How Japan promotes its competitive system in the areas of higher economic potential by Luca Ebreo, member of EIEAD’s Scientific Committee.

“we hereby report the speech by Dr Luca Ebreo, member of EIEAD’s Scientific Committee, during the Forum EIEAD on June 23rd, in SEAFUTURE 2018 La Spezia, on board the Italian Tallship Amerigo Vespucci”

Part 1


Japan has few natural resources and depends on massive imports of raw materials. It must export to pay for its imports, and manufacturing and the sales of its services, such as banking and finance, were its principal means of doing so.

The successful model of Japan in promoting its competitive system in the areas of higher economic potential is due to three main components: government’s administrative guidance, trading companies, and official development aid.

The export of infrastructure systems as Japan’s foreign economic policy is unique in terms of diplomatic goals and means. We will discuss about Japan’s Silk Road Diplomacy focussing on Central Asia policy application.

Administrative guidance

The Japanese Government has directly contributed to the nation’s prosperity helping initiating new industries, mitigating the effects of economic depression, creating a sound economic infrastructure, and protecting the living standards of the citizenry.

Administrative guidance (gyosei shido) has been the principal instrument of enforcement used extensively throughout the Japanese government to support a wide range of policies.

The Japan’s Ministry of International Trade and Industry (MITI) was formed in 1949 and served as an architect of industrial policy, an arbiter on industrial problems and disputes, and a regulator. MITI provided industries with administrative guidance also seconding key personnel to the private industries. In 2001, MITI was reorganized into the Ministry of Economy, Trade, and Industry (METI).

Trading Companies

With their extensive intelligence networks and broad global footprint, Japan’s trading houses (sogo shosha) historically have been reliable sounding boards on topics ranging from energy supply and diplomacy to the world economy. With their roots in the 19th century, the sogo shosha have worn multiple hats as intermediaries, investors and supply chain operators.

For example, little is known of the role of Japan in the global land grab. Japanese Government and corporate actors have responded to the changing global food system over the last decade implementing “overseas agricultural investment” (kaigai nōgyō tōshi), the preferred term for both land acquisitions and broader agriculture-related investments. The trading companies have been engaged in substantial investments also in downstream sectors of international agricultural trade like storage and distribution/shipping.

Official Development Assistance (ODA)

ODA is broadly classified into two types: bilateral aid and multilateral aid. Multilateral aid consists of financing and financial contributions to international organizations, while bilateral aid is provided in three forms: Technical Cooperation, Loan Aid and Grant Aid. In addition, other schemes of bilateral aid include the dispatch of volunteers.

On a net disbursement basis, in 2016 Japan contributed approximately US $7,016.09 million (approximately ¥ 763.4 billion) in bilateral ODA (including aid to graduate nations) and contributed and financed approximately US $3,315.33 million (approximately ¥ 360.7 billion) to international organizations. Accordingly, total ODA contributions amounted to approximately US $10,331.42 million, a 12.7% increase from the previous year (a year-on-year increase of 1.3% to ¥1,124.1 billion on a yen basis). With this amount, Japan ranked fourth among the member countries of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD), after the United States, Germany and the United Kingdom.

Japan attaches importance to the loans, 84% of the bilateral ODA in 2016, because it thinks that, the recipient government will be more attentive in selecting projects and be more disciplined in implementing them, because otherwise they will have difficulty in repaying the loan.

The trading companies, acting as prime contractors, are managing the infrastructure projects financed with yen loan.

Using the yen loan, Japan built quite a lot of infrastructure in Central Asia: roads, modernization of airports, railways, optical fibre lines, bridges, power plants, vocational schools – more than 60 vocational schools in Uzbekistan – water supply and canalization system in Astana, and so on. Projects under the yen loan are located in such a way that they provide a good connection between Central Asia and the outside world – construction of roads, railways and telephone lines and modernization of airports.

Luca Ebreo, June 23, 2018

European Institute for EurAsian Dialogue (E.I.E.A.D.)

FORUM E.I.E.A.D. 2018

2018-07-11T18:12:01+00:0011 Luglio, 2018|0 Comments

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