 7.2 295 2,654 4.4 -1.9
Western Europe 164 189 1.7 3,338 7,136 11.9 3.7
Brazil 691 1,253 11.6 1,244 3,955 6.6 -3.4
Latin America 1,405 2,510 23.2 3,924 10,730 17.9 2.3
Australia 330 524 4.8 1,067 3,04 5.1 0.9
Total 10,154 10,820 100.0 30,500 60,098 100.0  

Source: Ministry of Finance, Japan.
1Year-end.

That same year, at the United Nations, the developing countries of the 'South' demanded that the industrialized countries of the 'North' establish a 'new international economic order'. Translation al corporations reacted to this request by creating a 'new international division of labor'. In response to these criticisms of Japan from Asian countries and the emerging international consensus in favour of a new economic order, Japanese corporations launched an attempt to develop a Japanese version of the new international division of labour. This effort evolved into the Pacific Basin Economic Cooperation concept

The rapid economic growth of the 1960s was driven by expansion of energy-consuming industries based on lavish use of cheap Middle East oil. The leaders of this spurt in growth were the raw material processing industries. Iron ore, copper ore, bauxite, and other minerals, as well as lumber and petroleum, were imported in huge volumes and processed in Japan. From 1963 to 1973, Japan consumed much more raw materials than the Western economies. In that period, the consumption of oil, copper, aluminium, and nickel in Japan increased more rapidly than in the United States and West Germany, growing at double the pace of GNP (Table 3.2).

TABLE 3.2 - Annual Growth Rate of Consumption of Natural Resources, 1963-1972 (per cent)

Resource

Country

  Japan United States West Germany France United Kingdom
Energy (total) 10.0 4.6 4.1 5.9 1.3
Oil 16.1 5.1 11.0 13.5 6.8
Copper 13.4 3.9 4.0 5.2 2.2
Copper ingots 12.8 2.9 5.2 5.4 0.4
Lead ingots 6.8 4.5 1.8 2.3 0.1
Zinc ingots 9.8 3.1 4.6 4.8 1.4
Aluminium 20.8 8.1 10.5 6.4 4.4
Tin 9.2 0.5 3.1 0.3 1.6
Nickel 17.3 5.0 10.4 6.5 1.3
Wood 5.6 3.8 0.5 2.3 0.2
Meat 8.2 2.5 2.8 1.2 0.3
Wheat 2.5 4.3 2.7 0.0 0.6
Maize 9.2 3.9 10.6 9.9 2.8

Source: World Energy Supplies Metal Statistics, FAO Production Yearbook (various issues).