Foreign Policy Blogs

Economic diplomacy for reconstruction

Japan plans to beef up its strategy of “economic diplomacy” to recover from the destruction caused by the March 11 earthquake and tsunami. The economy was further damaged by the ongoing crisis at the Fukushima Dai-ichi nuclear power plant, which has resulted in rolling blackouts in Tokyo, and hurt consumer confidence. In today’s post, I will outline Tokyo’s current policy, and attempt to interpret what it means for the wider world.

The policy of economic diplomacy, laid down by former foreign minister Seiji Maehara, is based on five pillars:

1. Seek free trade accords with trading partners.

2. Secure natural resources and food supplies from abroad.

3. Boost tourism.

4. Export the nation’s infrastructure technologies.

5. Promoting “Japan brand” culture and food items.

Seeking free trade accords will be benefit Japan more than its trading partners. While in theory free trade allows traders to cross borders with little governmental interference, the reality is the Japanese have insulated their companies with secretive economic protections. A company that doesn’t belong to Japan’s exclusive keiretsu–business groups with interlocking relationships–will be effectively shut out of the Japanese market. While the Japanese seek “free trade,” the benefits only go one way.

Japan must secure resources and food from abroad. Japan has very few natural resources, and virtually no oil (which is why it depends on nuclear power for energy independence). Japan is also highly dependent on the outside world for food, as its food supply is only 40 percent self-sufficient.

Tourism is still an underdeveloped industry in Japan. The Japanese have been slow to see the value of the service industry, since it doesn’t offer anything “concrete.” (This may explain why Japan tries to keep unemployment down by literally pouring concrete.) Japan will have a hard time attracting tourists as the country is prohibitively expensive, and its best natural resource, nature, has been degraded by all the concrete.

By “exporting the nation’s infrastructure technologies,” I assume they mean concrete. This will entail encouraging developing nations to create jobs by building massive public works projects. To the Japanese, this means pouring concrete all over the landscape.

Promoting “Japan brand” is Japan’s main economic strategy. Japanese companies focus on expanding market share rather than quarterly profits. Therefore they will produce and sell items at marginal profits in order to gain a larger market share and push out their competitors. Promoting culture and food items, which ties into Japan’s “soft power,” is a viable economic strategy, as I mentioned in my inaugural post. Japanese culture, history and aesthetics have captivated the West since the first Portuguese sailors shipwrecked on the shores of Japan in 1542. Japanese food has yet to be discovered by many Americans. Outside of cities like New York and Los Angeles, the idea of eating raw fish is still alien, and Japanese cuisine is largely unknown. This could provide a real area for growth for Japanese food companies.

I find the benefits of Japan’s “economic diplomacy” to be mostly one way. For viable, long-term economic diplomacy, the benefits need to go both ways, especially in regard to Japan’s hidden barriers to foreign companies, and pushing concrete on developing countries as an economic strategy.



Dustin Dye

Dustin Dye is the author of the YAKUZA DYNASTY series, available through the Amazon Kindle.

He lived in Okayama, Japan, where he taught English at a junior high school through the Japan Exchange and Teaching Program for three years. He is a graduate from the University of Kansas, where he received a bachelor's degree in anthropology.

His interest in Japan began in elementary school after seeing Godzilla fight Ghidorah, the three-headed monster. But it wasn't until he discovered Akira Kurosawa's films through their spaghetti Western remakes that he truly became fascinated in the people and culture of Japan.

He lives in Kansas with his wife, daughter and guinea pig.

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