When someone mentions Japan, words like Honda, Toyota, Sony, Shogun, and sushi usually come to mind - or perhaps Rockefeller Center and Columbia Pictures. Decline is a word not often associated with Japan.
Most economists agree that the Japanese have never been in better economic shape and their future looks extraordinarily bright. In this book, The Rise and Fall of the Great Powers, historian Paul Kennedy even suggests that Japan will expand faster than other major powers in the future. Kennedy sites such pluses as lower raw material prices and increased industrial efficiency; a decrease in oil dependency; and technology advances that allow for low-cost foreign labor and robotics. Some analysts believe that robots and automated plants will solve the problems of Japan's decreasing labor force. In addition, Japan spends nearly 5 percent of its GNP on research and development and with 2-5 percent growth, this should keep Japan on or near the first rung of the global economic ladder far into the twenty-first century.
Furthermore, the Japanese produce more engineers than any Western country, enjoy one of the highest literacy rates, and are thought to have one of the most diligent work forces in the world. To top it all off, the Japanese people save far more than any other country, making them the No. 1 creditor nation and enabling them to export billions of dollars in addition to their other highly regarded products.
And yet, the Japanese would be the first to say that their fortunes could change. The possibility of protected markets in Europe and America loom on the horizon and Japanese exports are certain to decline as Korea, Singapore, Hong Kong, Taiwan, China, and other competitors increase their exports activity. At home, as the value of the yen rises and the level of consumption swells, inflation will spiral up and payment surpluses will drop. Growth is bound to taper off as Japan's economy matures.
But, the greatest threat to Japan is its own policies. The government must do a better job of harmonizing its global economic and political programs with its domestic plans. Already loud and contradictory opinions on what direction to take are being heard from all sides. How the debate goes and what decisions are made toward such critical questions as opening up markets to foreign competition, changing the constitution, increasing military spending, and Japan's international role could break apart Japan's 44-year political consensus.
In light of the continuing slew of Japan-bashing books and in response to Paul Kennedy's rise-and-fall theory, THE WORLD & I asked Japan specialists to thoroughly examine Japan's present and probable future. Will it inevitably decline as, according to some theorists, all great powers must?
Despite the potential, Ronald A. Morse, executive vice president of the Economic Strategy Institute, argues that Japan should not be written off. "Instead," says Morse, "the world must prepare to compete at the highest level." Even if Japan were to decline tomorrow, there are numerous other tigers waiting in the global economic jungle.
But what about the oil crisis? Hasn't that, as economists predicted for years, incapacitated Japan's economy? Roger Brooks, director of the Heritage
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