Lessons from Japan

2008-07-15 00:00

On August 15, 1945, in a departure from imperial custom, the Emperor Hirohito addressed the Japanese people on the outcome of the war against the United States and its allies. Speaking to a defeated nation in a frank and succinct manner, he asked them to “let the entire nation continue as one family from generation to generation, ever firm in its faith in the imperishability of its sacred land, and ever mindful of its heavy responsibilities and of the long road ahead”.

“Unite your total strength and devote it to rebuilding for your future,” he urged. “Cultivate the ways of rectitude; foster nobility of spirit; and work with resolution so that you may enhance the innate glory of the Imperial State, and keep pace with the progress of the rest of the world.” Thus began what would become known as the Japanese economic miracle.

Despite the post-war reconstruction programme that was established, the task facing the Japanese people was daunting. Two of their cities had been obliterated by atomic weapons, while others had been severely firebombed. Starvation, disease and misery weres rife. The radioactive fallout from the bombings of Hiroshima and Nagasaki would endure for decades. Yet within 40 years, Japan would become the second strongest economy in the world.

Apart from a highly focused work ethic at all levels of Japanese society, one of the contributing factors to Japan’s post-war success was to be found in the Flying Geese model of economic development. This term was first introduced by the Japanese economist Kaname Akamatsu during the thirties, and was so named because those nations that joined the formation did so in tiers, mimicking the inverted “v” shape of geese in flight. The sequential and masterful application of this model goes a long way to explaining the initial success of those Asian nations who joined the formation. Japan, being the initiator, took pole position, followed by the second tier of Hong Kong, Singapore, South Korea and Taiwan. Malaysia, Thailand, the Philippines and Indonesia then joined them as the third tier.

Lying at the heart of this model is the sequential and systematic approach to developing one’s economy, and taking a patient, long-term view. Japan employed a three-pronged strategy to the implementation of the model. Firstly, it adopted a policy of moving its industrial capability from low value-added to higher value- added industries. Secondly, it viewed as necessary the policy of import-substitution-cum-export-promotion. In other words, it replaced imports with domestic output and later used that to promote exports. Thirdly, it transferred its comparatively disadvantaged industries on to nearby developing Asian countries in order to retain its own higher value-added domestic capability.

As an extension of this approach, the Japanese industrial structure was also designed to favour an assault on world markets. Companies such as Toyota, Honda, Hitachi and Sony, to name but a few, were listed as “first tier companies” and were used to spearhead Japan’s initial foray into the global arena. Dubbed the “samurai without swords” these companies were supported by their government to help place Japan in a favourable position on the world business stage. One can only speculate what might have happened if companies such as Old Mutual, SABMiller, Liberty and Sanlam had been employed post-1994 by the ANC government in a similar vein.

The success of this model has not gone unnoticed in South Africa. Writing in The African Finance Journal in 2005, Oludele A.

Akinboade and Daniel Makina from Unisa examined the prospects of the Flying Geese model’s applicability to Africa, with South Africa assuming the role as the leading “goose” in much the same way as Japan had done in the Asian model. However, the true genius of

Akamatsu’s Flying Geese lies in the patient, systematic and deliberate plotting of economic development, something the current South African government still has to learn. So why has South Africa not become the Japan of the African continent? With all the potential that the ANC inherited in 1994 from natural resources to physical and human capital, why is it that in 14 years the people of this country have witnessed very little progress economically or socially?

Government apologists who have previously taken this columnist to task about drawing comparisons with Japan have come up with a grocery list as to why it is a bad idea. Excuses such as the diverse cultures in our country (after all we have 11 official languages) to the special needs of Africa are often thrown onto the debating table. Yet the Flying Geese model transcends these differences because it is concerned with building an economy in a sequential and systematic way for the good of all the people, not a favoured few. It is about being able to walk before being able to run. It has less to do with self-importance and more to do with doing what is right for the country’s economy to prosper and grow within the global arena.

Japan started with a lot less in 1945 than the ANC government did in 1994. Both countries came through trauma of a different kind. Japan’s success came from moving forward and leaving war-ravaged emotions behind. Perhaps that is the greatest lesson our government can learn.

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