What The United States Can Learn From Japan
improving specific sectors of the economy by focusing R&D, subsidies, and tax
incentives to specific industries that the government wants to promote. The
United States could adopt some of these industrial policies to help foster
with East Asia.
In Japan the government both during the Meiji period and the post World
War II period followed a policy of active, sector selective industrial targeting.
government would focus its tax incentive programs, subsidies, and R&D on what it
saw as emerging industries. During the Meiji period Japan focused it’s attention
on emulating western technology such as trains, steel production, and textiles.
strategic industrial policy to develop the high-tech, steel, and car industries
supported by the government through subsidies and tax breaks to farmers, steel
producers, and other industries that have been hurt by foreign competition
the U.S. is almost a complete reversal of the economic policies of Japan and the
Four Little Tigers; instead of fostering new businesses and high tech industry
it supports out of date and low tech firms who have political clout. The
existing economic policy of the United States fails to help high tech businesses
innovation by providing incentives primarily to existing business. The structure
of U.S. industrial policy like the structure of an advance welfare state has
sectors of the economy. The current U.S. industrial policy is a distribution
strategy and not a development strategy.
Instead of this ad-hoc industrial policy the United States should follow
Japan’s model of strategic targeting of emerging technology. The U.S. instead of
should provide loans, subsidies and R&D money for firms that are producing high
technology products. Unfortunately, there are several impediments to copying
politicians to give corporate welfare to failing established firms and not
emerging firms. Second, it is difficult for a government to select which sectors
of the economy it will target. But despite these obstacles the U.S. is now
confronted with trading powers who have coordinated government programs to
reliance on individual initiative and a lack of government support for new
industries has allowed Japan and the Four Little Dragon’s to catch up to the U.S.
in the area of high technology. In the coming years the U.S. could not just lose
its advantage but fall behind if it fails to redirect government subsidies from
failing firms to emerging sectors of the economy copying Japan’s industrial