The Japanese developmental state served as a model for other Asian state's industrialization, but do the problems that Japan has - Essay Example

Download file to see previous pages In the model the state enjoys the right of controlling the economy more efficiently. The state in the model has been defined as an independent and autonomous political power. A developmental state is supposed to have strong intervention of the government with extensive planning and regulations. The countries outside East Asia satisfy the criteria for developmental state. Developmental State Model A regulatory state is governed by the regulatory agencies empowered to enhance the protection of the public from different kinds of market failure including monopolistic competition. The regulatory agencies also provide collective goods that aim to curb the excessive demand of the market that remains unsatisfied. A developmental state has more direct intervention into the economy and contributes in promotion of new industries and reduces the dislocations that are caused by the shifts in investments as well as profits from the old to the emerging industries. The main difference between regulatory state and developmental state is developmental state can pursue the policies directed for industries while regulatory states cannot do so. In Japan, there is little ownership of the government in industry. The private sector is rigidly guided as well as constrained by bureaucratic government elites. The government elites are not the elected officials and thus lack the capability to influence the working or the corporate class through political process (Woo-Cumings, 1999, p. 93). The developmental state emphasises on the market share rather than profit, focuses on the transfer of technology to foreign countries, lends time to promote economic growth rather than political freedom. Japan was the first country to witness successful industrialization. If the perspective of economic development is taken into account the development of the country followed the same pattern as in other developing countries. The factors that influenced the development of Japan include macroeconomic stability, development of human capital and economic infrastructure. It is difficult to equate a booming economy with a developmental state where the economies are dependent on external factors like inflows of foreign support in the form of aid or exports of raw materials. Therefore it can be stated that the concept of developmental state not only refers to economic and human development but presents the role of the state in enhancing the natural resources and lay down a distinctive and clear decision making processes. The model and the Problems for Japan The industrial policy of the country was based on the financial support and the taxation systems of the government. For the allocation of financial resources for prioritized sectors a large amount of loans were directed to develop the infrastructure of economy. The support of the government was modest but the activities of the government encouraged additional funding from the private banks. The total funding was under the supervision of the Export-Import Bank of Japan. The outcome of the implementation of the industrial policy was not always envisaged. Three reasons can be accounted for the implementation failure. The choices of the policies were flawed, the power of enforcement was not stringent as it allowed the private sector to work against the intension of the government and government ex ...Download file to see next pagesRead More