Export-Led Industrialization. The Japanese Experience with Export-Led Development

Several countries have relied on export-led industrialization—a strategy to promote industrial growth based onthe manufacture of consumer items to be sold at foreignmarkets. In most cases, markets in the United States,Western Europe, and other developed countries are targeted for the sale of these items. Automobiles, electronicequipment, personal computers, television sets, clothing,toys, and small consumer items are among the manytypes of goods produced for export.

The emphasis is onthe cheap and efficient production of high-quality goodsthat can undersell similar products manufactured in thedeveloped countries. The recent success of Japanese andKorean automobiles in the United States, is the result ofthe high quality and lower cost of these products relativeto American-made cars. Cheaper production results fromlower labor costs and highly efficient production techniques. These developments have enabled Japan to claiman increasingly large share of the world automobile market (Figure 8-13).

Figure 8—13 Japanese Automobile Exports.Japanese-made automobiles have taken an increasing share of the world-market for automobiles. In many countries of Europe and North America, imports from Japan account for more than a quarter of the total number of motor vehicles sold

Countries that have recently adopted the strategy of export-led industrialization are often referred to as the newly industrializing countries (Figure 8-14). These countries have experienced substantial increases in industrial employment. Industrial employment in South Korea increased by 77 percent between 1974 and 1983. During the same period, manufacturing increased by 43 percent in Hong Kong, 53 percent in Taiwan, and 75 percent in Malaysia.

Figure 8-14 The Newly Industrializing Countries. In recent years, a number of countries have attempted rapid industrialization and have realized substantial increases in income and employment. Many of these countries are in East Asia and Latin America. Newly industrializing countries have generally adopted either the strategy of export-led industrialization, following the Japanese model, or that of maquila development, as in the case of Mexico

The Japanese Experience with Export-Led Development.Many of today's newly industrializing countries look toJapan as a working model of export-led industrialization.In less than half a century. Japan rose from the ashes of adevastating military defeat in World War II to becomeone of the world's leading economic powers. GivenJapan's astonishing record of economic achievement,careful study of the Japanese experience is warranted inexploring the nature of industrial growth in newly industrializing countries.

Although initial contact between Japan and the West began when Portuguese mariners landed on Japanese shores in 1542. the Japanese government shortly forbade contact with the West. For more than three centuries, the Japanese government maintained a policy of strict isolation. Trade with the West was limited to a very small number of Dutch and Portuguese ships, whose officers and sailors were restricted to port and had no contact with the local Japanese population.

In 1853, the U.S. Navy forced Japan to open its borders to trade with the West. Once contact with the global economy had been initiated, Japan developed rapidly. During the late nineteenth century, the Japanese pursued a policy of import substitution while laying the foundations for a competitive export-led industrial strategy. In the effort to avoid becoming a Western colony, the Japanese government discouraged foreign investment while encouraging the development of domestic capital. At the same time, Japan pursued an aggressive colonial policy of its own.

By World War II, the Japanese empire extended over Korea, Manchuria (Manchulco), and much of China and the western Pacific Ocean. In order to maintain this empire, the Japanese invested heavily in the production of military hardware and equipment. Many of Japan's largest industrial firms were established during this period in order to manufacture military-related products.

On August 11, 1945, the Japanese government surrendered unconditionally to the Americans. Shortly there-after, Americans began decades of occupation of the Japanese islands. The objectives of occupation policy included the establishment of a democratic government and a peacetime industrial economy. Millions of dollars of Western aid poured into Japan. The already established large corporations of Japan began to convert to production of consumer goods.

Throughout the 1950s and 1960s, Japan's economic growth was steady and spectacular. The Japanese aggressively promoted the development of markets for their products in the United States and elsewhere. By 1971 only the United States and West Germany ranked ahead of Japan in exports. Japan's economic growth continued to outpace that of the West throughout the 1970s and 1980s, despite a worldwide economic slowdown.