No. 23 — June 16, 2000

Feature Article


Jon Choy


Like Great Britain and the United States before it, Japan paid scant attention to the potential environmental consequences in its headlong rush to develop an advanced industrial economy. In particular, the reconstruction after World War II and the subsequent drive to lift Japan into the top ranks globally were achieved at the cost of fouled air, water and soil — a price that both policymakers and the public had been willing to pay.

Since entering the postindustrial phase of economic development, however, Japan has been reassessing its priorities. Having built the second-largest market-based economy in the world and generated one of the highest per capita incomes, the argument that Japan could not afford environmental cleanups and anti-pollution technology increasingly rang hollow. The problem of cost began to recede in the face of Japan's economic development, and the country's interest in environmental matters grew as it started to focus on quality-of-life issues.

Paralleling this domestic shift in attitude were changes at the global level. As mankind's understanding of the planet's complex ecology deepened, it became apparent that some environmental problems could only be addressed effectively from a worldwide perspective. The Japanese political vanguard has made leadership on global environmental issues a keystone of its commitment to uphold Japan's responsibilities as an economic superpower. Leading by example, Tokyo has pledged to reduce the country's release of pollutants on a wide scale, again bringing "green" topics to the direct attention of companies and individuals.

Signs of Japan's environmental revolution are popping up everywhere — in government programs, in new and revised laws, in corporate business plans and in everyday life. In the opinion of most activists, Japan has taken significant strides in the past several years but still has much catching up to do.

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Weekly Review

--- by Douglas Ostrom

Japan's economy expanded an astonishing 10 percent on an annualized, seasonally adjusted basis after inflation in the first three months of 2000 (see Table), the Economic Planning Agency announced June 9. This performance should silence those analysts, mostly foreign, who had described the nation as in a recession given the back-to-back contractions in gross domestic product that occurred in the third and fourth quarters of 1999. These experts presumably now are reading from the same page as Japanese business forecasters and government policymakers who argue that the economy has been in a recovery phase for the better part of a year. Yet the latest GDP data provide reason for continued caution about the short-run and long-term prospects of the world's second-largest economy.


--- by Jon Choy

Perceptions play a key role in the insurance business. At the micro level, an insurance company attracts and retains customers on the basis of its financial health and stability. These attributes are needed at the macro level as well because providers of life and property and casualty coverage must compete against other types of financial institutions &emdash; notably, banks and securities brokers. With the exception of the chaotic years immediately following the end of World War II, Japan's insurance industry had maintained a rock-solid financial reputation. This standing was due in part to very close supervision by the Ministry of Finance, which set remarkably conservative standards for such key benchmarks as the solvency ratio, or the excess of total assets over potential liabilities. While insurers could not be characterized as the star performers of Japan's financial world, they were considered among the least likely to fail.


--- by Marc Castellano

For the ninth year running, Japan was the world's top provider of official development assistance in 1999. According to preliminary figures released in mid-May by the Paris-based Organization for Economic Cooperation and Development, Tokyo disbursed a record $15.3 billion in ODA, 26.2 percent more in adjusted terms than in 1998 (see Table). The jump was due in large part to the appreciation of the yen, which bolstered the dollar value of Japan's contributions. But it also reflected continued implementation of the Miyazawa Plan, the $30 billion fund designed to support East Asian countries affected by the 1997-99 regional financial and economic crisis (see JEI Report No. 6A, February 12, 1999).


--- by Barbara Wanner

Reflecting the depth and the importance of U.S.-Japan relations, President Clinton traveled to Tokyo to attend the June 8 state funeral of the late Prime Minister Keizo Obuchi, who died May 14 after being felled by a stroke six weeks earlier (see JEI Report No. 14B, April 7, 2000). Mr. Clinton had just wrapped up a busy six-day trip to Western Europe, Russia and Ukraine, but he apparently did not hesitate to reboard Air Force One after only 24 hours back in Washington. His 12-hour flight to Japan was made for the express purpose of paying respects to Mr. Obuchi, whom he called his friend. "Prime Minister Obuchi touched hearts around the world in simple human ways. Our world is a better place thanks to the life that he lived and the work that he did," the president said at a reception hosted by Ambassador to Japan Thomas Foley following the funeral service.

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