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No. 30 — August 4, 2000

 

Feature Article

JAPAN: LEADING OR FOLLOWING ASIA
INTO THE INFORMATION AGE?

Marc Castaellano

Summary

Tokyo believes that information technology is the key to economic growth, both at home and abroad. To be sure, computers, electronics and communication products will play a central role in the future development of Asia. However, the "digital divide," the gap between the nations — or parts of nations — that have technology and those that do not, is a problem that must be addressed when considering the long-term prospects for growth in the region. Tokyo has made the proliferation of IT a global priority and is keen to lead its neighbors into the information age.

Asian leaders are actively pursuing their own IT development strategies, but they also welcome support from Japan. The Association of Southeast Asian Nations, for example, has encouraged Tokyo to take on a leadership role in the efforts to bridge the digital divide. Japanese policymakers have responded by introducing an aid initiative worth $15 billion and by taking steps to foster the development of IT at home.

Some observers note, though, that Japan is not considered a shining example of a New Economy — that is, one powered by technological innovation and characterized by rapid productivity gains — and is not exactly a trailblazer of the Information Age. However, business leaders and government officials are optimistic about Japan's potential. Indeed, corporations are increasing their investments in technology, and legislative changes to foster such investments are in the works. Moreover, Tokyo has launched a vigorous campaign aimed at "digitizing" the Japanese economy.

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Weekly Review

MORI PLEDGES IT-DRIVEN "REBIRTH OF JAPAN";
COMES UNDER FIRE FOR KUZE APPOINTMENT

--- by Barbara Wanner

Basking in the afterglow of an upbeat, mishap-free summit of the heads of government of the Group of Seven industrial nations plus Russia, Prime Minister Yoshiro Mori opened a special Diet session July 28 by emphasizing the positive outcomes of the July 21-23 gathering of world leaders on Okinawa. He noted in particular the group's pledge to promote the international advancement of information technology (see JEI Report No. 29B, July 28, 2000). Toward that end, Mr. Mori renewed his promise to put the economy on a self-sustaining expansion track by promoting the IT revolution as well as continuing current stimulatory fiscal and monetary policies. Such a course would lead to the "rebirth of Japan" in the international community, the prime minister told assembled lawmakers.

 

TOKYO PLOTTING STEADY COURSE FOR SPENDING POLICY
--- by Jon Choy

Japan's coalition parties and the Ministry of Finance have begun the process of drawing up the general account budget for the fiscal year beginning April 1, 2001 by setting overall spending guidelines and objectives. Spurring the economy remains Tokyo's primary goal, say Prime Minister Yoshiro Mori, Finance Minister Kiichi Miyazawa and top officials of the Liberal Democratic Party, the New Komeito and the New Conservative Party. Their words will be backed in FY 2001 by a ¥1 trillion ($9.1 billion at ¥110=$1.00) special reserve for public investment.

 

JAPAN'S TRADE SURPLUS DIPPED AGAIN IN SPRING
--- by Douglas Ostrom

For the fifth straight quarter, Japan's customs-clearance trade surplus declined on a year-to-year basis in the April-June period (see Table 1). Like its predecessors, the drop was measly — only 3.2 percent — suggesting the need for caution in drawing inferences from the recent trend. In fact, the dip in the spring was entirely artificial. A high proportion of both Japan's exports and imports is denominated in dollars, yet the nation's trade figures are reported in yen. The Japanese currency, although fairly stable in recent months in the range of ¥105 to ¥110 to the dollar and averaging ¥106.6=$1.00 for the April-June quarter, was far stronger than a year ago when the comparable number was ¥120=$1.00. A more expensive yen implies that a constant value of dollar-denominated trade translates into fewer yen than otherwise. Since Japan's exports exceed its imports by a wide margin, a high-flying yen tends to depress exports more than imports, thereby trimming the surplus even in the absence of any change in export and import volume or pricing.

 

JAPAN VOWS MORE HELP FOR SOUTHEAST ASIA
--- by Marc Castellano

Foreign Minister Yohei Kono announced July 26 that Japan would help the Association of Southeast Asian Nations bridge the "digital divide," the gap between nations that have benefited from the proliferation of information technology and those that have not. Efforts will be aimed at aiding the organization's newer, poorer members — Cambodia, Laos, Myanmar (formerly Burma) and Vietnam — to catch up with the more developed ones — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Mr. Kono made the announcement in Bangkok, where he was attending an "Asean+3" meeting — a forum that brings together the foreign ministers of Asean member countries, the People's Republic of China, Japan and South Korea.

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