JPRS ID: 10264 JAPAN REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500020033-8
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• Original Classification: U
• Document Page Count: 143
• Document Creation Date: November 1, 2016
• Sequence Number: 33
• Content Type: REPORTS

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JPRS L/10264
19 January 1982
Japan Report
(FOUO 3/82)
FBIS FOREIGN BROADCAST INFORMATION SERVICE
FOR OFFIC[AL USE ONLY
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JPRS L/10264
19 January 1982
JAPAN REPORT
(FOUO 3/82)
CONTENTS
MILITARY
U.S. Interest in Japan's Military Buildup Considered Limited
;ohtake Hideo; ASAHI JANARU, 30 Oct 81)
ECONOMIC
Annual Report: Fiscal 1981 White Paper
(TECFNOCRAT, Sep 81)
PossiblE Japan Telegraph, '1'elephone Tre.nsforme.ti-on Examined
(SHUKAN TOYO I{EIZAI, 21 Nov 81)
Toyota Motor Works out Bullish Production Plan f.or 182
(JAPAN ECONOMI(; JOURNAL, 22 Dec 81)
Zndigenous Companies Join Forces Against American Tb-x
(JAPxN ECONOMIC JOURNAL, 29 Dec 81)
Stronger Home Demand, Slow Grc,wth Forecast for F'Y 182
(JAPAN ECONOMIC JOURNAL, 29 Dec 81)
Hitachi, Europe Tie on Industrial Robot Sales
(JAPAN ECONOPaC JQURNp.L, 29 Dec 81)
Nissan More Cautious Than Toyota in 1982 Business Plan
(JAPAN ECOIJOMIC JOURNAL, 29 Dec 81)
Domestic Demand Recovery Seems Uncertain Prospect
(Masahijo Ishizuka; JAP.AN ECONOMLC JOURNAL, 29 Dec 81)
SCIENCE AND TECHNOLOGY
Technological Perspective for 1980's Revealed
(Shuji Tamura; TECHNOCRAT, Aug 81)
- a -
FOic OFFICIAL USE ONLY
[III - ASIA - 111 FOUO]
1
5
42
49
50
51
54
55
56
57
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Materials: 'Progress Toward Technologi.cally-Oriented Nation' 6
(TEG'HNOCRAT, Aug 81) 7
~ Highly Sensitive Photosensitive Resin Development Applauded
(TECHNOCRAT, Aug 81) 78
~
Comprehensive Waste Heat Use Systeui Completed
(TECHNOCRAT, Aug 81) 82
Toshiba Completes Fully Automa.ted Production of IC's
(TECHNOCRAT, Aug 81)
Mechanical Engineering Lab Develops Transfer Robot
(TEcHnNocRaT, aug si) 88
Semiconductors, Related Industries Reach V1 Trillion Level
(TECHNOCRAT, Sep 81) 92
NTT Develops Step-and-Repeat X-Rmy Exposure System
(TECHNOCF,aT, Sep 81) 95
- Digital Automatic DLTS Measuring Device Developed
(TECHNOCRAT, Sep 81) 98
Recent Developments in Amorphous Metals Research Reported
a (TECHNOCRAT, Sep 81) 101
~
Several New Facsimile Machines Appear on Market 106
(TECHNOCRAT, Sep 81)
1980 Report of NTT Electrical Communication Technology Committee Disclosed
(TEG'HNOCRAT, Sep 81) 107
USSR-Japan Import, Export Deal Updated
(Various sources, various dates) 108
- Butadiene Plant
Steel Plate for Large-Diameter Pipe
Horizontal Boring Machine
Sakhalin Crude Oil
Use of Optic Fiber in Te].ecommunication Network Under Study
(NIHICEI ELECTRONICS, 9 Nov 81) 113
- Hitachi To Mass Produce 256K RAM Chips in Fall
(Ryuichi Ke.to; JAPAN ECONOMIC JOURNAL, 22 Dec 81) 124
Toshiba Machine Devises Automatic Flastic Injection Molding System
(JAPAN ECONOMIC JOURNAL, 22 Dec 81) 125
- b -
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Japan's Nissan Firm To Produce Defense Equipment
(Peter Hazelbu,.rst; THE TIMES, 29 Dec 81) 126
Mitsubishi Electric Raises 64K RAM Output Target
_ (JAPAN ECONOMIC JOURNAL, 29 Dec 81) 128
Mikuni Eyes Exporting Its 'Papia' Know-Hoti*
(JAPAN ECONOMIC JOURNAL, 22 Dec 81) 129
, Jaeri Creates Heater To Produce 100 Mil. �C
(JAPAN ECOIIOMIC JOURNAL, 22 Dec 81) 130
Government Institute Uses Ion Beam To Print Extremely Minute Patterns
(JAPAN ECONOMIC JOURNAL, 22 Dec 81) 131
Addition of Titanium Gree.tly Increasea Electro-Magnetic Power
(JAPAN ECONOMIC JOURNAL, 22 Dec 81) 132
'ASAHI' Views Japan's Space Development Program
(Tetsu,ji Shibata; ASAHI EVENING NEWS, 23 Dec 81) 133
I4ippon Steel, Mitsubishi CI Tie Up To Produre New Materials
- (JAPAN ECONOMIC JOURNAI,, 29 Dec 81) 135
Briefs
- Development of F'BR Fuels 136
Coal Technology Cooperation Wa.tih Shell J36
Radioactive Waste Reduction 137
CANDU Reactor Desf gn 137
- Mitsubishi FBR Control Rods 137
Captain Service Extended 138
'Orbit-1' Program Developed 138
- c -
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MILITARY
U.S. INT.EREST IN JAPAN'S MILITARY BUILDUP CONSIDERED LIMITED
Tokyo ASAHI JANARU in Japanese 30 Oct 81 pp 34-38
[Article by Ohtake Hideo, assistant professor of political science, Tohoku Univer-
_ sity: "Detente to Military Expansion"]
[Excerpt] With the strengthening of NATO came a full-fZedged demand that Japan
increase its defense forces. But with regard to the military buildup of Japan,
tne problem is not as simple as that of Western Europe. This is because of the
lingering fear that Japan will again become a military power. It can be said that
America's policy of military alliance (excluding the human rights diplomacy of the
early years of the Carter administration) is based on a principle that differs
depending on whether a dictatarial government i,s leaning to the left or the righC.
Furthermore, it is based on the assumption that whereas leftist dictatorial nations
~ (communists) can be a great threat to the security of the United States, rightist
dictatortal nations (military dictatorship or fascism), even though undeniably
. their policy of internal control contradicts tne American philosophy, do not at
least pose any direct threat to its security.
If we follow this line of thoug}it, Japan's existence is unique to America, insofar
, as it is believed *_hat it can easily shift to the right and thus become a military
state that can threaten the United Statas. The one-sidedness of the Japan-U.S.
Security Treaty, which is uniquely different f,.om military treaties the United
States has with other countries such as Korea and Taiwan, is nothing more than an
expression of the special way in which Japan is viewed by the United States.
Therefore, in order to demand nilitary cooperation from Japan beyand a certain
limit, the United :;tates needs the assurance that there is no danger (or that the
danger is iminimal) that Japan will become a military state. Japan, through its
economic growth, has become a patentia], military power. Because of this, from the
mid-seventies America's defense policy,-aith regard to Japan began to falter. An
important factor in this lay in America's uncertainty about Japan's move toward
militarism.
In the seventies there were at least two occasions in which Ameri.can defense
specialists expressed concer:i about a Japanese trend toward becoming a military
power. The first occasion was in tre early seventies, when the so-called "ThPOry
of Autonomous Defense" and Fourth Term Defense Planning appeared. During this per-
- iod, the Japanese political elite, whenever occasion demanded, provided detailed
_ explanations of the concept of "domestic control" (national sentiment, Article 9
i
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of the constitution) and exchanged criticism on this resurgence of militarism.
This topic has already been discussed in detail in this series and will not be
repeated here: we note only the irony that such arguments not only had the effect,
but also contrarily, of establishing a basis upon which Japan could be asked to
strengthen its military without any worry." Furthermore, it was also during
this period that the Defense Agency repeatedly offered explanations as to how i11-
prepared and how far removed its military was from making Japan a powerful military
nation. It should be noted thati this resulted in the contrary effect of making the
U.S. Department of State and military request extremely concrete improvements on
- the part of the Japanese military.
I'ear of Japanese Militarism Rekindled
, After the early seventies controversy over resurgence of Japanese militarism had
quieted down, concern over Japan's move toward the same (more accurately, Japan's
"independence f�com America") resurfaced during the Miki administration. It may be
that this debat,e was used politically to counter those in the Congress who advo-
cated Americar. withdrawal from Asia." However, because Japan at that time was
extremely cautious about ratifying the nuclear defense treaty, it is a fact that the
U.S. Governmant was actually concerned about the possibility of Japan arming itself
- with nuclear weapons. At this time, with the withdrawal of American forces from
Vietnam and the fall of Saigon, there em2rged, among the hawkish faction in Japan,
- a sense of danger regarding America's pullout from Asia. At the same time, due
to the Soviet Union achieving nuclear balance with the United States, there was a
widespread conviction that the reliability of America's nuclear umbrella had
- deteriorated radically. Especially among the hawkish Liberal Democrats in the
House of Councilors, such as Minoru Genda and Masao Miyazaki, there were those who,
in order to have a"free hand" in nuclear weapons, advocated that the nuclear de-
fense treaty should not b e ratified or that Japan should be reassured of America's
defense of Japan in return for the ratification. In the evenly matched House of
Councilors, the few hawkish members held "deciding votes" and greatly influenced
the nuclear policy of the Miki cabinet. It is believed that the United States,
unable to understand fully this peculiar power struggle within Japan, was fearful
that Japan might move in the direction of nuclear weapons.
But this fear was eliminated by the following two methods. First, with the rati-
fication of the nuclear defense treaty, an inspection system was also introduced
in Japan and, furthermore, during the Carter administration, the United States
was able to take an even more severe stance with regard to nuclear proliferation,
and measures were set up to control the supply of nuclear fuel. Because of this,
a system was created whereby Japan's move toward nuclear armament could be checked.
Second, with the consolidation of a structure of strategic cooperation between the
two countries, which was begun by Handa, head of the Defense Agency, the U
military was guaranteed almost free access to the infurmation held by the Defense
Agency. This made it possible for the United States to check even the slightest
move that Japan might take in the direction of military buildup.
- These systems were created without any significant debate, but, in fact, could be
~ said to have greatly influenced the subsequenC military relationship between Japan
and the United States. In a word, what these two systems did to the Japanese
- Self-Defense Forces was similar to the results of restrictions created by the
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~ internationally unifieci command network called NATO, which was assigned the task of
controlling West Germany's resurgence as a military power. Through these two
systems the United States was able to prevent Japan's independent move toward mili-
tarism and could demand that Japan strengthen its military forces without the fear
of 3apan moving in that direction. It is in this respect that the syatems prepared
the way later for America's demand that Japan increase its military strength.
In any case, America's transition in the seventies from a policy of detente to that
of military expansion was completed by 1978. Overlapping with this was the criti-
cisim of a"free ride" voiced against Japan in the Congress. In the spring of 1978,
the demand on Japan f irst appeared concretely in the form of a request that Japan
shoulder a portion of the expenses required to maintain American forces in Japan.
= Since then, the United States has repeatedly asked Japan to increase its share of
defense in various forms. The contents of these requests and Japanese responaes
to them will be discussed beginning with the next series. Here, in conclusion, I
would like to comment on the question of what position these American demands on
Japan occupy in that country's total defense srructure.
What needs to be pointed out here is that, throughout the seventies, U.S. defense
experts, from the President to the White House staff and Pentagon officials, showed
only limited interest in Japan. This fact has remained basically unchanged from the
end of the seventies, wh--~n the United States began to demand strongly that Japan
strengthen its military, into the eighties. Despite straightforward demands that
have often had the appearance of interfering in the internal affairs of Japan, the
manner in which the United States has made demands on Japan has lacked any consis-
tency. America's style is still one of applying pressure when and if it recalls
that pressure is needed. An example of this is the fact that, at present, the
Reagan administration, preoccupied with economic problems and with Soviet expan-
' sionism, is silent about making demands on Japan. ,
; The reason is that there is a consensus among U.S. officials that the F3r East, in
camparision with other areas, is relatively stable. The troubled areas include the
Persian Gulf, Central and South Africa, and Southeast Asia (Iran-Iraq War, Israeli
- issue, Angola War, Ethiopian problem, Cambodian problem, China-Vietnam War); in
Central Europe, there is the confrontation with the Soviets (deployment of strategic
nuclear weapons, strengthening of NATO, etc), and the nuclear race and limitation
talks also with the Soviets. :Jhen the Far East is viewed in comparison with these
serious problems that confront the United States, the view that the Far East is
relatively stable is quite justifiable.
With regard to the military buildup of the Soviet Union, as far as Japan is concerned,
_ its army is offset by the existence of China, and as for its navy, even thougY it
may be effective in checking the U.S. Seventh Fleet from entering the Persian Gulf,
it poses no direct threat to Japan. Thus, the United States, on account of Japan's
economic prosperity and political stability, and because of the U.S.-China "military
alliance" against the Soviet Union, views the Far East as being militarily stable.
Case-by-Case U.S. Demands on Japan To Increase Its Military Strength
It is not an exaggeration to say that America directs its attention
it wants to reduce its military strength in the Far East so it can
where. The military situation in and around Japan is studied as a
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to Japan when
increase else-
part of U.S.
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"global military strategy; even in the so-called "second cold war" following the
Afghanistan crisis, the United States is not really interested in the m.ilitary
situation in the vicinity of Japan. Of course, there is the undercurrent of dissatis-
faction flowing through the American political scene that Japan is "getting a free
ride," and such a feeling surfaces abruptly frotn time to time. However, as long
3s the Far East is considered militarily stable, there will not be a continuous U.S.
military interest in Japan. Consequently, the U.S. military demands on Japan, from
the perspectiye of security, differ radically from those made on other countries
and have never followed a consistent course. In other words, its demands have been
made case by case: if a demand is not met, it retreats, saying it couldn't be
helped; if inet, it considers itself lucky. This is the kind of nuance [as published]
that characterizes its actions, and from which it has yet to extricate itself.
However, the Japanese media, through its sensationalims, has exaggerated the U.S.
understanding of the threat in the Far East regardir.g its demands on Japan and,
along with the Foreign Ministry, the Defense Agnecy;, and the hawkish rightist Liberal
Democrats, has created excessive responses to America`s demands. Naturally, it
cannot be denied that there is a strong dissatisfaction, principally within Congress,
with Japan's economic policy and that this, frequently in conjunction with the
defense problems, has made things extremely serious between the two countries. How-
ever, it is the view of this writer that, insofar as defense policy is concerned,
it is a mistake to think that the demands which the United States has made on Japan
occupy such a significant position within the total defense structure of that
country.
COPYRIGH'T: Asahi Shimbunsha 1981
9711
CSO: 4105/?9
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ECONOMIC
ANNUAL REPORT: FISCAL 1981 WHITE P,APER
Tokyo TECHNOCRAT in English Vol 14 Nu 9, Sept 81 pp 29-46
[Summary of the Annual Report of the Economy, Economic Planning Agency]
[ Text ] The Economic Planning Agency has published the "Annual
Report of the Economy-Eiscal 1981 "(Economic White Paper),
which had been �.ipproved by the cabinet in a meeting held on
August 14, 1981. The White Paper highly appraises the satis�
factory performance (economic result's) of the Japanese econo-
- my in fiscal 1980 which, it says, surmounted the prodigious
adverse effects of the 2nd oil crisis by Pnhancing the vitality of
the private sector and by implementing appropriate financial,
monetary and price policies. In addition to the vitality to
learn, which has been the panciple motivation enabling Japan
to enter the ranks of the advanced countries, and the creative
; vitality, the White Paper emphasizes that Japan should tackle
- the following problems:
(1) Maintain and promote the vitality of the private sector.
(2) Build up an efficient and impartial public sector.
(3) Prutect free trade and enliven the world's economy as well
~ as Japan's.
! (4) Improve national life-which results from, and is the
' fountainhead of economic vitality - particularly better
~ housing and greater leisure time.
Given below is a partial translation of the official summary
of the Annual Repurt of the Economy - Fiscal 1981. The
summary was published on the same day the Economic White
Paper was issued.
( indicates skipped passages.)
� Part 1. The Japanese Economy during the Period
1980 - 1981
[ntroduction: The Trend of the Japanese Economy
from 19$0 to 1981 and Factors which
Forrnulated the Characteristics of the
Trend
Fiscal 1480 was tlie year for tlie Japanese economy when
the adverse economic conditions t'inally bottomed out from
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the second oil crisis. The deterioration seen in such areas as
the balance uf payments current account and prices, that had
been hard hit by the crisis, came to a halt and the"sympcoms of
economic recession" were eliminated.
The Japanese ecanomy in FY1980 can be summarized in
the following three points:
First of all, the effects that the second oil crisis brought
about were conspicuous from the standpoint of the level ot
deterioration in the terms of trade that came from the increased
oil prices. In fact, the deterioration in the terms of trade
resulted in a sharp decline in the rate of increase of real incomes,
causing an appreciable gap between the real economic growth
rate and the real national income growth rate.
Secondly, however, the level of performsrtce of the Japanese
economy proved to be satisfactory despite all of the effects
frurr, the sudden oil rrice hikes. This is clear in terms of a
comparison with the situation in the advanced western countries
and also with that at the time of the first oil crisis. Specifically,
the Japanese economy, which depends on oil imports more
than any other western country, should have sufFered mare
than those countries in its international balance of payments
and prices. However, Japan's international balance oi payments
deficit, which peaked in 'the last quarter (January-March) of
FY1980 (approx. $U.S.5,000 million), showed a quick
improvement, and, in FY1981, it began to show a slight
surplus. Furthermore, as regards the price situatiorr, the rate
of price increases turned out to be the lowest among all the
major industrialized nations, as wholesale prices remaired
nearly unchanged and consumer prices were up only four
percent in the second quarter of calendar year 1981 (April-
June). Tliis was due primarily eo the fact t!:as the effects of
the import product price hikes did not causs home made
intlation. Meanwhile, real gruss natianal product also showed
a steady rise. In the January-March pEriod in 1981, it rose
3.5% over the same period of the previous year, a higher
gruwth rate than that of other major advanced countries.
Also, even as compared with the economy during the first
oil crisis. its performance at this time is apparently better.
This means that, except the fact t:hat deficits in the balance
of payments current account reached an appreciable level at
the time of the peak, because of the relative increase in the
_ amount of oil imports in total imports, the effects from the
worsened terms of trade turned out to be slight in all areas
of the economy.
Thirdly, although the abovementioned effects were relatively
small, it cannot be denied that signs of an economic setback
were seen in the 1980 economy. These signs were basically
the phenomena that arose from process whereby the effect
of the deteriorated terms of trade was gradually permeating
the domestic economy. The chacacteristics of the adverse
economic symptoms at this tima were that economic perform�
ance varied in every sector of the econamy and was not
uniform. Breaking down the economic sectors of final demand,
for example, while a favorable performance was.seen in plant
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and aquipme:it investment and exports, housing construction
was stagnant. By industry, a contrast was seen in the per-
formance between tHe processing industries and the material
producing industries, of which the former fared well while the
latter showed a sluggish trend. In this situation, meanwhile,
inventory adjustment for the material producing industries
progressed. By size of businesses, further, the economic setback
to medium- and small-sized enterprises was greater than expect-
ed. It should also be pointed out that economic conditions
varied in each district due to the unusual weather.
In Part 1, the abovementioned general synopsis of the
Japanese economy in EY 1980 is further broken down, for
deeper analysis.
Chapter l. Effects of the Second Oil Crisis and [ts
Termir.ating Process in the Japanese
Economy
As a result of the sharp oil price increases from the end of
1978 to 1980, the Japanese economy experienced once again
deterioration in its terms of trade and a significant decline in
. real income. Subsequently, it s3w a stagnant trend in domestic
~ final demand and a need for inventory adjustment. Along
with these came a slowing down in thG paca of economic
expansion, the so-called "symptoms of economic recession",
~ starting in the spring of 1980 tluough to the beginning of 1981.
j Meanwhile, the previously worsening terms of trade came
; nearly to a halt and began to stabilize in and after the Spring
i of 1980.
Section 1. Terms of Trade and Real Income Trends
Reflecting the sharp increase in oil prices and the movement
of the exchange rate, imported product prices showed an
increase of 99% in the six quarters in and after the October-
December quarter of 1978. This means that the price increase
for imported products was higher than that in the same length
of time from the October-Becember quarter in 1973 when
it was up 56~'c after the first oil crisis occurred. Export product
prices this time, on the other hand, showed an increase nearly
equivalent to that of the previous crisis.
Consequently, the terms of crade (exports deflator/irr.ports
deflator) were down approx. 33% this time compared with
a decrease of approx. 20% in the previous case.
This decGne in the terms of trade conditions, which brought
forth a transfer of real purchasing power to the oil exporting
countries, reduced the real income (nominal gross national
income/domestic demand deflator) of the Japanese economy
as a whole.
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Section 2. Final Demand Resulting in a Stight
Deterioration in Growth Rate and SmaU
Inventory Adjustment
Retlecting such sluggish trends in real income, domestic
final demand also declined, starting in the latter half of 1979,
and resulted in only a small overall increase in 1980.
It is important to note, however, that the deterioration in
the cerms of trade caused by the oil price increase does not
necessarily directly lead up to deflationary effects, because
there are some other f2ctors that may offset the tendency for
- a decline in the growth of domestic final demand. First of all,
- for example, exports increassd. The oil producing countries
- expanded their imports from Japan and other exports also
increased, reflecting the strengthened international competitive�
ness in export prices due to the deteriorated yen value as seen
_ after ttie first oil crisis. Secondly, investment ui energy-savung
areas increased also reflecting the oil price liike.
_ The increase in expurts, however, which was also seen in
= the Cirst oil crisis, does not serve as a major factor that can
accuunt For the situational difference between the first and
- second uil crises. Nonetheless, comparing the effects of the
first oil crisis with those of the second, a difference is seen in
the conditions of domestic demand.
First of all, all private demand sectors experienced similar
declines in their rate of growth in the case of the first crisis,
while plant and equipment investment continued to rise this
time. Secondly, regarding the other sectors, the rate of decline
was smaller this time. [n particular, it is noteworthy that the
rate of growth of consumption showed a small decline. This is
because, although the decrease in real incomes was larger this
time, a fall in the propensity to consume did not occur,
as had been the case in the previous crisis. Thirdly,the extent of
~ fluctuation in inventory investment this time was smallet than
tast time.
As for the reasons for the difference in domestic demand
conditions between the two periods, which will be further
discussed later in more detail, it may be macroscopically
summarized in the following chree puints:
First, although in the case of the former crisis corporate
- proFits were greatly squeezed by the decline in real income
as a result of the worsened terms of trade, they did not suffer
such an extreme effect from it this time. Corporate profits,
which were not so much decreased, on the other hand, actually
served as one of tlle factors that bolstered the firm conditions
in investment in plant and equipment at this time (See Chapter
1.3).
Secondly, in tlle case of the first crisis, the domestic
- business conditions a little before the "oil shock" were
_ uverheated due to the excessive slackening uf the monetary
measures adopted during the period from 1971 to 1973.
_ Subsequently, a tight money policy was enforced to cool off
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11978 OMNI". .~d /rl- MlniOr'S 0f11M'1 "lNM ~uMY��
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j1%1o0-P R., iPD., lri -1l4/PO-IM.I/PO., IMIIONP'
 ,/P0.,
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K nN nOOrn . M'. 1011iT00M. GN' rMl ON/. P: ON OA4teI
AMI W~~� In~Iw~NI 1n~O~MO1 ~~1~Y~~tepl nu~ OI ~T/MY~MI/
a~-.. aw~wa 401-n.
niM.n'no..werm-n od I", "ominve wwumWtrl�IMr~N~
~l trM~l.
er aes- aw u ce~nr -n M\ IMT. Fig. 1. The Relationship of Changes in Terms of
_ Trade with Real Wages and Productivity
(increase or decrease compared with previous
year) -
uver-heated business, and therefore business was already begin-
ning tu cool off when the ail shock occurred, and a further
retrenchment policy was enforced. Therefore, the significant
fall in business activity in the case of the first crisis was bruught
about nut unly by the effect of the oil crisis itself but also
by the monetary reinforcement measures taken at the time.
Louking back on the economic situation of the second oil
crisis, on the ot}ier hand, business conditions immediately
before the crisis were not over-heated and monetary policy
remained "neutral". In addition, the rate of money supply
increase immediately after the advent of che oil crisis did not
resuft in such a sharp fall�off as in the case of the previous
crisis (See Chapter 3.2).
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Thirdly, in the case of the first crisis, the estimated rate of
growth of enterprises showed a decline, causing a significant
- slump in plant and equipment investment. This time, however,
there was no such factor involved; instead an increase in plant
and equipment investment occurred in a more self-sustaining
_ Way.
At the moment, the "symptoms of economic recession"
are being eliminated and economic conditions in general are
gradually improving. This is because of the following two
factors. 1) the rate of increase in real income has been recover-
ing due to domestic prices having been stabilized and 2) the
rate of decrease inventory investment has been shrinking as
_ inventory adjustment has entered its final phase.
Section 3. lncome Distribution and Its Effects
Reflecting the real income decreases stemming from the
- deterioratiun of trade terms, the rate of real wage increases
that did not change labor's relative share dropped, i.e. an
increase of 2.4% in 1979 and 0.2% in 1980. There was not,
however, seen such" a large real wage gap'this time as in the
case of the previous oil crisis because the actual rate of real
- wage increases also dropped, resulting in an increase of 2.1%
in 1979 and minus'0.6% in 1980 (See Fig.l). Consequently,
labor's relative share (employee's income/nominal GNP), which
moved up only 0.8% from 53.7% in 1978 to 54.5% in 1980,
Showed a stable trend. And this contrasts strongly with the
situation of the previous oil crisis when the same share showed
an increase of 5.8"m from 48.1% in 1973 to 53.9% in 1975. [n
the case of the previous crisis, corporate profits had to bear
the strain derived from the decline in real income, but this
time the burden of the decline in real income was uiiiformly
divided between the income of workers and corporate profits.
The income distribution which showed a difference between
the two cases of oil crisis came about because of the fotlowing
two reasons:
I) Since the decline in production was small this time,
labor's relative share did not increase because employment
adjustment was so small that there was little delayed adjustment
of employment, so it did nut pull up labor's relative share.
2) The rate of wage increases remained moderate reflecting
the fact that labor supply and demand conditions were not
[iglic, znd the rate of prospective inflation (expected inflation
rate) was not large. It also reflected the effect learned from
the severe experiences of the first oil crisis.
The stable movement in labor's relative share, which was
lead by such a stabilized wage condition, brought about the
following three good effects. First, the decline in real wages
which came from the deterioration of trade terms' was easily
absorbed by reducing the rate of nominal income increases,
and the acceleration of inflation could also be averted.
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Secondly, the fact that a sha:p rise in labor's relative share was
averted and that the rate of increase in wages was not rigid
downward, greatly contributed to the stabilization of employ-
ment. Thirdly, the stability in labor's relative share prevented
corporate profits from decreasing sharply, thus senring as a major
factor to maintain a firm basis for plant and equipment invest-
ment.
Section 4. Prices Stabilized from Sharp Hike Phase
The domestic price structure which had shown a powerful
tendency to rise since 1979 due to the sharp inerease in the
prices of imported products centered on crude od, began to
moderate its growth during and after the latter half of 1980.
Then, subsequent to the first half of 1981, it went on
gradually stabilize.
There are three factors that are considered to have
contributed to this stabilization of prices. The first factor was
that the previous tendency of imported product prices to
increase began to level off in and after the Spring of 1980, and
that the spread of the domino effect of the price hikes caused
by imported products terminated its first cycle.
Secondly, the nominal growth in deniand dropped due to
the decline in the growth rate of money supply.
The third factor which helped to stabilize prices was the
' steady wage gowth, helping to avert the vicious circle of
wage/price inflation. As stated in Section 3 in this Chapter,
the reason why wage growth was stable was because labor
~ supply/demand conditions were not tight and also because the
' acceleration of the prospective inflation rate that occurred
~ during the previous oil crisis was averted.
Section S. Balance of International Payments Re-
covering from Huge Deficit
Tlie crude uil price (customs cleared) soared from $U.S.13.8
per harrel in 197$ to SU.S.33 in 1980. Consequently, the
payment for imported crude oil in 19$0 increased by approx.
029,000 million (approx. 2.9% of GNP) compared with the
level of 1978.
- Retlecting this sliarp increase in the cost uf crude oil and
the trend of the declining yen value until the end uf 1978, the
balance of payments current account deteriorated acutely,
regis:ering a deficit of SU.S.13,900 million in FY1979 and
SU.S.7,000 million in FY1980. Since the turn of FY1981,
iwwever, it has been gradually improving.
A major factor that accounts for this trend is a significant
improvement in the balance of trade whereby exports have
continued ro rise steadily while the upward trend of imports
has slowed down.
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The long-term capital balance, whicit showed deficits of
$U.S.16,300 million and $U.S.8,400 million in FY1978 and
1979 r:,spectively, went into the black in FY1980, registering
a surp:us of approx. $U.S.4,400 million. This was due chiefly
to the sharp increase in surplus of Japanese securities investment
by non-Japanese investors.
The yen value showed the largest fluctuation among all af
the major currencies during the period from 1978 to 1981.
It reached its peak in October,1978 at V 185 against the dollar.
However, it then gradually sagged, ralling to the 'r`252 level in
April, 1980. The devaluation in this period was a phenomenon
seen only with the yen, and other currencies remained nearly
unchanged in their relative values. Furthermore, from April,
1980 the yen value began to rise, reaching a high at V202
against the dollar in January, 1981. This time, the movement
in the rate uf the yen was not parallel but contrary to that of
European currencies.
Chapter 2. Recession "Shadow" and Its Causes
In FY1980, business began to decline. Mining and
manufacturing production stagnated in the summer and made
only a very I slow growth thereafter. This time, however,
business did not decline so badly as to be called a recession
but only to an cxtent that can be expressed as a recession
"shadow" This is basically because the total dem3nd did not
show as big a drop as occurred after the first oil crisis, and
also may be because of the contribution of experience gained
in enterprises or industry sectors after the fust oil crisis.
From the point of view of the tinal phast of demand, however,
trends this time are considerably different from those previous-
ly. In other words, after the first oil crisis, other final demands
generally showed a slower growth, though exports showed a
considerable growth. After the second oil crisis, in contrast,
exports grew and equipment investment remained steady. In
other words, a sort of imbalance was observed in final demand
in the form of a slower growth of personal consumption and
housing investment, in contrast to steady exports and equip-
ment investment. This imbalance in the final phase of demand
has had a subtle effect on cettain sectors of the economy
including industrial production and shipping trends.
Section I. lnventory Adjusiment Found Slightly
Unbalanced
Features of Current Inventory Adjustment
Since inventories increase to an unexpected and unwanted
Pxtent when total demand scarcely grows or stagnates, com�
panies start inventory adjustment by reducing production or
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promoting sales. This time, inventories started a slow growth
in the latter half of 1978 and continued it until they reached
an adjustment phase in the period between January and March
uf 1980.
Evaluation and Progress of Inventory Adjustment
How, then, should the current inventory adjustment be
evaluated? In a few words, it may be said that on the whole it
was slight,but it was fairly prolonged, espeically in the material
type industries.
_ On the whole, it was slight because (1) the inventory
level and inventory�salas ratio at the start of the inventory
- adjustment were lower than before attd (2) the problems of
inventory adjustment were confronted primarily by material
type industries but hardly at all by processing type industries.
On. the other hand, it was fairly prolonged uecause
material type industries as the authors of inventory adjustment
had as strong a burden of excess inventory as before and could
. scarcely get rid of it.
Section 2. Personal Consumption Recovering from
Decelerated Growth
Real private consumption expenditure (on a GNP base) for
FY1980 ~showed a 0.8% growth over the previous year, a
much lower figure as compared with the 5,0% growth for
the previous fiscal year, and tha lowost sina 1975. This is
because the deflation after the second oil crisis had a relatively
stronger effect on the household sector than after the fust oil
crisis.
- From the point of view of classified households, real con-
sumption for workers' households compared with the previous
year gradually reduced its negative value �in the latter half, after
- a drop in the first half of the year, while that for general
households gradually increased its rate of fall and fazmers' house-
holds also showed actual negative growth over the previous fiscal
year.
Section 3. Housing Investment in a Continuous
Slump
Private housing investment (on a real GNP basis) continued
scant growth following an almost constant level from FY1978,
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and showed in FY1980 a 9.5% decrease, the largest drop since
FY1974, resulting in a contribution to the recession "shadow".
The number of housing starts, indicating the trend of housing
investment, dropped to 1,210,000 in FY1980 showing an
18.3% decrease from the previous year, after the period
between FY1976 and 1979 when the number generally
remained at a level around 1,500,000. 0000000000
The above factors caused house-building to decline in
FY1980. How will it'be in the future? From the point of view
uf the medium-term factors described above, there is no hope
of any large increase in demand for the reconstruction of
owned houses. However, since the floor space of houses in
stock is smaller than that of houses which have started to be
built, there seems to be a potentially strong demand for new
houses. Under these circumstances, there are signs of a slow
improvement in house-building, (though there are still restric-
tive factors such as the bottleneck in supply of housing sites)
in because conditions for house building such as real income,
building costs, and requirements for loans are gradually
improving.
Section 4. Equipment Investment Supporting Busi-
ness
Private equiprrgent investment started in the latter half of
1978 to take a recovery course and thereafter played an
important role in supporting business in the period of recession
"shadow". However, in EY1980, differences in growth were
aQpearing between industries and sizes of business.
Yearly Changes in Equipment Investment and Theit Character-
istics
Private equipment investment (un a real GNP basis)
generally showed a steady growth, though it decelerated to
5.8% in EY 1980 after a 10.1% growth in 1979. Above all,
manufacturing indusiries showed a satisfactory growth level.
This may be because (1) enterprises recovered their confidence
and expected growth rates stabilized, (2) wage costs remained
stable because the elastic determination of wages and profit
rates of enterprises remained at a high level, and (3) the supply-
deitand gap for manufacturing induatries showed a rapid
decrease towards the January-March period of 1980.
Because of the above factors, equipment investment in
manufacturing industries as a whole showed growth, and
above all, the growth in processing type manufacturing indus-
tries manufacturing was particularly prominent. This latter
growth shuwed an upturn in 1976 and thereafter continued
steady growth with a significantly high rate after 1980. This
was in st arp contrast to material type industries which
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ro w wr M..~w+~� w.w~
iwa rw.~~
~
�
~
M~WW ryM ~
I
I
\

.
~ /MonhnM
~

7
I%)
(7) C11M~ M wwN~M-M M W NMIMMM rY~ItY
~
I~1 ~uNNMwrti M
/
i,
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/nol1y h7o
'Oo.
1/

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W~IW tyr
wwrv ( I1rrr w MnMr wMrM .10 WwNw wrl
PnM"MtYM
1%)
10 . WNrMltyS '
0

1 17 IO IYGn1M
1 1 V 1
-.1g- `~'1~~ "17J ~.HJ ~.p~ ~y1 (~IwI
Nw: ~wM~MM InYw11tiw1M+Mr 1r~/111MMMIIVVY '�OuMMW
/MMMM 114"n M CMWMM ~MrMMM~
Fig. 4. Yearly Chanyes in Equipment Investment
and Supply-Demand Gap In Manu-
; facturing Industry, by Type
i continued ;tock adjustment till the middle of 1978 and showed
an increase only in 1979 (See Fig.4).
[n contrast to these steady trends of major companies, the
growth of equipment investment by smaller companies in manu-
facturing industries decelerated in the latter half of FY1980.
However, it was gradually improving in 1981 and there Is
increasing need for investment for technological innovation.
Thus, stagnant equipment investment by smaller companies
seems to have been very temporary.
Under these circumstances, equipment investsnent of late
can be characterized by, first, the increasing emphasis on
investment in energy-saving and resoarch and development;
secondly, steady continuous investment in rationalization and
labor saving; and thirdly, a gradual increase in investment for
expansion of productive capacity.
Since these investment inducements remain steady and the
investment environments are improving, private equipment
investment is expected to grow steawly.
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Section 5. Exports Remain Steady
Exports (real GNP basis~ for FY1980 showed a considerable
growth continuously from F1'1979, playing a role, along with
steady private equipment investment, in supporting business.
Exports, in terms of quantity, showed an upturn in the
July-September period of 1979 and then gradually accelerated
their growth till the April-.Tune period of 1980. Thereafter,
thoegh the growth somewhat decelerated, they continued to
remain at a high level, showing in thc January-March period
of 1981 a 12.8% increase over the same period of the previous
year. These increases can be ascribed to the following: 1) price
factors contributed to increasing exports primarily because
of the devaluation of the yen, and 2) demand factors helped to
promote exports with the aid of growing world trade in
FY1979, but contributed to restructing them in EY1980.
Under the above circumstances, exports remained at a high
level for the following reasons: rocessin
Eirst, the expo:ts primarily of machinery by p 6
type industries continued to show high growth. One of the
reasons for this is the growth of the non-price competitiveness
of goods due to an increase in investment in equipment
embodying technological innovati en� ~dustries the degree of
Secondly, *in processing typ
machining of goods is very high. This implies that even while
the prices of primary foreign products, particularly crude oil,
are rising, the increased costs of raw rpaterials will have
relatively little effect on goods, and price competitiveness will
hardly decrease unless other factors which increase costs arise
domestically.
For the trends of exports to different areas, on the other
hand, the overall growth of exports from Japan to various
areas almost exceeded that from the OECD (except Japan)
to the same areas. Above all, the growth of exports to Oceania
and Africa was promient. roducts
With generally steady trends in exports, however, p
exported from smaller companies were exceeded by those
~ from larger companies after the April-June period of 1980.
Section 6. Recession "Shadow" and Corporate Pro-
fits
With business on the upward trend after 1978, corporate
profits continued to grow steadily but imbalance was found
between sizes. Eor example, the profits of stnaller manufac-
turing companies turned upwards in the fust half of FY1977,
subsequently continuing at a high level till the first half of
1979 but turned downwards, ahead of larger companies, in
the latter half of 1979. In contrast, larger companies still
maintained increased profits in the first half of FY1980, only
registering a decline in the latter half of that year.
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Thus, smaller companies were less active than larger
companies. This was because the imbalance of final demand
_ and the tight monetary policies had a greater effect on smaller
companies. Under these circumstances, bankruptcies increased.
_ Section 7. Employment at a Standstill in Business
~ Recovery
Employment, on the way to improvement after .1978, was
levelling of,f when the recession "shadow" gradually appeazed.
- The ratio of effective labor demand to effectlve supply waa
on the downward trend in the April-June period of FY1980,
- with the complete unemployment rato rising to 2.15% in the
- January-March peciod of FY1981. Meanwhile, hawever, non-
agricultural and forestal labor continued around at an annual2%
growth rate, while houuwife labor also continued to increase.
- Although this is partly due to stagnancy of production and
marketing activities, the recent relaxation of supply and
demand in the labor market is not likely to become very
serious. Tlus is because companies made considerable employ-
ment adjustment in the period after the first oil crisis and
thus there is no significant excess employment pressure within
companies.
Under these circumstances, the number of employod people
(non�agricultural and forestal) still continued steady growth
~ even at the beginning of EY 1981, 'while business was slowly
~ improving. Since empioyment trends generally tend to lag
� behind business trends, these facts are expected to have a
' favorable effect on the reduction of unemployment, and the
labor supply-demand situation is expected to return to an
improving trend.
Chapter 3. Unfolding of Fiscal and Monetary Policy
and the Problems Awaiting Solution
; The effective and timely operation of fiscal and monetary
policy may be picked out as one of the background factois
! allowing the Japunese economy to maintain a good perform-
ance despite the effects of the second oil crisis.
_ Section 1. Effective and Timely Operation of Mone-
tary Policy and the Financial Mazkets
= 1. Monetary Conditions Relaxed
Strict monetary restraints have been carried out to cope
with the difficulties caused by the second oil crisis. These
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_ obtained good results in preventing home�made intlation.
However, with explicit signs of the deflationary effects of the
raising of the oil price, the tight money policy turned to
relaxation. Reflecting the last tight money policy, the following
three features were observed.
1) Interest rates rose at a fairly high tempo in the period
- of tight money policy. This stabilized prices to create room
to turn quickly toward a relaxation of this policy. As a result,
Japanese interests rates have becrime the lowest among. the
major countries.
2) In corporate finance, there was seen a situation whereby
the private sector evaluated the peocess of monetary policy
as having changed from "a tigtt money policy without a feeling
of tightness" to "a policy of relaxation without a feeling of re-
laxation" (See Fig.S). This does not mean that the effects of the
monetary policy at that time decreased, although it is true
that the effects of monetary policy on corporate finance
through the channel of finasncial institutions became small,
as enterprises had multiplied their financing channels. But
liberalization of interests rates, which was another aspect of
the multiplication of financing channels, brought about high
interest rates in these channels to influence the corporate
demand for funds itself. This expansion of channels through
which the effects of monetary policy works brought about
the above�mentioned phenomenon.
- 3) The stance of financial institutions on lending money
changed compared with the period after the first oil crisis.
Even in the period after monetary policy turned to relaxation,
the increase rate in bank leading was slow compared with that
in the relaxation period after the first oil crisis. In particular,
fending for small and medium�sized enterprises by financial
institutions, such as mutual loan and savings banks and credit
associations was sluggish. This was a feature of the time and
suggests that the management environment was worsendng
for all financial institutions so that they had to change their
lending stance to expand loans quantitatively, which had been
the prevailing situation before the last tight money policy.
On the uther hand, it seems a noteworthy phenomenon,
which indicates changes in the financial market structure, that
the financing channels of city banks had diversified along with
the liberalization of interest rates and their positibn was
improved.
Stabilization in Money Supply and the Fall in Interest Rates
APter the slackening of the tight money policy in April
1979, the increase in the money supply continued to follow
a gradually decelerating trend up to the beginning of 1981,
though the trend was moderate. Unaer these circumstances,
market interest rates registered a significant increase at the
beginning, but after the middle of 1980 they showed a
favorable decline.
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- ~11
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Fig. 5. Change in Discernment of Corporate Finance
in the Period of Monetary Relaxation
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When growth in the money supply is suppressed, interest
rates go up to start with because the supply of currency is
decreased. This is followed by a decrease in nominal incomes
and thus is followed by a decrease in the demand for currency.
T'his then functions as a factor to lower interest rates. Further,
if suppression of the money supply makes the growth rate of
prices slow down, the expectation of inflation becomes calmer,
and as a result, nominal interest rates decrease still more. As
seen abuve, the appropriate control of the money supply results
in lower interest rates in the long�term, and we can say that
the Japanese experience after the second eil crisis demonstrated
this hypothesis.
0000000000
3. Liberalization of Interest Rates and the Movement of Long-
and Short-term Interest Rates
The evolution of the liberalization and the flexible operation
uf inteRest rates in recent years has been highly significant as a
background to the effective and timely operation uf monetary
W~I
MO~ I '
I I awr.w.
x~ ( ~r..w.... ~...�w....i

u....~..�
~ee1 t�.~n�w.�..�.s~
a~ r...
a~l
MeE
NO~
b0~
iK I ~1 i~w Hr
I MM MMnI
j :.....w......~"w~::

�~~r~ if r1 r~ 'N '11 1~ ` M �
Fig. 6. Yearly Change of Public Works Expenditure
Budget and Contract Rates
policy and its effects since the second oil crisis.
In particular, the following fact is notable. As the call
market and the discount market, where monetary policy has
a direct effect, had been fully liberalized, arbitrage transactions
increased between these markets and the open market, including
the Gensaki-market (a market fur bond trading with a short-
term repurchase agreement), and the C.D. market, resulting in
stronger interconnectedness between the short�term money
markets. In the process of liberalization of interest rates, it
Iias been clarified that a normal market mechanism is basically
uperating in the Japanese monetnry sector, which had conven-
tionally been apt to be regarded as a special Japanese�type of
monetary mark:et.
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Section 2. Fiscal Operation Under Tight Condtions
1. Budget Compilation Aiming at Financial Reconstruction
Large�scale finance up to FY1978 played a targe part in
returning the Japanese economy to a scable economic growth
course. [n this process, the financial deficit was expanded,
and thus, financial reconstruction has become an urgent
problem. For.thIs purpose, growth rates in the general account
of annual expenditure from 1979 to 1981 have been maintained
at a very low level. On the annual revenue side, income tsx
revenue has begun to recover favorably since FY1978 when
business showed a recovery, and in the fiscal 1981 budget,
measures for a tax increase were taken. As a result, the rate of
reliaece on public bond issues, which had continued to increase
after FY1975, began to decrease from 1979.
2. Fiscal Operation Changing from the Suppression Type
- Even under tight. cunstraints, such as the financial reconstcuc-
tion, fiscal policy after the second oil crisis has been operated
both effectively and opportunely (See Fig. 6).
Looking at the execution of the public works budget, the
1979 budget was primarily compiled to promote business
recovery. However, it was executed as a neutral type budget
from the beginning, reflecting the full-scale business racovery
; and the worsening of the price performance. Furthermore, in
the latter half of the fiscal year, a 5% cutback in public works
was enforced as a part of the measures against price risas. Thus,
the ratio of public works contracts (coniracted amount/budget)
I at the end of the fiscal year remained at a low level of 93.6%,
~ which was the lowest since 1974. The public works budget
' for FY1980, which was formulated for a very small growth
over the previous year,. was executed as a restraining type
' budget placing primary importance on price stability.
Such restraining type operation of fiscal policy greatly
' contributed to preventing home�made inflation. But from
mid-1980, the restraining measures were cancelled to cope
- with signs uf a recession. And, in the latter half of FY1980,
positive measures were taken to sustain the level of business
activity. As for the 1981 budget, the Government decided on
about a 70.5% ratio of public works contracts in the ftrst half
of the fiscal year.
Section 3. Facilitating Measures Against Price Rises,
and Economic Measures
Analysing the progress of economic measures, which were
taken to cope with the second oil crisis, it is noteworthy that
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' measures ugainst price rises were taken in goud time, and that
importance was placed on stabilizatiun of prices.
Retlecting the steady t;end uf prices and the growing signs
of a recession after [he middle of 1980, economic measures
were decided upon both in September 1980 and March 1981.
T'he features of these measures were as fotlows:
1) The economic measures which were implemented were
macroscopic ones composed of two axes, namely the fiscal and
munetary aspects mentioned above.
2) The macroscopic measures were made up of fine�grained
microscopic ones. For instance, measures for small and medium
enterprises, and the promotiun measures for house building
- were adopted jointly in the two economic measures mentioned
above. In particular, in the economic measures of March 1981,
concrete actions for both smaller businesses and house build-
- ing were decided. This was because these sectors were suffering
most under the intluence of the recession "shadow", which
prugressedat an unbalanced pace among the sectors.
3) Even during the recession "shadow", actions against
price rises had remained as one of the major supports for the
- econumic measures. This was because the Government stabiliza�
- tion of prices was the most important requirement for achieving
_ sustained economic growth.
Section 4. Oil Crisis and Economic Performance
The Japanese economy, which experienced severe stagflation
after the tirst oil crisis, has shown the most stable performance
among major advanced countries since the second oil crisis
period. Comparing the two crises there is little difference
between them in regard to the deterioration in the terms of
trade. Nevertheless, why did such a difference in the economjc
performance of Japan occur? As reasons for this, there were
favorable factors such as staoility in the rate of wage increases,
and rational countermeasures of households and enterprises.
Apart from fhis, the economic conditions just before the two
oil crisis (incipient conditions) were substantially different,
which, it seems, inEluenced Japan's economic performance
fairly greatly. Such differences in incipient conditions include,
and are related to, various factors includiiig the difference in
phases of business activities.. On the other liand, differences in
money supply and fiscal expenditure, which were due to the
differences in the phases of business activities as well as the
differences in economic measures (that formed the background
to the phases of business activities), may have had a varying
intluence on economic conditions just before each oil crisis
respectively.
Befure the first oil crisis, both money supply and fiscal
disbursements fluctuated widely, inEluenced by the Nixon
Shock and ihe adoption uf business stimulation measures to
cope with the undesirable effects of the Shock. Against this,
fiscal expenditure before the second oil crisis recorded a large
increase rata similar to t~at before the f-irst crisis. In this
situatiun, the growth rate of the money supply increased but
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its movement was much calmer compared with the first oil
crisis. From this we may conclude that the difference between
tiie cliange in money supply before and after the first uil crisis
was very large, while tnat before and after the second crisis
was small, and that this caused the significant difference
between the two performances of the Japanese economy at
those times. The movements of the money supply during the
first and second oil crisis were reversed and simulated simple
econometric time series models. As a result, it was found that
the movements of prices and the real GNP had changed
considerably.
Conclusion of Pazt 1. The Present Phase of Prices and
Business
Tlie adjustment process of the Japanese economy in re-
spunse to the second oil crisis is now ending. The prices of
imported goods have come to be stabilized in the event that
- the rate of increase of oil prices has levelled off. Thus, the
terms of trade have continued to be unchanged since the
second quarter of 1980, and the various effects caused by their
deterioration have been gradually eliminated. In respect to
prices and the international balance of payments, the lapanese
perfurmance has greatly improved in EY1980 as seen earlier.
Also the recessiun "shadow" which appeared in FY1980 is
coming to an end and, moreover, inventory adjustment in the
material type industries has on the whole nearly ftnished to
level off or to continue decreasing, both in actual amount and
- in the inventory-sales ratio. Personal consumption has turned
to increase in real terms supported by the stabilization of
consumer prices. There are also signs of recovery in housing
construction, and promotion measures have been taken for the
- execution of public works. Equipment investment ana exports
are tending upwards, though the growth rate is not as large as
previously. ,
[n this environment, business activities generally.are showing
an upward tendency and the adjustment process is coming to
an end. Thus, with regard to trends of business activity in
future, it is necessary to pay attention to the following five
points:
- I) The influence of the recession "shadow" is now appearing
in employment with a time lag, and there is an easing in the
labor supply-demand situation.
There is a possibility that the recession "shadow" will
partially continue, as shown in the phenomenon that among
structural-recession industries production cutbacks still con-
tinue.
3) It is necessary to monitor continuously the movement
of prices, while stably controlling the money supply.
4) The influence of the European and American economies,
which are still in an unstable phase, is reaching to the Japanese
economy in some areas.
5) Uncertainty is increasing throughout the world political
and economic scene.
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Part 2. Vitality of the Japanese Economy, Its Fea-
tures and ['roblems
[ntroduction. Vitality of the Japanese Economy and
Problems
Fur some 100 years since the Meiji Restoration, Japan has
learned from Europe and America and, in doing so, it has set
an objective of "catching up" with them. Now, after recovering
from the devastation of World War II, Japan has reached the
levei of the acivanced countries in many fields, such as the
size of the economy and technology.
However, the Japanese econumy is confronted with new
prublems. First, how will the private sec:tor ecunomy, which
is the mutive power of economic development, be maintained
and improved?
Secund, how will the government perform, efficiently and
impartially, its role in the public sector, which cannut be burne
by the private sector economy?
Third, liow will the vitality, as seen in the Japanese economy,
he empluyed efficiently by the world economy and how will it
be accepted?
Eourth, how will the quality of housing, which is indispensa-
ble to the stabilization and promotion of national life, be
improved, and how will leisure, which likewise is indispensable,
be employed wisely?
(n order tu solve these problems, not only the "vitality
tu adapt to the envirunment" but also the "vitality to improve
the environment" are necessary. T'lie "vitaliry to improve the
environment" indicates the high degree of Japan's creativity
in that success has been made possible by imitation. What Japan,
as a nation, should do today is to make the most of this
creativity and, if possible, to further enhance it, and to manifest
the vitality to improve the environment both at home and
abruad.
Therefore, even if the core of the problem in this chapter
may appear as though the vitality of the econumy is, at a
glance, a special feature of Japan, it will be clarified that the
problems are based em universal and rational factors. Thus,
while cunsidering "cultural differences", an analysis will be
made which will make possible "common underst3nding"
between variuus countries of the world.
Chapter l. Vitality of the Private Sector and Its
Problems
~ Although Japan's economy was greatly affected by the
second uil crisis, it has developed satisfactorily and is in a better
condition than the other leading industrialized countries. This
is attributed� to the rational actions taken by enterprises and
households in respunse to the economic situation. We would
like to call it the vitality of the private sector.
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- Table 7. Comparison of Objectivea and Organizations
of Enterprises between Japan and U.S.
2.y
~uwlrr r~ N In~wt~nt
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RNpiy. yy~l~nt pelwy~ 11 RaM UnrvMMY. I\ullr- N-1. ProlwMr o1 O-IMY CallW.
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101 tnwe.GTwoNs. 277 rwiWd te ouSWieneun. 1
7~M~ w1~Y~~Y wM ~NM 3 M'nt~ 1er lM M.I. 7 o~~nu rar rcana ow..
1*So11a1 LC 0ulaul. SAd 0 POIn11W o1MI~. TM 1-1 MM Ibl tWIM ~r~ t~~
MMSr vMUM cN1Y1.lq Ip M11 01 1-.
Section 1. High Labor Productivity and Its Back-
ground
Labor productivity of the Japanese economy (on a GNP
basis) showed a high average annual growth rate of about 8.59/0
during the period from 1960 to 1973. After the first oil crisis,
however, the rate dropFed to 4-5%, but was still the highest
among the major advanced countries.
As a background to this, first, capital equipment registered a
high growth rate due to active capital investment. Second,
technological innovations were unfolded in parallel with
equipment investment. For example, the production of manu-
1'acturing industry rose by 12.4 times during the period from
1965 to 1980. Of this, it is estimated that about 30% was due
to technical innovations. In fact, the period up to around 1965
was one of technological innovations based on the introduction
of technulogy trom foreign countries. The subsequent period
up to the oil crisis was a period of large�scale technology in
pursuit of economies of scale. It was also a period for co-
ordinating and diffusing technology. wfter the oil crisis,
efficiency-type technological innovations and mecatronics-type
innovations in manufacturing industry made headway for the
purpose uf energy and oil conservation. A representative
example uf the latter is industrial robots which have rapidly
cume into use recently.
� Tliird, in the process uf high economic browtli, the signifi-
cance of the low productivity sector in the industrial sector
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decreased. That is, the significance of primary industries
decreased while that uf the manufacturing industry increased.
- Fourth, the way in which enterprises and laborers acted
spurred technology innovations which were accepted. [n viewing
the modes of behaviour of Japanese and American enterprises
on this point, Japanese enterprises apparently make investments
with long-term objectives in mind. On the other hand, American
enterprises are sensitive to msking profits within a short period,
and even if investment is deemed indispensable to their growth,
they tend to avoid making investments which do nat pay off
in the short run (See Table 7).
As Japanese enterprises grew and employment opportunities
increased, labor tended to take a flexible attitude in accepting
technological innuvations. This is ascribed to factors such as
( l) active on�the job training within enterprises under the life
employment system, (2) labor unions by industry are aware
that the prosperity or decline of enterprises is closely connected
- with the interests of workers, and (3) under the wage system
- For long service, changing from one job to another in the same
workshop will not affect wages. Moreover, positive proposals
for raising the efficiency of produetion processes and for
quality contrul Ilave been made from the labor side.
Section 2. Labor Market Absorbs Oil Shock
After the first uil crisis, the rate of wage increases in Japan
was the hioiest among the advanced countries. Furthermore,
pruduction dropped appreciably. On the otiier hand, the
adjustment of the number of workers employed was delayed
su tlist unit labor costs uf enterprises ruse. However, since
1976 unit labur custs, unlike in Europe and America, have
tended to stabilize. One uf the reasons for this is that the pace
of intlatiun siuwed down due to the effects of Financial measures
caken by the government in the midst of the prolonged decline
in employment after the first oil crisis because of the delay in
adjusting empluyment.
In cases wliare the earnings of enterprises are expected to
to drop, there is a strong possibility that tlie tabor unions
by ii:dustry, in the course of wage negotiations, 011 upt for
a low wage increase by placing more importance on securing
empluyment. Mureover, it cannot be denied that fluctuations
in wages have been made tlexible by the bonus system.
Section 3. Progress of Energy Conservation
Japan is greatly dependent un oil as a source of energy, and
Iacking domestic supply, has nu other option but to rely on
impurts uf this vital commodiry from abroad, mainly the
OPEC cuuntries. Cunsequently, ;mong the advanced cuuntries.
Japan particularly lias been hit hard by increases in the price
uF uil.
The uif price increases have brought about three effects
(the Japanese use thc word "trilemma" - short for tliree
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7
dilemmas for the three defects), namely, the oil def'icit
(unfavorable balance of international payments due to the
increase in payments for oil), oil inflation (impocted inflation
due to the increase in the cost of oil), and oil deflation (outflow
of revenue to foreign countries due to the increase in oil
charges).
At any rate, the effects of the second off crisis have been
twice as great as those of the first oil crisis. As the oil price
increases have not only produced the "trilemma" but will also
raise their ratio to the size of the nominal amount of oil
imports, the effect of oil price increases will be heightened
every time the price of oil is raised. In order ultimately to
escape fcom this vicious circle, therefore, the only way is to
switch over to alternative energy sources. On the other hand,
efforts should also be made to promote the efficient use of oil
and to raise oil productivity (real GNP/oil consumption).
Throughout the first and second oil crisis, Japan's oil
productivity increased sharply. As the home-made inflation
was averted particularly after the second oil crisis, the rise in
the price uf oil was higher compared with other commodities,
so that econumizing on oil was pushed forward (See Fig.8).
Material-type industries, such as chemicais and iron and steel,
have reduced their basic unit of energy, which has produced a
marked et'fect on tlie economy drive. A switchover of the iron
and steel, ceramic and clay industries from oil to an alternative
energy source has also contributed to the drive.
Enterprises and iiouseholds are still proceeding with con-
serving energy and oil and investments for this purpose are
notable in enterprises which consume large quantities of
energy. The purposes for which investments are made have
changed from readjusting methods of aperation and improve-
ment uf uperational control to installing new equipment and
also large-sized zquipment to keep up with the newly-installed
equipment.
In the irun and steel industry,.active investment for energy
wnservation in the cont;:.ucu., casting snd rolling sactorz
being made, while the use of furnaces which du not use oil is
spreading. Industries such as the paper, pulp, chemical, ceramic
and clay industries, too, are making active moves to invest for
energy conservation.
Households are also economizing on energy to cope with
the rise in the price. Moreover, in urder tu propel this form uf
energy conservation, efforts are necessary to equip houses
with insulutiun devices and energy�saving electrical appliances.
Section 4. Future Problems of the Private Sector
Cunfronted by such issues as the increased limitation of
energy and the ageing uf. society, the Japanese economy will
be beset widi severe problems in the future. In urder to secure
stable growth of tlie economy, it is thus necessary to sustain
the vitality uf the private sectur and to make it more creative.
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Mdintenance of a Competitive Environment
In the Japanese economy there is brisk competition among
enterprises. It is because of this that Japan attained high
economic ;rowth and energy conservation after the oil crisis.
However, with the rate of market growth slacking, enterprises
have come to act more in concert with each other, and it is
feared that this will cause problems in industrial vitality.
0~~~ N 4V W w
~IICw~ r r~ M rA~w ~1
~w M o~ ~~I M ~y
-
;
I a
~
"f- ~ - - - _ _ _ .

~~h
~~r M~w~+MW1y+~~'Ywtiw~Nr~w~+~~~~
M M~~ r~~ ~~w N rNM
Fig. 8. Yearly Changes in Oil Productivity (real GNP
devided by oil consumption)
Depending on changes in the economic environment, it
cannot be denied that there is a possibility that government
regulation of industry will bring about distortion of the distribu-
tion of resources. In order to sustain and increase competition
therefore, it is important to review these matters.
Future Technological Development
With the exception of tiigh teclinology, such as in aircraft,
nuclear puwer equipment and information processing, the level
- uF Japanese teclinology is comparable with that of countries
iii Europe and America. In iron, steel and automobile manufac-
turing, Japanese technology leads the world. Although the
process of technological development was based on the intro-
- duction, application and systematization of existing technology
at home and abroad to meet economic needs, most of the work
has been borne by the private sector. As far as innovations
centering around mecatronics are concerned, applied tech-
iiulogical development is Japan's forte. However, from a long��
range viewpoint, technological developmeiit in the basic areas
and a sucial assessment uf scientific technulogy are important.
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Further Promotiun uf Energy Conservation and Development
uf Alternative Energy
Restrictions in oil are ,pf a continuing nature and efforts
to conserve energy and uil must be made with increased vigor
in the future. But, there are limits to conservation. Accordingly,
it is necessary to switch over to other sources of energy, such
as coal and LNG, as well as to stimulate the development of
an alternative energy to coal, such as atomic energy, so as to
lighten restrictions on energy. Ensuring safety is also a major
prerequisite particularly with regard to atomic energy. And,
in utilizing atomic energy, it is necessary to promote its
acceptance both at home and abroad.
Promotion of Efficiency in Agriculture
In urder to sustain the vitality uf the national economy, it
is neassary to raise the producdvity of the agricultural sector.
Japan's self-sufficiency ratio of farm produce for food dropped
to 72% in 1979. Moreover, productivity of labor is low due to
the small size of farms and, depending upon the products,
there is a wide disparity between their prices and international
prices.
Furthermore, the fact that the government's purchase price
of rice is maintained at a high level compared with other agri-
cultural products has increased the trend among farmers with
small�scale plots to cultivate rice.
As the part-time farmers rely greatly on the income from
their side jobs, they do not have a strong will to raise agri-
cultural productiviry. Moreover, there are problems with respect
to effective utilization of farm-land, machinery and facilities. In
particular, there is a high emphasis on rice cultivation amongst
part-time fazmers whose productivity is relatively low, and this
is hampering the advanamont of the entire agricultural sector.
Under these circumstances, moves are being made to improve
the situation, which, in agriculture, means better land utili-
zation, and expanding the scale of management to raise' pro-
ductivity. However, buying farm-land is difficult because of its
high price.
There is however a possibility of expanding the scale of
practical management by expanding the manaBement of leased
land. Contributing factors are: (1) Against a background where
a rise in the actual price of rice cannot be anticipated, the
difference in earnings between the various scales of management
will be increased. (2) Under the present situation where the
dependence of part-time farmers on the income from their side
jobs is incceasing, it is anticipated that their will to manage
their farms under unfavorable conditions will decline. (3) The
part�time farmers are ageing.
Thus, in ordec to expedite the expansion of scale of farm
management, an environment wherein a competitive principle
can be incorporated should be maintained. Accordingly, i4
necessary to induce competent men to work in farming as well
as to foster men of talent and imprave agricultural technology.
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Chapter 2. The Role and Review of the Public Sector
The second problem with respect to maintaining and foster-
ing the vitality of the Japanese economy involves the public
sector and its review.
Section 1. The Present Condition of Deficit Financ-
ing
The Japanese Government's revenue and expenditure have
greatly worsened since the fust oil crisis. Moreover, the govern-
ment's dependence on public bonds has pursued an upward
trend since FY 1974 and reached 39.6% in 1979, which is ex-
ceptionally high in time of peace. In the government's budgets
for FY 1980 and 1981, the reliance on public bonds declined,
but it was still at a fairly high level of 26.2% in the FY1981
budget.
Wttile carrying such a structural deficit, the national economy
has recovered to a satisfactory performance in respect of prices
of goods as well as business and employment. This is in contrast
to countries in Europe and America which aze compelled to
carry on a painful economic situation in the midst of deficit
fmancing. Japan's condition azose as a result of deficit fmancing
being limited to the area of excess savings of the private sector.
Moreover, if the scale of Japan's deficit financing is compazed
with those of the United States and &itain, the fo~owing is
observed (See Fig.9):
(1) The level of dependence on public bonds (relative to the
size of expenditure) is very high.
(2) This level compared with the size of the economy (GNP)
is also high but not as high as (1).
(3) The ratio of deficit financing to gross national savings has
risen considerably, but it has a special feature, that is, its level
is still low. The degree of risk of the so�called "hardening of
finance" is high, but the relatively small scale of the expenditure
itself has not made conspicuous the ill effects of deficit financ-
ing up to now.
However, the balance of savings investment has changed con-
siderably recently. The excess savings of the private sector have
shrunk since 1979, and if public bonds continue to be issued in
the future, the private sector's demand for funds will be com-
pressed. Thus, it cannot be said theze is no fear that conditions
in the money market will become difficult.
[n fact, it is reported that, in the United States and Britain,
the baneful effects of deficit financing have come to the fore.
Added to this, it should not be overlooked that the feeting of
enduring deficit financing is lighter compared with a tax increase
and is apt to be linked to "big government". In this context, it
cannot but be said that an improvement of the financial balance
is an impurtant problem for the entire lapanese cconomy.
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(1) Ineomw and exPendlture bNanee/
oxpendituro
l%1
ae
30
25
20
J.p.n
~
~
` BrIbin
~
/ "
U.S.A.
1%1
e
5
4
3
z
1
16 ~
i
10 A� /
~
~
6
0
~
-5 ~
_,o ~
70 71 72 7374 76 76 7778 79 (Year)
(3) Income and expenditure bdanee/
prou notlonel uvinpr
~ 464.9
(%1 ~ i
~
140. ~
120
. ,
1oo
,
eo
~
% ~ eini~
eo ,
i
40 so
J.o�n
0
~
-20 -J
70 71 72 73 74 76 76 77 78 79 (Vear)
0
-z
-3
(Z) Inoome and expenditun
balanacJGNP
n ~en

, ~ , i ;  eritiln
I �
i I %
i `
-u.s.A.

I
v
1
I
l
70 71 74 73 74 76 76 77 78 79 ( V Nrl
(4) Government'f debt balena/GNP
l%1 ~
eo
ao e.ie.in
40 _
- -
u.s.n.
30 Jopen
so
10
70 71 7273 74 75 76 77 78 79 (Yoar)
1NOtes1
1. Prepared from 8ank of Japan's "Internatlonal Comparison StatistlG", etc.
2. Minua indleatN flnanelal surplus.
3. Statistles for Japan and Britaln an for flseal year (Aprll-March).
U.S.A. is for ulendar yM.
Fig. 9. International Comparison of ScaEe ot Dsficit Financing
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Section 2. Review of the Public Sector and Raising
lts E fficiency
A review of what the public sector should be has become an
urgent problem. The main points are: 1) Avoiding the tendency
for deficit financing to continue increasing. (2) Maintaining a
proper size of the public sector. (3) Checking whether there is
wasteful and inefficient spending in the public sector. (4) Secur-
ing a fair share with respect to revenue.(5) Such efforts have
already been made in the other advanced countries and there are
many points which Japan should learn.
From the standpoint of international comparison, the public
sector in lapan has continued to be limited to relatively small
governmen:. However, the public sectot eaised the significance
of the government in the midst of high growth but was still
able to increase its vitality smoothly. With the economy con-
tinuing to grow, the weight of the public sector is gradually
rising. (n cne 1960's, government expenditure was around 18%
of the GNP, while recently the ratio has exceeded 3001o.
As a future problem, even if the present expenditure struc-
ture is unchanged, the possibility of the signif`icance of the
public sector rising furthes assumes importance. For instance,
the population of Japan is expected to age rapidly in the future
and, along with this, it is anticipated that the expenditure
related to social insurance will inevitably increase. Moreover, the
ratio of social insurance in Japan is by no means low if the
population composition is taken into account. Due to ageing, it
is estimated that social insurance in the year 2000 will rise to
the present level of Western countries (See Fig.10).
Also, the probability of the national economy owning big
government is not small. On this point, it is believed that the
time has come for the Japanese people to leam afresh from
the experiences of the ldvanced welfare countries.
Section 3. Vitality and Creativity of the Public Sector
What is the real role of the public sector? Generally "ef�
ftciency" in the natiunal economy has been brought about
solely by free competition in the market. It has often been
thought � that a"failure of the mazket" is compensated by
securing "fairness" in the public sector. "Small government"
regards the public sector as being essentially inefficient. Con-
sequently, people who seek positive significance in the public
~ sector have a strong sense of distrust of the market economy.
However, with the switchover to stable growth, efficiency in the
~ public sectoc has come to be demanded. ''ven in the public
sector, efficiency as an organization" has become an important
matter in order to realize economic and social objectives.
ooooouoooo
i
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~
E ~F
~ IL~` b r
~ I
~ I
77 ~
~ p
'a
~ U
� N.~Wo
....M.
a r
s
_ ~a =
1T ~

/
� /N~ww~
GMw~wr �n,~.~r~
� O~w~ra
~aMw
.
CrnM � irn~M
~ . .us.
ly/~
'
.~.~ww~�7o
MY~0 /IMMy
1191~I�
~ rWVMY
r i....1�72)
~ MMb
~ r funnW ~ ~au~ ~yM 111701
~wMM~
IM~'/
~ � ~~ru
~ L jMNtYM~ CMM~00~
~ CYR~
0
~ _ ] ~ ! � t ~ f t0 tf 17 17 14 H A1
mom o/ eMN~ r~ N v~ t~
tHM OMUYe~M
.Wo 1 ~OYrt~'YuMMMWN0IMnMAtCOY11tl/Yt1WMMMO~OI~K'IWNMNNIti1M7t
eM Unmi1 N~
f. Om N W/117. eut ww~ N tMiw w nw ef H77.
0~AIe af war rwnn. ~n a~na'N~ ~ww W w w~M rruna ewM~n. w~a we+w~e~.
rN wMHn Cw~M N~ w~Mw.rnawit ~CSww~MdM fuM.. n~N /n etnw ewV~~M ~n
feIIg cwnirNa
3. iM 111OW4 IIM .11 1M Mph 4 tM HW IIM 4Nllr f0 t1N p0n Mttl01, WY \Y fF111fIY
1M N/~41u1Y i/ 4110121YL'
y.-t.'IM � 1.77637 111 . Q747 OW � 2.21
I�1461 1t.1�
O" s rwv'annono aw em,n 0rn0 M eM arnnm. r~ N�w awtt tn N Mrtt 1976.
Fig. 10. Ageing of Population and Social Security
Ratio
Section 4. Finance and the Public Sector
- Japan's financial structure changed geatly after 1975. T'he
public sector was the one which most lacked funds, and the
extent of a shortage of funds in corporate enterprises diminished
considerably. As regards the deplayment of funds in house�
holds, a changeover from liquidity deposits to income earning
mvings was seen, indicating a move placing more impoRance on
proHtability.
On the other hand, the market for pubtic bands and de-
bentures expanded rapidly, and their sales, which amounted to
only 9 trillion yen in 19 i0, exceeded 200 trillion yen in 1979.
Interest rates gradually came to fluctuate freely, and it became
clear that a market mechanism was basically at work in the
money market. It can be said here that Japan ranks with the
Unittd Stages as the most advanced nation in financial markets.
0000000000
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al
Chapter 3. Formulation of Ja7:inese Economic Vitali-
ty Which Will Be Accepted in the World
Economy
Japan's economic position in the world economy has become
increasingly important, but it has come to face a serious pro-
blem, namely, how the economy can make the best use of its
vitality and be accepted and welcomed by the international
economic community, which is suffering from uncertainity.
There are in fact three issues.
(1) International trade frictions have begun to take place be-
tween Japan and the advanced countries. The tirst problem for
Japan is how to cope with these frictions.
(2) Differentials in income per capita between the advanced
countries and the non-oil producing developing countries, es-
pecially the LLDC, have become wider. The second problem is
how and in what form Japan should carry out its economic
cooperation with these countries under these circumstances for
their economic development. .
(3) The third problem is what monetary rote Japan should
seek in the world economic community .
From the latter half of the 1970's, the lapanese money
market has internationalized rapidly but the eifect of this de-
velopment on Japanese monetary policy has not yet revealed
itself.
Section 1. Intensification of Trade Frictions
With regard to srade frictions between Japan and the ad-
vanced countries, many of them took place in the tield of
textiles, and'uon and steel from the 1960's to the first half of the
1970's. Entering the 1970's, new aspects of friction, such as
those concerning color Ns, and shipbuilding industries, etc.
became issues. Recently, frictions are focusing on the machinery
industry, including automobiles, machine tools, etc.
There are two features fium the viewpoint of the period of
these frictions: a) they became strong in the second half of the
1970's, and b) they eased far a time after 1978, but after that
they appeazed to start to strengthen again. We can point out
tluee factors as a background to these trade friction issues:
(1) Price competitiveness of Japanese producta centering
around machinery has become relatively strong against that of
other advanced countries leading to a larger market share for
Japanese goods in the American and European markets.
For example, ,american unit labor costs increased by 6.1%
annually on average during 1975-1979, while those of Japan
decreased by 0.8%. Such differentials as these have remarkably
strengthened the price competitivenss of Japanese goods.
In this context, the reason why the trade friction issue eased
for a time after 1978 was because the increase in the yen ex-
change rate worked as a counterbalance against the increase in
price competitiveness of Japanese goods. .
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[t is not correct, however, that increased imports from Japan
did large damage to the corresponding industries of t�he im-
porting countries. As shown in Eig.l l, an analysis of fluctuation
factors in the 1970's of employment of American manufactur-
ing industry by sector indicates that the effect of imports on
employment was small, while a decrease in domestic demand
and a movement in productivity had a much larger influence.
Therefore, it is la*gely due to the conditions in the importing
countries that the increase in imports has been linked to trade
- frictions.
(2) The second factor is the domestic conditions in Europe
and America as importing countries, such as the inclination to
intensify protectionism, and uneasiness over employment. As
mentioned, those goods which have experienced trade friction
with Japan vis-a-vis the advanced countries are textiles, iron and
steel, automobiles, etc., where the advanced countries are
graduaily losing their comparative advantages in the field of
unit labor costs, product cycies, etc., as seen in the U.S.
Erom the viewpoint of the international division of labor, it
is desirable for thoso countries which are losing their compara-
tive advantage in some specific industry to reduce the size of
that industry, thereby turning the market of the industry over
to those countries where the corresponding industries have
developed comparative advantages, and to assign labor and other
resources to those industries or commodities for whlch they
have comparative advantages.
As seen lately in the U.S. and some European countries,
the chances for an industry, which is losing its comparative
advantages, to succeed in developing new products or shifting
its industrial rield are becoming less when the poiaMel
economic growth rate has become small. With these facts, they
are apt to try to stick to the "status quo" as much as thay
possibly can. Fur example, in the case of textiles and steal in
the U.S., they attempted to protect theu vested interosts by
cuztailing imports.
(3) The thicd factor is lack of mutual understanding between
. Japan and the U.S., and, Japan.and the EC countdss. A mis-
- understanding that one's counterpart is strengthening its com-
petitiveness by unfair measures genetates a desire to take
countermeasures which often leads to movements for pro-
tectionism, e.g. a) Japanese industry is intensifying unfair
export attacks with governmental support and based on a special
financial system, b) the Japanese domestlc mazket is closed to
overseas industries, c) lapan is. trying to grow economical-
ly overty depending on exports. These are typical examples of
such cases.
It is advisable ro adopt six major pollcies for easing inter-
national trade frictions:
(i) The first is to rejuvenate the economies of the advanced
cauntries. This is very important, and along with these measures,
it is necessary to create a good economic environment to cope
with retrogressive activities aimed at protecting vested interests
by bringing pressure to bear on their governments.
(2) [t is important for Japan to take leadership with West
Germany to safeguard the free international trade system,
which is unsettled due to the relative weakening of the United
_ Statas' economic strength.
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(3) Japan should import finished products from advanced
countries.
(4) Development of industrial cooperation including d'uect
investment will help ease trade frictions. (5) It is necessary to promote mutual understanding at various
levels including governmental, corporate, etc.
(6) [t is necessary to pay attention to orderly exports, taking
into full account the market trends of importing countries.
7
1
O
_1
_2
_3
w31i
i331 1221
1371
(37)
(291
(3e)
(ae)
.
~
W
S
'
r
/aIef1tAM17eA nYTbNs 111141 .7IC COOM
t�imoon
In numDM
,oYw
nd cauw
xtWhv
Notw� t. sourew� U.e. Commwas Deoutmenn'7urv*v of
Curnni mudnew" anO Lebor QpntrMnCs
'.MOnM1V labo. 11~v1aw" and "1m01oYmMt OrW
lunlrlM��
2. An and-all of eM uus" 01 CIIMgw In lM nYTbM
01 anDloVw wM mWo bV 1he fOllOWlng mathoa.
IlpnaMq Pwioa�2 of a eertain InauRrv, vNw W
eoTwale eonium0tion: CnQt - Xt + Mt
LMOr DrOduetlvlty pr pMan: APGt/lt
OOmNt10 p/OduCtlon MNg of dOnMRI000nwm0
tion 6t-CVCt
(Gt Is Nf10TMN velue. %t oMDort qlue. Mt ImpOrt
V.IYi. T11eN Me 1967 OfICA. lt Is RYIIIEN 01
.mDIOYo*LI
' eaw0 On tM Mwe,
At 192 Ct- WCt � OVCI � CI-Lt,
Thmdms. Ct-CMK. A[-AOfill". tr110011,
Lt-lu7I ICO, Ao, !o, LO an valuM
at eM IIrN ittps.)
, laW on Me Wave.
Lt�1.0671-Ai'1 !t Ct
- ~AO.I e.btlo~t Cw~T
~AO'I60 Co . 0 f-d�a.eh
conwquontW 7--6 + Q�A
Fig. 11. Changes in the Number of Empioyees by
iUlanufacturing Industries in U.S. and Their
Causes (1970-1980)
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Section 2. The Devsloping Countries' Problems and
the Role of Advanced Countries
The problems of developing countries can no longer be
considered with a simple chart comparing wealthy, advanced
countries with developing countries. Wealthy, capital�surplus
oil producing countries, which were once regarded as developing
countries have come on the stage of the world economy, while,
on the other hand, some of the middle-income countries have
succeeded in their industrialization. Meanwhffe there still exist
a number of LLDC countries which are suffering from poverty
and low economic growth.
The abovementioned diversification in the economic con-
ditions of the developing countries has made the North�South
problem complicated. in this diversified environment, it is
necessary for the advanced countries, including Japan, to im-
plement appropriate economic cooperation which meets with
the economic conditions of the counterpart countries.
(I) Regarding Official Development Assistance (ODA), the
Japanese Government set a new ambitious medium term target
of ODA on January 23 of this year, which is very important for
Japan. Thus, it is vital for her to expand ODA positively so
that the target can be successfully achieved. But it is also
necessary to carry out accentuated cooperation of ODA which
meets with the conditions and development phases of counter-
part countries.
(2) It is necessary to pay carefui attention to the smooth
recycling of oil money to those non-oil producing countries
which are suffering again from enlarged deficits in their current
account balances of payments, and also from accumulated
international debt under the influence of the second oil crisis.
(3) [t is necessary for the advanced countries positively to
create opportunities in their domestic markets so that they can
promote international trade with those developing countries
under industrialization. Those countries which are industrializ-
ing are not limited to the so�called New [ndustrializing Countries
(NIG's), but also industrialization is developiiig in many
countries in the sectors of labor�intensive light industries, such
as the textile industry. With reference to the share of the textile
industry in employment, it displayed an upward trend in many
developing countries after the 1970's while it decreased in the
advanced countries and the N[C's (Fig.l?)
(4) The prumution of direct investment overseas and tech-
nulugy vansfer via it to meet the industrialization and other
conditiuns ut' counterpart countries are necessary.
Section 3. [nternationalizing Finance
Along with the expansion in size of the Japanese economy
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M
(Ot
her developinp eountrias)
(Advsneed eountries)
Asia
20

Frsnee 30
Total for other
~soa~
devslopinp countries
~
y`
15
. Britain
qfrica
25
1
.
L
-
70
rmany
R U.S.A.
w.
,
G
.
-
-
20
Central end South Ameriea
/
(
'
%
~
I (NICS) 15
I
L
5
-

.
. Oeesnie

`

46
Hon9 Konp
-
-._J
0
1970 71 72 73 74 75 78' 77 78 79 (Yesr)
40
201
~ Singspore Notes: 1. Pnpared from I l0's "Ysisr Book of l.abor Statisties".
2. 321�spinnlnp and weavinp induftry snd 322-clothinp
manufacturinq industry of "Intanational Standsrds
15 ' Induatrfal Clatiification" taken ss the textile industry.
` � 3. Statittict for Japen ere from MITI's "Industrial Statistics
--j � Tsble".
Maxfto
10
1970 71 72 73 74 75 76 77 79 79 (Year)
Fig. 12. Changes Textile Industry's Share of Employment in
Manufacturing Industries
and internationalization of its monetary transactions, the cole of
' Japan in the world money markets will be greater. We have
mentioned earlier that the Japanese financial and capital markets
are conducting a reiatively large role in the field of overseas
loans and the supply of money for overseas governments and
enterprises. This trend will continue to increase. Especially,
lapan's role in recycling oil money to non-oil producing countries
is important t'rom the viewpoint of the world economy.
Chapter 4. Better Housing and Leisure Time
Without a vibrant economy, the stability and betterment of
people's livelihood cannot be achieved. Livelihood itself, how-
ever, is the source of economic vitality. [t is a goal of the future
therefore buth to maintain the economic structure having
vitality and at the same time to achieve an affluent level of
peuple's livelihoud, thus avoiding the disease of many advanced
cuuntries.
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Conclusion of Part 2.Searching for the "Vitality to
Create and to Exchange", along
with the "Vitality to Accept
and to Absorb"
Conclusion
- Vitality to Learn and Creative Vitality -
The Japanese economy has joined the ranks of ths advanced
countries.
A quarter of a cen[ury ago (1955), the United Stages ac-
counted for about one-third of the world's GNP and ranked
lirst in the worid. Britain was placed second with 5%, followed
by Japan with 2%. In 1977 the United States' ratio dropped to
about une�tiftli while lapan accounted for 1017o of the world's
GNP. The various per capita indices in Japan indicate the
development of the national economy relative to those of ad-
vanced countries.
However, the Japanese economy was a"participant who
came late" and was, so to speak a"newcomer". In any social
relationship the late participant is beset with difficultues. Eirst,
immense efforts have to be made to obtain.the qualification
of the participant. Even after participating, it will ta?ce time to
be treated with camaraderie.
The Japanese economy had a"strong vitality" to learn from
the advanced countries of Europe and America. Many people
and many enterprises learned. A book entitled "Promotion of
Learning", which was written by the late Yukichi Fukuzawa,
opens with the famous passage, "God does not create man above
man nor create man below man".
Consisting of 17 volumes, it was published over a period of
several years from 1872. (t isestimated that a total of 3,400,000
copies were printed. Considering that the population of Japan
at that time was 35 million, une can understand how popular
tlus enlightening book was.
After World War II, the vitality to leam, based on the
"popularization of knowledge", was reborn. The diligence of
the elite in Europe and America is well known, but the base
of such a class in Japan was wide and the working people as a
whole also had a strong desire to learn. And, hand in hand with
the "free market competition" principle, the vitality to learn
raised the productivity of the national economy and brought
about substantial economic growth.
However, the rapid growth of the national economy and
Japan's good performance after the oil crisis in 1973 made the
advanced countries in Europe and America look at the new-
comer and question whether Japan had special features. But
was it so?
The annual economic report published by the government
in 1976 pointed out that "the confrontation betwten the two
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systems in the world has changed from nuclear armament com-
petition to peaceful competition. Peaceful competition is a
struggle to improve the economic growth rate and a contest to
raise productivity. We must adapt ourselves, as soon as possible,
to the technology of the world which is advancing every day,
and to the world environment which will be changed by tech-
nological advancement.".
Needless to say, even if technological advancement is for
raising productivity, the way it will be done will vary according
to the state of affairs in each country. In order therefore to
survive the contest to raise productivity in a small country like
Japan, it can be said that the national economy, which lacks
resources, has chosen rational steps which have the most appli-
cability to make the best use of the country's strength to learn
and tu compete in world markets.
However, arguing over "special features" and "generalities"
is not considered to be productive. Shouldn't it be recognized
that all the countries of the world have their own characteristics
and are different from each other? After this is recognized,
shouldn't learning, which will produce good results regardless
- ut its peculiarity or difference, be regarded as having at its roots
high universality'' lt is believed that "learning" is to find out its
uwn universality and to own it. In this context, the Japanese
economy must cuntinue to maintain the "vitality to learn". At
the same time, it is hoped that all the countries of the world,
particularty the major advanced countries, will have the vision
to detect this universality.
Be that as it may, the status of the Japanese economy as a
newcomer has changed. The world economy is transforming and
shaking violently in the midst of multi-polarization. Under this
'situation, the Japanese economy is faced with the necessity to
- solve a number of problems.
- Eirst, as a membzr of the economies of the 'advanced
cuuntries, the lapanese economy has to continue maintaining
and increasing the vitality of the private sector. Many of the
advanced countries are attempting to reactivate their economies.
' Thus, the vitality of Japan must not be diminished. Second, the
rule of the public sector, which cannot be shazed by the private
sector, must be fulfilled efficiently and fairly. Third, free trade
in the world must be safeguarded and the best use of the world
ecunumy, including the Japanese economy, must be made. The
countries which can explain the benefits of free trade, and aze
able to share the beneticial resitlts with other countries, have
the respunsibility to maintain the free trade system. Fourth, the
promotion of national .life, which is the fountainhead of
economic vitality, is an important matter. Therefore, it is es-
- pecially impurtant to improve the quality of housing and to
- employ leisure wiseiy.
[n order to solve these problems, it can be said that in
addition to the "vitality to learn", "creative vitality" is needed
more than reforming oneself and adjusting to others. Not only
should the "posture of another person" be takon as a model
but also a"posture for oneselP' should be created. The basic
thinking for this is as expressed in this annual report.
Lastly, we wish to emphasize the following two points as
important matters. First, Thomas Jefferson, who was one of the
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draftees of the Declaration of Independence of America and was
also the third President of the United States, pointed out: "The
Government undertakes many projects on the pretext of pro-
tecting the interests of the people. However, among these
projects there are many which do not serve this purpose. In
undertaking projects, the Government is apt to wa~te the work
of the people. It is only when it is possible to make the govern-
ment eliminate this waste that the people can become happy".
[t can be said that the role of the public sector will be
fulfilled if it is based on such a viewpoint. Concern is felt about
the economic effects of the "administrative reform" which the
government is pushing forward. Whffe the real decrease in income
resulting from the rise in the price of oil will mean a switchover
of Japan's purchasing power to abroad, the curtailment of
government expenditure will mean that resources equivalent to
the curtailed amount will remain in the private sector. Second,
even many of the countries which achieved the status of a major
power were not necessarily received with camaraderie when
they made their debut in international society and were going
through the stages of becoming a major power. By the same
token, many of the advanced countries came to be trusted
internationally as a result of efforts made by themselves. Ac-
cordingly, the Japanese economy, which has grown rapidly, is
still in an awkward position internatiunally. This is unavoidable,
but the situation ought to be overcome through national efforts
as well as efforts made by everyone in every enterprise at
international forums, which are increasing rapidly in number.
COPYRIGHT: 1981 Fuji Marketing Research Co., Ltd.
CSO: 4120/103
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ECONOMIC
POSSIBLE JAPAN TELEGRAPH, TELEPHONE TRANSFORMATION EXAMINED
Tokyo SHUKAN TOYO KEIZAI in Japanese 21 Nov 81 pp 38.-42
[Text] The Japan National Railways and Japan Telegraph and Telephone Corporation
are drawing attention as possible targets of administrational fiscal reform. Although
some say that "it would be senseless for Japan Telegraph and Telephone to be used aE
a tool in f iscal recovery" (Chairman Oyokawa of the All-Japan Telecommunication
Workers Union) it is a fact that inside Japan Telegraph and Telephone and within the
Liberal Democratic Party there are rapidly increasing rumblings about changing Japan
Telegraph and Telephone from a public corporation into a private enterprise. Policy
will be set in the next month or two, and a gigantic enterprise with capital of
1 trillion yen and authorization for another 3 trillion yen may be formed.
On 16 October unprecedented labor-management negotiations were held at Japan
Telegraph and Telsphone in which, according to Secretary Yamagishi of the All-Japan
Telecommunications Workers Union, "when one side proposed, the other side accepted."
Eight people including Japan Telegraph and Telephone's President'Shindo and Vice
President Kitahara attended for the Public Corporation, while all three members of
the Central Executive Committee of the headquarters of the All-Japan Telecommunica-
tions Workers Union led by Chairman Oyskawa and Chief Secretary Yamagishi attended
on behalf of the union. Under the usual practice in labor-management negotiations
at Japan Telegraph and Telephone prior to President Shindo's assuming his off ice,
the president would not have been able to attend labor negotiations. Furthermo're,
the eight to three ratio is "collective bargaining" is reportedly unique in the
history of the talks.
The consultations lasted over 2 hours, and in them a heated discussion developed on
the question of turning Japan Telegraph and Telephone into a private enterprise,
a question which is directly confronting the public corporation. It was President
Shindo who touched off the discussi:on. He expressed his warm appreciation to the
union for "the resolve it has shown thus far."
On 7 October, the All-Japan Telecommunications Workers Union drafted a resolution
in preparation for the 34th meeting of its Central Committee. The resolution con-
tained the statement: "We are opposed to conversion to private enterprise, but in
such areas as data communications, the basics for competition should be actively
adopted." This was unanimously adopted on 12 October. -
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Labor uniona in the public corporations have a strong inclination toward maintenance
of the atatus quo, and it is rare that one of them would go so far as to actively
change ite own working conditions by advocating introduction of the principle of
competition. President Shindo applauded the position taken by the All-Japan
TereCommunications Workers Union.
In fact, President Shindo said: "The resolution is written in jargon but, if I
read between the lines, it considerably overlaps my own thinking. I am, rather, put
at ease about the union which opposes everthing; I consider it has ehouldered its
responsibility."
In the course of his remarke, President Shindo, speaking soberly about the current
situation of Japan Telegraph and Telephone, said: "If we were in the private sector,
we would be near bankruptcy. The union side pressed him on this. It said: "You
_ will unduly upset the membership. Withdraw that remark."
President Shindo bowed his head, but then he broke in saying: "Very well, but let
me say eomething". The "collective bargaining" suddenly became a very quiet one-Raan
show.
"It is impossible to achieve what the union is asking for unless we get free of
national budgetary controls. No matter how large Japan Telegraph and Telephone may
be, it is still part of the state apparatus. It cannot be excluded from the across-
the-board regulations which give it the same status as the administrative agencies
and off ices. The aituation might be diff erent if we could operate according to the
Public Corporation Act, but it is impossible to achieve the union's deaires while we
are completely tied up by strong administrative directivea and legislation which
supersedes the Public Corporation Act. It is a matter of using the aituation, with
its fiscal ahortfall and extraordinary boaxd of inquiry, to get free of the conf ines
of national budgetary controls."
Suddenly the question had been raised. Japan Telegraph and Telephone ia the atar
performer of the three public corporations and f ive government enterprises. In 4
years it contributed 480 billion yen to the government, and it did thie while lower-�
ing telephone rates. The question of converting to private enterprise, which had
been emoldering in Japan Telegraph and Telephone, burst out all at once at a
"collective bargaining" session.
After the collective bargaining sesaion, a second hearing was held in the fourth
working group of the special administrational board of inquiry (with Professor
Hiroyoshi Kato as chairman of the group). At the hearing, a member of the Mass
Communications Committee said: "Still, Japan Telegraph and Telephone is one of
the public enterprises. Is it not appropriate for it to have the same status?"
In a forceful voice, bristling with anger, Preaident Shindo retorted: "The workers
knock themselves out and get no reward for their effort. Would this be allowed in
the private sector? If you were part of Japan Telegraph and Telephone, what would
you do?" The All-Japan Telecommunications Workers Union was delighted to hear
of this incident. They said: "The old man (this is what President Shindo is called
in the All-Japan Telecommunications Workers Union) will not be shut up now." All
at once appreciation for Shindo grew, and both labor and management began all at
once to agree to their basic perception of the issue of making Japan Telegraph and
Telephone a private corporation.
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Secretary Yamagishi of the All-Japan Telecommunications Workers Union said: "In
the ea.rlier proposal we suggested that the corporation would have a monopoly over
circuits but would compete with the private sector in services as such. Speaking
as a citizen and in light of the way times are changing, it would not do ,for the
corporation to sit back and do nothing in the current situation. The corporatiori,
however, has developed a policy of private cector management in the form of ownership
by the people, and it would be strange to convert to private ownership a common
asset of the citizens of the nation which includes property worth more than 9 trillion
yen. In the last analysis, public ownership must be a prerequisite."
In saying this, 9ecretary Yamagishi was using the argument for having the form of a
public corporation to put on a show of opposition to a shift to the private sector;
however, since his position as secretary ultimately makes him responsible for an
organization of 290,000 union members, considerable political allowance must be given
to statements he makes.
In fact, Secretary Yamagishi is flexible; he said: "President Shindo said he would
prepare a response on the question of private management in February, but an answer
will develop in the next three or four sessions if there is give-and-take between
management and labor."
- Chairman Oyokawa also has somewhat decided views on the matter. He said: "It will
be necessary to have a system in which shares cannot be bought up by certain share-
holders such as large f irms. It will be necessary to look at the Europea.n system
of special citizen's shares, etc., as ref erence in studying how to devise a public
conversion to private managemezit and how to realize the capabilities of those involved.
It will be necessary to study various methods such as open accounting and a checking
structure composed of users."
The All-Japan Telecommunications Workers Union seems to be ready to make a decision
on the question of private management as early as 12 December. Although the simple
term private management is used, various formulas.such as completely private manage-
ment or a third sector arrangement could be considered, but in view of the public
nature of Japan Telegraph and Telephone, both labor and management have ruled out
completely private management. Therefore, the option becomes a third sector formula
of private management answerable to the public. ,
Furthermore, the Tanaka faction of the Liberal Democratic Party, which has very
great influence on the Ministry of Posts and Telecommunications and the All-Japan
Telecommunications Workers Union, is said to be encouraging the change; Diet member
Kakuei Tanaka himself has reportedly said: "Go ahead with the shift to private
management."
Chairman (Hiroyoshi) Harada of the Liberal Democratic Party "Subcommittee on the
Telegraph and Telephone Enterprise" has also hinted at approval of private management.
He said: "Even within the Liberal Democratic Party there ar.e people who come from
the bureaucracy and have the view that thinge are probably all right ae they stand.
Because of my position I cannot give my private views, but an organization which
cannot reward people for working hard shauld not be all right. On top of that,
- under the current circumstances, Japan Telegraph and Telephone, which is working
toward a highly informational society, cannot be expected to make full use of ite
capabilities."
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Movement toward pr:7ate management is gaining strength within the public corporation
and among those outside the corporation who are concerned with the question.
The interim report of the special board of inquiry will be given at the end of July
next year, but it seems as though the conclueions of the fourth working group tahiCti
will handle the question of Japan Telegraph and Telephone will be made be.fore that
and will be released as eariy as the end of March. The issue of converting Japan
Telegraph and Telephone to private management will come to a head quickly in the next
month or two.
Even so, the characteristics of a functionary are said to be persistence, regular
attendance and not doing any work. Qne cannot say that sll 330,000 employees f it
this deacription, but it is a fact that there are many employees of public corpora-
tions who are enjoying a warm bath in a full tub. Away from Tokyo, to be an employee
of Japan Telegraph and Telephone is to be elite. The employees cling to their Japan
Telegragh and Telephone badges, and salary levels are high fer those outlying areas.
There are managers in the prefectures who openly declare: "With a change to private
management, thinge would get tougher and salaries would go up, so rather than that,
it will be just fine to have a public corporation as we have now." Many of the
young technicians at the communicatione research center sing the praises of the
"paradise" at Japan Telegraph and Telephone. They say: "If private management were
to come about, cost controls would become strict and research themes would naturally
be subjected to selection or rejection. Japan Telegraph and Telephone would lose its
appeal if the free research system which has existed so far were to change."
According to Director Kojima of the corporation's Personnel Division: "The majority
of the 330,000 employees think that since they are gradually becoming poorer under
the current sttuation, some sort of changes will have to be made. However, when it
comes to approving a change to private management, only about 30 percent will agree."
Nevertheless, if the current situation is allowed to continue,various problems which
will determine the fate of these 330,000 employees will arise in as little as 4 to
5 years. These problems could make the corporation lose its drive as an organization
. and invite a weakening of its f iscal base. Japan Telegraph and Telephone, the star
performer, could become another Japan National Railways. This is the background for
the switch to private management.
At present, the budget and the general provisions wirtten into the budget document,
the Public Electricity and Communicatione Act, the Japan Telegraph and Telephone
Public Corporation Act, and strong administrational direction from the Ministry of
Posts and Telecommunications have Japan Telegraph and Telephone completely tied down.
- The system of general budgetary rules, in particular, has an eff ect which is
equivalent to virtually depriving the public corporations of a self-supporting system
`of operation. One example of the regulations under the Public Corporation Act is
that while a private enterprise can apply excess funds to atocks, bonds or savings,
_ in Japan Telegraph and Telephone's case, all excess funds are deposited in the Bank
of Japan. (Currently these deposits are 200 billion yen.) No interest- is paid on
the f irst 3 billion yen. Beyond that amount, interest is paid at the rate of only
3-4 percent.
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The greatest restriction is that Japan Telegraph and Telephone has absolutely no
power to set wages independently. Currently, complete implementation of the rulings
of the Public Corporation and the National Enterprise Labor Relations Commission in
arbi.tration on raising the basic level of government employees' salaries ha.s become
a political issue which is bound up in administrational reform; Japan Telegraph
and Telephone, as is to be expected, has also been drawn into this issue. This is
a public corporation which even in the high growth sector of communications and
information has somehow lowered its rates and still contributed 480 billion yen to
the state.
Considering that Japan Telegraph and Telephone is a company with 1 trillion yen in
capital, it would seem that it is a company which over the neact 4 years could pay
dividends of 10 percent in two installments. When the shareholder, which is the state,
gathers up all of the dividends and then says, in regard to wages: "Since the
workers have the same status as public servants, full implementation...," it is not
unreasonable that there are cries of "foul play."
Furthermore, before 1975, when the corporation made a contribution, Japan Telegraph
and Telephone was experiencing the most difficult period since its founding in 1952.
With the demand for telephones increasing, the difference between income and expendi-
tures was 2 percent per year and there was a def icit of 80 million yen. Redempt ion of
Japan Telegraph and Telephone bonds peaked at about 60 million yen per year, and
coverage of this debt at somewhat more than 10 percent of proceeds put tremendous
pressure on Japan Telegraph and Telephone's fiscal affairs.
Since the average rate of financing for a f irm in the private sector is around 3-4
percent, how strong this pressure was can probably be jmagined.
As immediate measures to deal with this situation, the corporation developed policies
of rationalization which would not be considered commonsense in a public corporation.
It took steps to eliminate the def icit mainly by holding down the number of its
~ personnel (a reduction by 81 persons was included in the draft budget request for
19822 the first such reduction since the inauguration of the corporation) and con-
stricting capital investment (20 million yen).
The reality is that even after making contributions and implementing rationalization,
the reward is "equal status" with such entities as Japan National Railways, which
is in the red.
If such a situation continues it is probably inevitable that working seriously will
be considered foolish. Eventually the organization's drive will be lost and, along
with a deterioration of the f iscal base, a"crisis at Japan Telegraph and Telephone"
will develop.
To cope with peak demand for telephone service, Japan Telegraph and Telephone under
the leadership of Vice President Kitahara is moving foward with the concept o� an
INS (Information Network System). As nontelephone aervices such as computer-associ-
ated date communications facsimile and video communications develop, it will be
the INS which will facilitate exchange of these kinds of information.
Japan Telegraph and Telephone's aim, backed by the use of digital communications
and optic fibers, is to buil.d a huge demand by eliminating the distance diffezential
and at the eame time.to strengthen its fiscal base by greatly cutting costs. The
INS is Japan Telegraph and Telephone's ticket to a new lease on life.
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Currently, the distance differential for the telephone is 1:60. Since this should
shrink to 1:5 or 1:6 in the coming yeare, demand will probably begin to increase
again. Already, the differential for faceimile is only 1:1.5. The effects of
technological innovation are already beginning to show.
On the other hand, with the introduction of digital communications, it seems that a
peraonnel surplus of more than 100,000 pereons will occur in 10 years. However, these
excess personnel cannot smoothly and eff iciently be put to new use through spinoff,
etc., within the present framework of the public corporation.
The best electronics and communicat ions research center in the world is at Japan
Telegraph and Telephone. The center has more than 3,000 people and spends nearly
60 billion yen a year on research and development. It has taken the lead in Japan's
technological revolution in the f ield of electronice.
In the f ields of super LSI, optic communications and digital communications in
particular, Japan Telegraph and Telephone boasts the world's moat advanced technology.
' This is true to such an extent that for the past 10 yeara IBM itsel� has been seeking
- to conclude a croas license agreement. A contract on this will be signed, possibly
this week.
However, unless the Public Electron ic Communications Act and the Public Corporation
Act are reviaed, it is impossible to extend this highly advanced technology to other
areas of industry and to use it extensively in commercial activities.
In short, as long as Japan Telegraph and Telephone is subject to budgetary controls
and other such laws and is subject to administrative direction, it will not, atruggle
as it might, break clear of the danger it faces even as it makes progress. Even its
ace in the hole, the INS, is premised upon the employees' industry and will to work
and upon a stable f iscal base. There is no way to break clear of these restricting
conditions except conversion to private management, whether it is as a third aector
or as off icial private management.
What, then, if Japan Telegraph and Telephone does convert to privatemanagement? Its
proceeds are over 4 trillion yen; prof it (diff erence between income and expenditures),
388.1 billion yen; total capital, 9.4591 trillion yen.
The only enterprise which can rank with thia is the public untilities corporation of
Tokyo Electric Power. By comparison with Tokyo Electric Power, it would probably be
appropriate for Japan Telegraph and Telephone's capital to be 1 trillion yen and
its authorized capital to be around 3 trillion yen.
Breathing a heavy sigh, President Hiragishi of Tokyo Electric Power said: "Up to
now Tokyo Electric Power has been the only giant. If an even larger enterprise were
to appear, I would be as confident as possible but, from the viewpoint of capital
procurement and other aspects of corporate operations, I think 1 trillion yen would
be the limit as far as Tokyo Electr ic Power is concerned. If the corporation were to
start with 1 trillion yen, well...."
President Shindo has said: "We will not use the KDD formula." Therefore, the state
would probably hold about half of the capital atid the remaining lialf would probably
be divided among small stockholders with stringent restrictions on its acquisition.
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Furthermore, although the move would be called a switch to private management, the
public serv ice character of the corporation and guarant ee of security in time of
emergency could not be maintained unless the circuit network were placed under the
control of the state. On top of this, assuming a shif t to an approval system
pata11e1 to the one for Tokyo Electric Power for quest ions involving rates and eo
forth, the current managesnent commission would probably have to be reorganized to
include subscribers, employees, the government and management and to have stronger
oversight authority.
The leader of a certain securities firm pointed out the tremendous eff ect a changeover
would have. He said: "If Japan Telegraph and Telephone goes public and half of 1
- trillion yen, or 500 billion yen, is absorbed by the public, stocks across the board
will slump."
Furthermore, capital investment to realize the INS as well as for the other purpose
would have to continue at 1.6-1.7 trillion yen per year. Procurement of capital will
_ naturally be a major theme.
Even if the corporation were to change to private managanent, there would be a limit
to what it would be able to procure by relying on gov ernment guaranteed bonds (Japan
Telegraph and Telephone Bonds). Therefore, "company bonds" issued independently
by the company, similar to the current "Special Japan Telegraph and Telephone Bonds,"
would be necessary. Just 2 or 3 years ago, Tokyo Electric Power issued 40 billion yen
- worth of company bonds every month for a year; procurement of capital in excess of
this amount would cause heavy repercussions in government and other bond issues.
Furthermore, if the corporation were to issue company bonds, it would have to increase
its own capital. If a corporation with 1 trillion yen in capital increased its
capital by even 10 percent at face value, it would draw off 100 billion yan from
the market. Total capital increases this year amounted to a little more than 1
trillion yen. Thus, one capital increase would draw off 10 percent of the money.
There certainly would be a commotion ae though a manmaoth had come into a pond.
On the other hand, after the switch to private management was realized, would the
union remain solely with the General Council of Trade Unions of Japan, the Sohyo,
which adamantly opposes changing public corporatione over to private management?
Especially since this involves the All-Japan Telecommunicationa Workers Union, which
is the largest and most rightwing oriented union in'Sohyo, conversion of Japan
Telegraph and Telephone to private mangement would probably cause great repercussions
on the labor front.
COPYRIGHT: Shukan Toyo Keizai 1981
9111
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ECONOAIIC
FOR OFFICIAL USE ONLY
TOYOTA MOTOR WORKS OUT BULLISH PRODUCTION PLAN FOR '82
Tokyo JAPAN ECONOriIC JOURNAL in English Vol 19, No 986 22 Dec 81 p 3
[Text ]
Toyota Mutor Co. and Toyota
Motor Sales Co. last Tuesday
announced their business plans
for 1982, in which the nation's
No. 1. automaking group set
their new pcoduc:ion target 5
per cent higher than this year..
'The production goal oE Toyota
Motdr and its sales arm for the
new year is 3,380,000 units (ex-
cluding knockdown kits for
overseas assembly), compared
with an estimated 3,220,000 for
this year.
Toyota said it expects ics ex-
ports in 1982 to go almost crab-
wise at about 1,730,000 units in
view of the stricter export en-
vironment.
Conversely, the company is
bullish toward domesdc sales,
which it estimates will climb by
10 per cent to 1,650,000 units.
Behind the optimistic outlook
on domestic sales is the reduc-
tioc-i of the official discount rate
enforced by the Bank of Japan
and the Government from
December 11.
T9Yota policy makers believe
th - bank rate cut will lead to
improving corporate protics at
large and cause a pickup in
both corporate and individual
demand. They also hope that
unveiling of new cars and
restyling of existing madels
will pump in fresh demand in
the new year.
Here is the gist of Toyota's
outlook on the auto business
trends in Japan in 1982:
Domestic sales: Aggcegate
demand for automobiles at
home in 1982 will increase to
4,200,000 units (excluding
midget vehicles), the second
highest next only to a record
4.290.000 scored in 1979. tToyota
initially estimated domestic de-
mand in 1981 at 4.100,000 units
and 50.000 units more or less,
hut it will actually remain at
some 3.900,000.1
One factor underlying the
bullish view is the rebound of
passenger car sales which be-
gan to go over the year�earlier
level from around Septembec.
The other is an anticipated up-
turn of truck sales stemming
from the money rate cut and a
resultant business recovery.
Toyota has a target to se112
million passenger cars, trucks
and buses at home in 1985. As a
step to attain the ambitious
goal by stages, the company
must annually sell its vehicles
at a pace swifter than the
growth of aggregate demand.
Toyota thus expects its share in
the domestic market to reach
39.3 per cent in 1982 after hitting
37.3 per cent in 1980 and 38.5 per
cent in 1981.
When midget vehicles aze io-
cluded, aggregate domestic de-
mand in the new year wiU run
to 5,480,000 units, compared
with an estimated 5,130,000 for
this year. In this case, Toyota
wants its share in the domestic
market to rise to 30 per cent in
1982 from this year's 29.2 per
cent..
Exports: Overseas sales in
1982 will move almast sidewise
or rise marginally by 1.2 per
cPnt over a year earlier. Ship-
ments to the U.S. and some
European nations in 1982 are
due to be voluntarily curbed as
in the preceding year. Toyota
will have to try to boost exports
to developing countries and
elsewhere with scrupulous ef-
forts to cultivate fresh demand.
The company will next year in-
crease production of KD kits by
30,000 to 146,000.
When KD kits are included
the pcojected pcoduction of the
Toyota group in 1982 will reach
3,520,000 units against the
3,330,000 estimated for 1981.
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSO: 4120/100
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I.CONOMIC
INDIGENOUS COMPANIES JOIN FORCES AGAINST AMERICAN TAX
Tokyo JAPAN ECONOMIC JOURNAL in English Vol 19 No 987, 29 Dec 81 p 5
[ Text ] Kyoto Ceramic Co., Matsu-
shita Electric Industrial Co.,
Sony Corp. and others have
decided ta organiZe�a plaintiSf
group for opposing the unitary
tax icr the U.S. 9n relation to the
start of proceedings in the U.S.
Supreme Court shortly on a
case against the tax raiaed by
an American company. �
Chicago Bridge & Iron Co. of
Oak Brook, Ill. filed a suit with
the Supreme Court on testing
the legality of the tax from its
view that the tax violates the
principle of fair taxadoa sat In
the U.S. Federal Constitution.
In the U.S., muldnatianal
enterprises, such as Inter-
national Business Machinea
Corp. and Coca-Cola Company,
support the ChiceBo firm and
have organized plaintiff
groups.
In Japao, opposition to th$
cax is on the rise on the grounds
that it impases a dual tax on
Japanese and other foreign
enterprises in the U.S. and it
obstructs smooth corrimerce
bettveen Japan and the U.S. as
well as obstrncts inv�stments
in the U.S.
Thirty-stx firms in the Kansai
(Ogaka-Kyoto) acea, including
Kyoto Ceramic and Matsushita,
became the first in forming a
cotincil for considering
measures against the unitary
tax, and the Federation of
Ecunomic Organizatioris (Kei-
dafiren) in Tokyo followed by
adopting a .resolution against
the tax.
'fhe Kansai Economic Fed-
eration (Kankeiren) directly
has appealed to the states using
tht unitary tax swiftly to
abolish the tax, and also has
drawn up a resolution asking
the Japanese Government to
take effective diplomatic
actions.
Kyoto Ceramic and others
nav plan to send a large plain-
tiff group to the U.S. to oppose
the tax in relation to the coming
gypmne Court examination of
the,C66e~ � , i, , . . 1
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSO: 4120/100
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ECONOMIC
STRONGER HOME DEMAND, SLOW GROWTH FORECAST FOR FY '82
Tokyo JAPAN ECONOMIC 30URNAL in English Vol 19 No 987, 29 Dec 81 p 5
[Text]
~I
The Japanese economy in
fiscal 1982, starting neact April
1, is likely to continue to gradu-
ally recover, butingredients of
growth will be somewhat dif-
ferent from fiscal 1981. First,
exports. will be growing at a
lesser pace because of inteo-
sifying trade frictions. Second,
fiscal policy will be playing a
minor role due to budgetary
constraints. On the other hand,
howevOr, stability of prices will
favorably affect personal coo-
sumption gnd, consequently,
will lead to recovery of capital
investment by smaller enter-
prises. Fiscal 1982 economy
thus will be characterized by a
stronger domestic demand than
in fiscal 1981, although the eco-
nomic growth rate as a whole
will remain almost the same at
slightly over 3 per cent. The
current-account surplus, meao-
while, is expected to continue to
run a huge surplus.
F.conomy in 1981
Japan's real GNP growth in
1981 registered 3.0 Qer cent in
the tirst quarter, 4.8 per cent in
the second quarter and 2.4 per
cent in the third quarter, re-
spectively, from the preceding
period. These figures attest to a
moderate expansion of the
economy.
Prices continued basically
stable throughout the year. Ad-
vances ot wholesale prices re-
mained slow, leading to an
equally calm movement of con-
sumer prices, which also bene-
fitted from moderate riseB in
labor cost. In November,-
wholesale prices stoal at 1.6 per
cent and consumer prices (in
Tokyo) 3.9 per cent ahead of a
year earlier.
In the balance of paymlnts,
trade balance kept runnigg a
huge surplus eath month due to
strong exports of machinery
and slow imports of raw raate-
rials. The current-account, bal-
ance as a result turned intb the
black in the second quarter,
averaging =880 million at 'a
monthly rate, which grew to
$780 miUion in the third
quarter, and $1,500 millian in
October.
Despite these seemingly
favorable performances com-
pared with other industrialized
economies, the Japanese
economy in the past year was
not necessarily in perfect
shape.
First ot all, its expansion de-
pended primarily on external
demand in the absence of
strength in personal consump
tion and corporate capital io-
vestment. Of the real growth
rate of 3.4 per cent during the
first nine monttas of the year,
2.6 per cent was attributable to
exporta and other overseaa sur-
plus, with domestic private de-
mand accounting for a ;nere
0.06 per cent.
Second, last year's business
recovery was imbalanced. In-
ventory adjustment in assem-
ble-type industries progressed
generally smoothly, but that in
industries producing basic
materiaLs lagged. Capital irr
vestment by big corporations
was strong, but that by smaller
enterprises was contrastingly
weak. Imbalances also per-
sisted among different geo-
graphical regions.
Corporate results reflected
such a sluggish recovery, with
pre-tax recurrirg prctits re-
cording a sharp 18.4 per cent
drop in the six months to Sep-
tember, 1981, fram the preced-
ing six months.
51
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External environment for fiscal
1982 economy
With the U.S. and European
economies likely to remain in
the doldrums in 1982, there
seema little ' likelihood of a
sharp markup on crude oil. Ja-
pan's import price of crude in
fiscal 1982 is expected to
average $38 a barrel on a c.i.f.
basis, up 1.9 per cent from
fisca11981,
Domestically, given the man-
date tor ffscal' rehabilitation
through reduction of debt-
financing bonds, fiscal policies
will play a severely restricted
role in the new fiscal year's
economic management. Fol-
lowing the December 11 dis-
count rate cut by 0.75 percen-
tage point, money is likely to
remain relexed.
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Shape ot fiscal 1982 economy
to be negotiated in the coming
The Japanese economy looks
spring round will likely be
smaller than last year's 7.7 per
likely to keep on a gradual re-
cent (as surveyed by the Labor
cover3 path, but factors. for ex-
Ministry). This projection is
pansion will be somewhat dif-
based on the recent slowdown
ferent from those of the past
of corporate earning~ and a low
Qa~
Y
Exports, which served as a
'
rate of inflation.
the ex-
On the other hand
s
driving force in the past year
will slow
i
,
pected gradual recovery of
c recovery,
econom
down sharply in the growth
business will result in a higher
ase in overtime worked
i
rate - perhaps to 4.5 per cent
ncre
and improvement
and bonuses
over fiscal 1981. Reasons for
the slowdown are the lagging
,
in employment situations,
recovery of world economy,
while independent busine.sses
All these
Will also fare better
rising trade frictions with other
industrialized counUies suffer-
.
trends will work to boast per-
ing from high unemployment,
sonel income at a faster pace
and decline in competitiveness
than in fisca11981.
of Japanese products owing to
As a result, private final con-
appreciation of the yen.
sumption expenditures will re-
'fhe size of the fiscal 1982 na-
cord an increase of 7 per cent
lional budget offers little hope
or so before inflation, slightly
for a role to be played by fiscal
hlgher than in fiscal 1981. With
expenditures. Public works in-
consumer price advances ex-
vestment, in real terms, in
pected to remain moderate,
consumption expenditures after
particular, is scheduled to be
cut back from the current fiscal
inflation will rise by about 3 per
year's level, resulting in a de-
cent, up sharply compared with
crease of 3 per cent or so in
0.3 per cent for fiscal 1580 and
an estimated 1.1 per cent'for
public fixed capital formation
fisca11981
on the CNP statistics basis,
Private domestic demand, on
.
As for housing, the worst will
looks likely to
the other hand
be over in the new fiscal year,
,
grow faster than in fiaca11981.
but for a variety of inherent
As for private final consuml>-
reasons, including lapd prices;
'
~
_
tion expenditures, wage raises
~ w1p be-a modeet
the one, wi ret th~
rate of' increase
_ Outlook for Gross National Expenditures
- (Vear�fo- yeer Dercenfapechen9es, aaawnelly adjwfad fi9urot in parenthnes)
Gross nationeleapendilures(nominal)
- Gross netionslerpendilures(reel)
_ Domesti[eprivsfeaemand
Prlvatellnelconsumpflon expentlltures
Prlvete houslnp investments
- Privele plent and equipmenf Invesfinenl
Priveteinventoryinveslmenf
PuDlit exPentlituros
Governmenr Iinal consumpfion expenditures .
Public cePNelezpenditures .
CurrentoverseessurPlus
Ezports efc
Imporfs etc
Mlninp 6 AAenuHCturln0 Productlon (reference)
52
PY NIO
FY 1111 (provtalonBl)
FY 1 1111114(estimate)
lit hall
2nd half
lst hall
2nd haH
7.1
5.9
( 5.3)
( 6.8)
6.6
( 6.1)
6.6)
3.7
3.3
( 3.7)
( 4.6)
3.1
( 9.1)
( 7.4)
0.3
0,6
f 0.4)
( Z./)
3.7
( 4.3)
f 3.9)
0,7
1.1
( 0.9)
1 2.1)
3.0
1 9.3 )
( 2.9)
-10.1
1.6
( 11.2)
(-4.6)
1.9
( 9.6)
( 5.3)
5.7
, 1.1
( -0.4)
( 7.2)
4.6
( 5.2)
( 5.0)
-3.9
-47.1
(-6A.7)
( 70.4)
43.4
( 25.5)
( 53.7)
0.2
7.J
f 4.3)
f 2.0)
-0.6
(-0.1)
7.7
' 4.7
1 0.4)
( 4.0)
2.0
f 0.51
1 7.01
-7,1
7.7
( 4.5)
f 0.1)
-3.1
(-1.1)
(-1.4)
241.6
50.3
f 67.4)
( 6.9)
5.9
( 3.9)
( 9.0)
16.6
16.6
( 47.6)
( 1.5)
1.5
(4.e)
( 6.9)
-9.9
~ SJ
( 11.3)
(-0.9)
7.8
( S.])
( 6.0)
4.e
4.1
c a.�
t e.e)
5.4
1 4.0)
c 5.0)
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stopping short of 5 per cent in
real terms.
Private capital inveatment
whicti slumped ip fiscal 1981
owing to sluggishness 1n spend-
ing by smalrer busiieases, is
expected to pick up in fiscal
1982 as domestic private de-
mand will stage a moderate re-
covery; leading to reinvigora-
tion of smaller buainesses' in-
vestment. Investment aimed at
new product development and
higher efficiency remains
strong in the meantime. All In
all, private capital inveatment
in fisca11982 will rise by 4.8 per
cent in real terms.
As for privete inventory in-
vestment, considereble pro-,
gress in adjustment has been
seen in basic materials indus-
tries, such as peUoleum and
coal products, and paper and
pulp, where icrventory hang-
over wae heavy. In the new
fiscal y.ear, m4ves for tnven-
tory buildup, It moderate, will
shovi+ up as tinal demand picks
up.
Overall, praspecta for the
economy in fisca11982 are for a
nominal GNP growth of 6.8 per
cent, up f- m 5.9 per cent esti-
mated for abcal 1981. After in-
flation, however, the growth
rate will be 3.1 per cent, which
is even lower than the pro-
jected 3.3 per cent for fiscal
1981. The Government's projec-
tion of a 5.2 per cent real
growth in fiscal 1982 is hardly
achievable.
Prices "
Wholesale pricea are ex-
pected to maintain a calm
trend in the new fiscal year due
to stable oversess commodtty
prices wlth a basically ttrona
trend of the yen in store. Their
advances during fisca11982 will
average 1.8 per cent, compered
with 1.4 per cent foi ffsca11981.
Consumer price advances will
also be moderate, vkitti. fiscal
1982.average expected Eo ceg-
ister 4.2 per cent or so.
Balance W payments
Japa~'s, expar ts in fiscal 1882
will reach $167 billion, up 9.2
per cedt irorti fiscal 1981, and
imports::137 billion, up 7.6 per
cent. Ttade surplus will thus be
$30 billlon, resulting in a cur-
rent-aceount surplus of $12.5
billion. , �
Accodding to the DKB's out-
look, fiscal 1982 economic
growth at 3.1 per cent is to fall
short oP 4 per cent for the third
consecative year. (The three
years' average will be 3,3 per
cent). Zn the aftermath of the
two oiC crises, the Jaoenese
economy appears to have come
claser to a slow-growing and
matur type of economy like
other a vanced countries oi the
Weat. 1pe moet important chal-
leage cing Jepen in fiscal
1982 ia adjnstment to such a
slowdo~n in growth. For one
thfng, this will require tha ough
elimination of budget �and ad�
minlstrAtive wastes. Another
cequlrehnent will be continuoua
efforta tor atrengthening corpo-
rete re8ources technological-
ly, finapclally snd othenwiae. �
Anottler task facing Japen is
to smoath out its trade relations
with the U.S. and West Europe
which have bzen badly strained
owing to the sherp rise in Ja-
pan's exports and sluggish im-
ports. With Japen's share a( the
international eeonomy growing
steadily, maintenance of har-
.,may.v~lth.*.{/lBt of the world
a.,la.asae~t"to eecure� ita stable
growth: COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSO: 4120/100
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ECONOMIC
HITACHI, EUROPE TIE ON INDUSTRIAL ROBOT SALES
Tokyo JAPAN ECONOMIC JOURNAL in English Vol 19 No 987, 29 Dec 81 p 7
[Text] Hitachi, Ltd. next year will
promote exports of industrial
robots to Eurapee undec tts
'recent sales agency contracta
with Bri2ain's Lansing Bagnal,
West Germany's Zeppelin-
Metallwerke and France's
Martin & Cie.
Under the sales tie-ups,
Hitachi will supply its welding,
painting and other robots to
Martin and Zeppelin-Metall-
werke for diatribution in their
respective countries. Martin is
a machine tool sales company,
and Zeppelin ia a tna jor maker
of clsemical equipment and
w;reless apparatus.
The tie with the German firrn
may develop into a broader
Iink, including technological
know-how or/and more com-
prehengive buainess lines.
Landing, a top construction
machinery lwildet', has already
received sample shipments.
Hitachi thus hopes to export
350 robots in 1982, including 120
for Europe and 100 for two U.S.
enterprises, compared with an
e;s 6Cd 180 in 1981.
T'h' ; two U.S. firms are
Gen" Electrlc Co. and Auto-
mati;, Inc., with wwch Hitachi
has Open in overall business
ties atr robots.
In pddition, Hitachi has been
negotiating with 10 other
foreign enierpriaes, including
Britaln's General Electric, to
tie up on rabot sales or related.
skills: Approaches to Hitachi
have come fr�om Sweden, Fio-
lend, Switzerland, Belgium,
Austria, the Soviet Union and
some East European countries.
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSOP 4120/100
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ECONOMIC
NISSAN MORE CAUTIOUS THAN TOYOTA IN 1982 BUSINESS PLAN
Tokyo JAPAN ECONOMIC JOURNAL in English Vol 19 No 987 29 Dec 81 p 7
[ Text ] Niasan Motor Co. appeara
somewhat cautioua, campared
with Toyota Motor Co., in
predktlng btaime trenda iM,
1962: � �
. The nation's No. 2 automaker
ennounced ita buslness pland
for 1982 in late December, in
which it set the new year's
pcoduciion goel at 2,676,000
units, up 3.7 per cent irom 1981,
compared with the b per cent
growth targeted by No. 1
Toyota. Nleraa also plsns to
produoe 284;000' ktbeitti1kdown
kits for overaeaa aseembly, up
25.1 per cent.
Ntesan enviaiona \booeting ib
domestic ealee !n 1982 by 7.2
per cent to 1,226,000 unita
agaimt the 10 per cent increase
eet by Toyota (JEJ Dec. 22
iuue, Page e).
Aa ior aggregate demend at
bomq Nlsean estimates it at
4,100,000 uniPa, up B per cent,
while Toyota puts it at
4,200000, up 7.7 per cent.
Also in setticg new export
goalw, the two biggest auto-
'makare were split in their
view~, though marginally.
Nie n expecta ita exports in
thew year to riae by 1.0 per
cent ~to 1,462,000, anticipating
that ~981 exporta wUl iall by 1.9
per dent to 1,438,000. T'ne Com-
para0le export growth rate
targdted by Toyota tor 1982 was
1.2 "r cent.
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
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DOMESTIC DEMAND RECOVERY SEEMS UNCERTAIN PROSPECT
Tokyo JAPAN ECONOMIC JOURNAL in English Vol 19 No 987 29 Dec 81 pp 1,16
[Article by Masahiko Ishizuka)
[Lxcerpt]
As 1981 gives way to 1982, the
Japanese economy continues to
be caught in a trap with no easy
way out in sight, with weakness
in domestic demand presenting
the nation's economic mana-
gers with the mast knotty protr
lem.
Just a year ago, the Govern-
ment came up with an outlook
which put fiscal 1981 real eco-
nOmic growth rate at 5.3 per
cent. As the year progressed,
however, it was forced to
revise the projection downward
twice - to 4.7 per cent and then
to 4.1 per cent. The original
outlook stood out for its overt
optimism, compared with mast
of the projections by private
institutions anticipating a
growth rate in the neighbor-
hood of 4 per cent.
The Government's relative
bullishness a year ago was
based on an assumption that
consumption would revive on
the strength of slowdown oi
advances of prices. But things
have not come out that way.
Despite the success in coo-
trolling intlation, private final
consumption expenditures
continue sluggish, turning out
to be the prime culprit for the
slower-than-expected econamic
growth in fiscal 1981 as in 1980
fircal.
Again, the Government's
projection for fiscal 1982 stands
nut for an unmatched , w
timisrt, - a 5.2 per cent'real
economic growth which com-
pares with most private institu-
tions' forecasts falling in the 34
per cent range. And the
assumption is again the same
as a year ago - a stronger
domestic demand like personal
consumption and housing.
Policy targets receiving top
priority are also the same as a
year ago - i) alleviation of
trade frictions arising from
Japan's heavy dependence on
exports; and 2) reduction of
budget deticit:
Will the new year be able to
tare better, learning lessons
from the past year's perform-
ance? As many economists point
out, the prospects are not quite
bright.
The Government expects
that, and mast privaEf"Iore-
casters agree to a varying
extent, that personal consump
tion expenditures will revive in
the coming year on the strength
of increases in overtime
worked and bonuses, while
prices remain calm. 3ome
question this assumption, how-
ever, citing the pruspect that
wage increases in 1982 to be
negotiated in the spring labor
offensive will average less than
in 1981. (The Government itself
foresees this possibility.) Also
tax and other non-consumption
expenditures will continue to
account for an increasing
proportion of workers' income
in the absence of personal
income tax cut, which is ab-
soiutely ruled out at a time
when reduct;on of fiscal deficit
is a sacrosarict policy objec-
tive. Disposable income tt!ere-
fore is expected to continue to
sag.
Housing investment is pro-
jected by the Government fo
grow by over 10 per cent in
fiscal 1982, compared with this
fiscal year's 0.9 per cent. This
assumption is most seriously
challenged in the light of at>
sence of any effective measure
to speak of. The recent lower-
ing of the Bank of Japan dis-
count rate, for example, is
having no impact at all on the
cost of housing finance by com-
mercial financial institutiom.
COPYRICtIT: 1981, Ttie Nihon Keizai Shimbun, Inc.
CSO: 41.20/100
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SCIENCE AND TECHNOLOGY
TECHNOLOGICAL PERSPECTIVE FOR 1980'S REVEALED
Tokyo TECHNOCRAT in Englieh Vol 14 No 8, Aug 81 pp 11-15
[Article by Shuji Tamura, director, Electric Standards Division, Agency of
Industrial Science and Technology, Ministry of International Trade and Industry]
[ Text ] 1. CharacterisNcs of Japanese Technological Develop-
ment
1�1. Indwtrial Structuae and Technology
Economic growth in postwar Japan has been making
progress, making full use of the open economic rystem, that
is to say importing necessary raw materials and exporting
mant~factured products. At the same time, the Japaness
econon:y has been adapting itself optimally to the world
economic development, making shifts from using coal to oil,
from inland locations to coastal locations, from small-scale
to large�scale plants with great mass-production effects. Japan
generally owes its economic success through this adaptation
and to the high stability of the world economy in the 1960's
continuing into the first half of the 1970's, closely linked
with stable international currencies as a prerequisite to trading
and increasing supplies of energy and resources. It is important
from a technological point of view that the postwaz period
was the flowering time of technological innovation in the
mass market symbolized by the mass�production of automobiles
and electronic home aplianas such as televisions and radio
sets.
These circumstances have molded Japan's technological
drvelopments into "end products types" or "downstream
types" which make much of markets, with tendencies toward
limited technological developing capacity in respect of the
supply of energy and raw materials essential to production.
From an intarnational point of view, such countries as
- the U.S., West Germany, Britain and France show, even
today, high Qercentages of selfsufficiency in energy and
raw materials, having a lot of domes�c anergy and resource
industries, at home. In contrast, Japan has looked down
at the coal industry as a declining indusery, while instead
57
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cherishing the , oil refinery industry even without having
domestic oil fields, resulting in unsuccessful fostering of
energy intensive industries equipped with adequate power
of technological development for securing new energy sources.
This weakness can be visualized quite well in the fields of
energy and resources development. In new oil fields under
development, most excavators and gigantic machines are either
American or European made. More important is the fact
that know-how for resources development has almost been
fully monopolized by specialized companies of Europe and
the U.S. * Japan's present sicuation might be the natural
outcome of a country, spazce in resources, but it seems
necessary for the country, as one of the lazgest consumers
of energy and resources in the world, to make intensive
effort at technological development in these fields.
_ Another prominent feature of the present industrial structure
is that Japan has been growing on an economy primacily of
civil products. Because technology for defense and military
equipment is often required to show high performance in
very special environments, the technology developed cannot
readily be applied as it is in other fields. However, its effects
un space development, and the aeronautic and electronic
_ industries are not negligible. Usually the research and develop-
. ment uf technulogy for defense and military equipment gives
first importance to� performance while giving little head to
cost, resulting in the effect of widening the frontiers of
technology in specific fields. On the contrary, the research
and development of civil products, is much limited by cosi,
confining the pursuit of performance within cost limits.
Consequently, techniques produced in Japan tend to show
good cost-performance balance, though somewhat lacking in
technological creativity. In use the tend, to be multifarious
- and higtily applicable because of efforts to make full use
of available techniques which contribute to reducing substantial
development time and costs.
Table 1, which shows finance for technological development
in major industrial countries, show clearly Japan's uniqueness
uf small government f'uance for R3cD. It shows, that while the
Japanese governrnent shoulders an extremely ;inall 1% of the
- expenses for research and development carried uut by industry,
American and British governments provide more than 20%
of such expenses, and that this difference applies primarily
to such sectors as aucraft, and electronic and electric machines.
At that periud, the research and development related to
energy is not amply budgeted, the role of the government
and universities in each country seems to have been under-
estimated as compared with today.
In Japan, smaller businesses are generally at high levels
uf production technology and support large companies primarily
engaged in the assembly and production of final produGts, by
supplying parts and subcontracting simple or standardized
machining processes. This is particularly prominent in the
machining and assembling industries, such as the machinery
industry and durable consumer goods industry. However
58
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some industrial sectors such as the chemical industry is -not
merited by the subcontracting system because of the con-
tinuous manufacture up to 6na1 products using integrated
processes. In the process of diffusing new techniques in
widely spreading smaller companies, subcontract production
systems developed by leading large firms play a very important
role. In most cases, master companies give intensive technical
guidance in improvement of production equipment, quality
control, and training of technicians which results in satisfactory
quality and cost of products required by them. On the other
hand, it is important that smaller companies, as receivers of
such guidance, have rich experience in production, skilled
workers and drive for competition in digesting new technology.
These qualifications of small businesses have been developed
_ over a time under domestic conditions. Native industries
traditionally existing in local areas have been a major source
Of supply of small firms thus making important contributions
to the present industrial structure. Foundry, ceramic and
textile industries for example, have frequently developed
special production areas.
Reliability uf parts and semifinislied products produced
~ by small scale industries is an essential prerequisite for Japanese
subcontracting practices. The American automobile industry
shows a lower rate of dependency on subcontract manufacture
than in Japan, and it sometimes suffers labor disputes, making
it difficult to maintain stable supply. In West Germany,
machinery, precision, and chemical industries have been
prevalent historically and technology has been highly advanced
with specialized industries distributed locally. Recently,
however, the country is slipping behind in adapting electronic
technology and is having difficulty, because it has been suffering
underdevelopment uf specialized electronic parts industries
~ before worldwide trends toward electronic conversion in the
i machinery industry or elsewhere. [t is one of the favorable
! conditions in following technological changes in an inter-
~ national environment that Japanese smaller businesses are
~ competitive at high technological levels and are sufficiently
I mature to assimilate new technology.
1-2. Role Played by Introduction of Foreign'Technology
It is widely known that Japanese industry has introduced
technologies, from the world over and completed advanced tech-
nology by improving these technolugies. From an international
point of view, it is important to know that technologies are
mustly traded simply by themselves with somewhat limiEed
capital and management participation such as direct investment.
This is partly beCause restrictions were imposed by Government
- on the introduction of foreign capital till the middle of the
I960's but mainly because Japanese industry had sufficient
- technological experience to absorb new technology and years'
uf accumulation of productive activities in each technological
sector. For the introduction of technology in those days,
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the technological and managerial abilities uf industries as
the recipients of the technology were required to be sufficient
to digest the technology introduced. Thus, it was the duty
of major traditional companies which had experience in
production using existent technology at home to absorb
and digest new technology. In introducing technology for
the petrochemical industry, for example, it was mostly the
subsidiaries of the traditional Japanese zaibatsu chemicat
groups, such as Mitsui, Mitsubishi and Sumitomo which were
the predominant industries for coal chemistry in those days
and major oil refining companies that were selected as the
center of a new petrochemical complex. Also, technology
for semiconductors and IC (integrated circuits) elements
which have undergone intensive technological renovation was
introduced primarily by the general electric machinery com-
panies such as Hitachi and Tushiba. Consequently, while in
the U.S., which developed technology by itself, smaller
companies specialized in electronic parts appeared in swarms,
out of which large specialized companies in semiconductor
industry liave been growing. In Japan, it was the versatile
large companies which had their own markets for various
final products that developed technology for producing most
advanced electronic parts and integrated circuits. At present,
it is recognized that Japanese electronic parts, except special
items, often exceod American itoms in cost performance and
especially in reliability. One of the acknowledged reasons
for this is that the scale of research and development, the
effects of massproduction and capability of quality control
of largo versatile companies are very advantageous, in producing
sophisticated microproducts.
1-3. Research and Development for Improvement
Japan, stazting with the introduction of technology in
the postwar period, successfully made continuous progress
just because the country favorably made best use of the new
technology and new products introduced. Adaptive efforts
for foreign technology gradualy enriched the ground for
improvement. In this process, systems for the development
of improved technology and new products were established.
At present, Japan is recognized as the fastest country in the
world to absorb new technology. Furthermore, in such elec-
tronics applications as video recorders and robots the reputa-
tion that Japan is advanced in developing new products and
technology for commercializatlon has come to stay.
Currentty, Japanese industry has been making a shift from
impruving research with limited cost of research and develop-
ment, tu applied research with gradually increasing costs,
and at present carry{ng out research and development with
a considerably high cost, as is observed in the development
of new products such as integrated circuits and video recorders.
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Increaae in the odginali:y of Japanese technology may
partly be seen by the growth of technology exports to the
world. [n 1971 the value of receipts from technology exports
of all industry was Yen 27,187 mlllion, which amounts to
only 20% of payments.for technology imports. However in
1979 receipts were Yen 133,145 milh'on, which amounts to
55% of the payments. During the period from 1971 to 1979
exports thus increased almost 5 times while imports increased
less than 2 times.
1980'f, introduction
of sclence
q Tupet for 1980's
�
0 c ,
~ 1~70'~, Introduetlon of rwuch
E a ~ and dwelopment toehnoloqy
M + ~ ~
0
...AchiwW
c \ - In 197ds
10, Inaoductlon ofnroduetlon
60'~
E~ r�~~ C�... AchNwd In 14E01'.. tKhnolopY
s ~ ~ c eomm~cl~lli~tlon primuily
~.U9 ~ of elvil products
0 CommaoreiNl:stlon
~ ~ W' nMeroh Propreu of Products ( YMr)
Aeronautles Automobllos, Sulo of induRry
8 nd space �Iectrle maohinary (productlon/Year)
Rswuren and hort� apPllanas
and enapY
Llfe scienp
Flne chemieals
OPtofciends
Fig. 1. Characteristics of Industry and Coat for
Research and Development
The greatest surplus of technology trade in 1979 came
from iron and steel, and construction industries while the
greatest deficit came from the electrical and electronics, and
transportation industries. It is interesting to note that there
are certain time lags between the perfocmana of a particular
commodity trade and that of technology trade for each
industrial sector.
2. 71'echnological Development for 1980's
2-1. Importance Given to Basic Sciena
As described earlier, the structure of Japanese technology
can be characterized as being very market oriented and highly
efficient. These characteristics are illustrated in Fig.l, where
intake of new technology occurs at diffetent stages of product
development over a time. In contrast to the flow of typical
technological development which starts with a principle and,
via basic and applied research, achieves commercialization,
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Japanese technical development has been predominatly via the
back door, "backwacd enginee:ing", which fust introduces
technology d'uectly necessary for production and after digesting
it, introduces more advancxd technology. In the 1980's,
however, it is likely that development of already available
or existing technology in Japan will be completed but instead,
basic science as a seed for technology will be increasingly
more nec'essary. It is hardly possible to cover all achievements
of basic science by introduction from foreign countries, L1ce
conventional technological introduction but the country will
be required to make achievements mostly by itself.
Here, "forwazd engineering" type research and development
rystems, which,, while building up basic science, connect
inventions and discoveries as its fruits to research and develop-
ment, and further, to industrialization are found important.
Studies, for example, 'on the properties of materials under
extreme conditions, such as ultra-high gressures and ultra-low
temperatures have lead to the development of super-conduc-
tivity and new materials. /#lso, appiied fields of life science,
such as genic rearrangement, cover unfathomable scope.
Electronic semiconductor devices such as sensors and optical
elements must be made practical and useful as new functional
materials. This requires an increase in public finance for
research, building up of researchers and improvement of
research environment to permit research activities in the fields
of basic scienca It is also important to invite substantial
demands for maintaining close relations established with
production shops so that the results of reseazch will be
appreciated and utilized. While the roles of universities and
government research instftutes will increase in view of the
creativity of research, the organization Qf government-
financed basic scientific research projects advantageous in
making use of industrial experience in production. will be
promoted as practical systems for organized basic research
and development.
2�2. Advancement of Technological Structure
it is pointed out that one of the characteristics of the
Japanese technological structure is the lack of technologies
in special fields. In the 1980's, it will be necessary to develop
these "missin6 links". Typical examples of such development
ase technology for developing natural resources and energy,
and space and aeronautic technology.
For technology for developing oil, coal, and mineral
resources, the predominant companies are the multinational
majors and it is impractical for Japan to promote its own
research and development because development sites aze
located overseas. However, technology indirectly related to
resource development, such as technology for refining crude
materiaLs or technology for transporting energy and raw
materials is at high levels in Japan. Thus, developments will
be eagerly promoted in new technological fields, such as
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development of procesaing low-grade orea, collection of waste
oil and cracking of heavy oil, which have somewhat missed
international attention.
More positively, Japan's efforts at research and development
must be directed in such a manner as to be free of dependency
on existing resources and energy such as oil and coal, thus,
emportancx should be given to development of renewable
resources, recycling of resources, research on new energy
- sources including nucleaz fusion and atomic power generation,
and development of technology for saving energy. Some
examples of Japanese technology recently being appreciated
- in these fields include technology for high reliability of atomic
reactors for power generation, technology for solar energy
systems for heating and cooling,and for collecting waste heat,
and technology for neutrilizing resources in urban garbage.
Technology promising in chemical fislds may include
technology for saving energy and reaources by applying
biochemical reactiona, developing new materials, developing
techniques for energy conversion including fuel cells, and for
improving thermochemical processes and thermal energy.
- Technological development about resources and energy
generally uses large-scale rystems, requires tong years and
involves high riak. In such cases Governmental research is
called for. For axample, Agency of Industrial Science and
Technology has been promoting its "Sunshine" project for
~ developing new energy sources, amd the "Moonlight" project
for developing technology for raving energy. In October
1980, a semigovernmental organization called New Energy
Development Organization was started, as a development
system to pernut consistent rexarch and development from
basic to applied reseazch, and from prototype and demonstra-
tion plant development to practical use.
, In major foreign countries, space and aeronautic technology
is a special field closely related with the growth of the
; military industry. In Japan, technological development in
; these fields is being promoted in the absencx of any military
industry. However, it is important to improve technological
levels in these fields successfully, hence it is a pressing
~ necessity to carry out national projects such as the development
~ of domestic aircraft such as YXX as a subsequent to YS 11 the
; flrst Japanese turboprop aircraft, communications satellites,
resources search satellites and jet engines, which can have
a large technoingical influence but require enormous amounts
' for research costs and advanced �ystems for research and
development.
The presence of reuarch and development intensified
industries and companies is essential to the advancement of
a technological structure. In this respect, it is desirable that �
the weight of what is called "hi�value added'� processing indus-
tries, such as pharmaceuticals, precision machinery and
' electronics, will increase. Because in these industries, it takes
much money and time, as it takes long to train personnel,
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to accumulate technology, they will be highly appreciated
internationally. They will successfully acquire adequate capital
- for research and development by achieving high added value
and entrain a favorable circle toward advance when they
~ exceed certain technologicaf levels. However, they will en-
counter fierce competition on the way. This is why years
- of accumulation of efforts are necessary before highly creative
technology with signiFicant bargaining power is developed.
2.3. Development of Social Technology
[n the most important fields to be dealt with by technology,
� are a wide variety of problems concerning society as a gathering
of individuals. The urban problem is a typical one, and they
are mostly important problems directly related to daily life,
such as education, medical treatment, culture and environment.
Technologiual development in these fields is racher dissimilar
to technological development :or commercial individual
pruducts in which Japan is adept. For example the application
in social situations is more important factor rather than
production in plants, and consumption by groups js mure
usual rather than individual purchase. 'I'hus, society participates
to a greater extent in the determination of the aims of research
and development, and the decision making by those demanding
depend on the general technological knowledge and the ability
- of society to bear the risks. For these reasons; it will be an
important problem to train "social enterprisers" who stimul2te
and create favorable environments for technological devetop-
ment.
As local systems, for example, attempts primarily by local
governments to promote the development oi wind power,
solar heat, geothermal energy and small hydraulic power in
local areas, and introduction of local information systems
will become important in elevating the technologic2l ability
of society. Also, medcal equipment, and educational and
training systems will be important.
Technological development concerned with society is hard
tu deal with on a short term basis in the market mechanism
and will hardly be successful by individual production tech-
nologies. It will su%.ceed only in integration with society and
_ thus it is hoped that central and local governments will play
an important role in planning and encouragement.
.1. Technological Development and Intecnaticnal Co-
operation
3-1. Internationationel Cooperadon through innovation
Since the uil crisis in 1973, countries throughout the world,
suffering from stagnant economic growth and increasing
ur.erployment, inevitably have pressed to sacrifice international
tracie in order to defend their domestic economies. Fortunately,
Japan has recovered her economy fairly soon by increasing
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trade with middle and neaz east markets, and building up its
international competitiveness in respect of automobiles and
home appliances. It was because the country could make a
swift response to a changing world economy. Present world
economy is not the same as in the past when the entire world
economy was in a growing phase, and the economy of each
country was more or less abie to grow. Ouce the world's
economy becomes stagnant, however, countries will be affectad
widely and differently depending on their ecanomic competing
power, as was observed in the oil crisis. This is why countries
have been giving serious consideration as to how to maintain
the growth of the world's economy.
Such problems as how to attract oil money to the world's
- economy and how to keep orderly exportation have been
discussed at international meetings and in the course of
- such discussions, the stagnancy worldwide of technological
renovation was one of the problems taken up. In Europe
and America, there are many pessimistic arguments on it
and, world innovation and growth, that there is no longer any
sufficiently large technology to start a new industry. In the
past decades, the U.S. developed most pioneer technological
industries, such as petrochemicals, electronics, and space and
aeronautics. But recently, Japan and European countries are
catching up, and it is apparent that the U.S. is somewhat
= uneasy about having d�fficulty in promoting technological
development as the nucleus of an advanced industry to which
~ the country wishes to return. As is shown in Fig.l, Japan is
reaching the phase, in the 1980's, in which the input of science
! is required. The U.S., on the other hand, was making much
greater efforts to develop new technology throughout the
~ 1960's and 1970's.
Under these circvmstances around the world, it is under-
standable that Japan is obliged to make significant efforxs in
the 1980's to develop technology worldwide and supply it
to the world economy. It is true that the scale of research and
development reaches to an tnormous extent, and innovation
becomes much more costly and difficult. In the fields of
nuclear fusion, it is becoming economically impractical for
individual countries to construct the most advanced accelerators
without asking for worldwide participatton. In technology for
~ coal liquefaction, joint research by the U.S., West Germany
I and Japan is being carried out to construct. experimentally
' a demonst*ation plant with a capacity of 6,000t/day. In this
, way, international specialization in gigantic technology is
~ becoming realistic. In order to provide a basis for such inter-
na~ional cooperation, there is an increasing need for Japan
to develop its own and unique technology and it will be
- increasingly important to train personnel to perform leadership
in the world.
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3-2. World FacEory to World Laboratory
Another mission of Japan is to find the way of promoting
technology transfer primarily by industries to developing
countries. Production know-how developed b,y Japanese
industries while they. introduced and assimilated a lot of
foreign tachnologies is unmeasurable. Labor intensified tech-
nology, in puticular, which was developed primarily by labor
power in the postwar restoration periods, has been fully
taken in by Japanese quality control and plant management.
. For the quick transfer of technology from advanced
countries to developing countries, only that of highly capital-
intensified plant-based technology will be successful. However,
: look into the way technology is adopted in developing
_ countries on a long�term basis will make clear that the elevation
of technological abilities of workers is prerequisite to success.
During the 1970's Japanese industry has established various
overseas production bases primarily in Southeast Asia. So
far the influence of such production is rather isolated from
_ local technological systems, in the future, it should contribute
to the development of these foreign countries by elevating
their technological levels. Production activities will not be
y welcomed by society unless they are admitted by the social
values of technology. Transfening technology in such a manner
as acceptable to society will consolidate the foundations for
mutual respect and reliability between donner and recipient
country. It will be the important role of Japan to make plans
for technological transfer in the world, carry out studies on
the improvement of existing manufacturing processes and
try to improve the ability of workers at production sites to
perform reseazch and development, while taking into account
the characteristics of foreign countries. It will be an important
task in the 1980's to shift the emphasis from the trade of
products to that of technology. Therefore internationai co-
operation by carrying out technological assistance, and research
and development bcLomes most important. If it will be
succecsful to build up international technological network
for world development, that should be exactly the way a
peace�oriented nation should proceed.
COPYRIGHT: 1981 Fuji Marketing Research Co., Ltd.
CSO: 4120/105
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~
SCIENCE AND TECHNOLOGY
MATERIALS: 'PROGRESS TOWARD TECHNOLOGICALLY-ORIENTATED NATION'
Tokyo TECHNOCRAT in English Vol 14 No 8, Aug 81 pp 32-37
- [Text] The Industrial Structure Council of the Ministry of
International Trade and [ndustry (MITI) submitted "A Report
on Policies for Trade and Industry in the 1980's" in March,
1980. Chapter 6 of the report outlines orientatian of Japan's
technological policies in the 1980's under the title of "Progress
Toward a Technologically-0rientated Nation".
As a reference for understanding Japan's orientation af tech-
nological p4licies in the 1980's, chapter 6 of this report is
outlined below:
"Progress toward aTechnologically-0rientated Nation"
' Section I. Progress of Man and Society and Technol-
i ogical Innovation
< Technological Innovation Starting New Age >
Within recorded history, technological innovation has al-
ways been the kcy to the future, promoting social and
economical development. Technological innovation in European
agriculture in the 12th and 13th centuries brought about
rapid increases in population, development of cities, and
economic advance. Use of the magnetic compass in Europe
in the 14th century opened the age of long-range voyages in
the 15th century, and the invention of steam engines and
similar discoveries in the 18th century triggered the Industrial
Revolution.
In this century, technological innovation has advanced over
wide fields to form today's affluent materialistic civilization.
Innovations have emerged successively to include chemical
fertilizers started by the fixation of free nitrogen in, au,
high�molecular chemistry started by nylon, automobiles,
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aircraft, transistors, IC's and computers, and more recently,
the use of atomic energy and outer space. Indeed, civilization
today is suppocted by technological innovations so far accu�
mulated.
< Current Feelings about Technology >
Looking toward the future, in the 1980's, we find ourselves
faced with the tasks of maintaining social energies and im-
proving the quality of people's lives under restrictions in
respect of energy. As keys to their solution, people have great
hope for technological innovadons.
Science is knowledge mankind has acquired as an asset by
discovering various laws of nature. Technology creates benefits
by applying accumulated scientific knowledge to social activi-
ties.
Today, there are not many instances of epochal technological
innovation without which, some fear that the problems
we have today cannot be fully solved. In the 1980's, however,
it is possible to develop new aspects in economy and society
by applying or assembling existing technologies, and there is
much hope that new technologies will prosper by newly applied
scientific knowledge. And the 1980's is a time when we
should prepare for epochal technological innovations which
are expected to blossom in the coming generation in and after
the 1990's.
People usually associate technology with "advances in
society", "affluent life", "hopes toward the future" and
"convenience". On the other hand, however, as technology
advances, becoming complicated and gigantic in size, some
come to feel indifferent to, and apprehonsive about technology.
Again, there are increasingly strict demands of technulogy,
primarily because of safety. Without any measures for such,
peuple will be disappointed by technological innovations,
possibly halting technological innovations and depressing
society. Thus, it is necessary to take appropriate measures
with strenuous efforts by offering adequate information about
technology, assessing possible effects of technology and
promoting research, and development for improvements in
respect of safety.
Modsrn technology is characterized by large�scale centralized
techniques. Recently, there has been the idea of community
technology which is of a distributed type on an adequate scale
and which contributes to improving local economy and social
situations, and it should receive attention.
In the 1980's, international exchanges in the field of
technology will be further promoted. Joint research projects
among advanced countries and transfer of technology to the
developing countries are important meanx of solving problems
common to mankind.
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Section 2. Progress Philosophy of a Technoldgically-
Orientated Nation
< Situadon of Technology in Japan >
Today when there is much anticipation for technological
innovacions, Japan, as an economic power, will actively serve
the world, playing the role of an innovator, while cultivating
its own creative ability.
On the other hand, Japan stands in the situation of being
caught up by new industrialized countries and in the midst of
fierce competition between advanced countries. Particulary
the competirion among the advanced in the development of
high technology is expected to intensify. Thus, for Japan,
it is very important to make the best use of brain resources,
which may be called the country's sole resource, and develop
creacive and independent technology.
If Japan acquires independent technology, it will maintain
and promote the advantage of Japan's industry and form the
foundation for long-term economic and social development.
For Japan which is weaker in respect of energy and resources
than other advanced countries, having independent technology
will augment its bargaining power and contribute to acquiring
economic security. Developing the country on the basis of
technology is the way Japan should take in the 1980's.
< Japan's Technological Level >
Since the end of the war, Japan has been actively introduc-
ing technology from advanced industrial countries in America
and Europe, trying to improve on it and making efforts to
promote independent development. This has elevated the level
of technulogy in Japan's industry to the world's highest in
almost ;,11 fields except for some high technological fields.
Japanese goods are internationally well appreciated because
nf advanced techniques for production and sales, such as high
quality, reliability, complete servicing and prornpt delivery.
Japan will maintain these features and further elevate tech-
nological levels.
On the other hand, in order to deal with various problems
in the 1980's, it is necessary not only to refine existing
cechnology and raise the competitive power of goods but
also to promute unique and creative technological development.
Sume doubt exists about the ability to achieve this. However,
it is presumed that the potential of technological development
is sufficiently enough, by taking into account that Japan
ranks tughest in the number of patents registered for foreigners
in ttie U.S., new agreements in technological trade showing
an export surplus after 1972, the growing number of graduates
from science and technology educational departments, and
current fiigh technological levels.
In tfie future, Japan shuuld make these features sufficiently
et'fective to achieve good results.
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Section 3. Problems in Technological Development of
1980's
< Social Demands of Technology >
Social demands of technology are the promotion of
technological innovations. [n promoting technological develop-
ment, it is necessary to correctly recognize social needs.
Social demands of technology in the 1980's could be four,
as follows:
I) To overcome restrictions on energy.
2) Tu improve life qualitatively and enrich communities.
3) Tu promute intensification uf creative knowledge in
industry.
4) To attempt technulogical innovations for coming genera-
tions.
< dCey to Solving Energy Problems >
gasically, technological developments are required to solve
energy-celated problems. First, technulogical development of
substitute energy sources for oil, and secondly, that for saving
energy must be promoted rapidly. Again, technology for
developing uil must be further improved.
Tiie technological development of substitute energy sources
fur oil can be the following:
(i) Technology for utilizing atomic power
It is necessary tu develop iiew types of reactors designed
to make mure effective use of nuclear fuel, establish nuclear
fuel cycles and develop technolugy for using atomic energy
t'ur various purposes.
12) Technology for utilizing coal
It is necessary to develop technology for liquefying and
gasifying coal, and technology for burning mixtures uf coal
and oil.
(3) Tectinology fur utilizing solar energy, etc.
Various technulogical developments must be promoced
including the following:
a) Technology for solar generatiun and solar space and
water Iieating.
b) Teclinology fur utilizing terrestrial hoat and water.
c) Technology for develuping and utilizing new sources of
fuel uil such as oil sands and oil shale.
d) Technology for utilizing small�scale hydraulic power.
e) Technology for utilizing biomass.
(4) Basic research for nuclear fusion for the 21 st century
Technological development for energy saving may cover
ttie following f ields:
(1) Industrial sector
It is necessary tu develop MHD (magneto�hydro�dynamic)
generation, hiRh-efficiency gas turbines, new storage cells and
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electricity storage systems, fuel cells, and waste heat collection
systems.
Huusehold sector
Energy-saving home appliances and housing systems must
be developed.
(3) Transportation sector
Engines must be made more efficient to reduce fuel con-
sumption.
On the otlier hand, for technology for oil, the following
will be essential: '
a) Surveying tecluology for under severe environmental
conditions such as deep seas and iced polar areas.
b) Technology for secondary and third collection.
c�) Technology for increasing safety in off conglomerates
and reserving oil.
d) T"echnology for treating heavy gas oil.
In general, energy technology involves investigation of
large�scale systems, taking long years and large sums of capital
and risk for development. Thus, a system relying on non-
governmental efforts is insufficient for the development of
energy technology. [ndustry, academic circles and the govern-
ment must cooperate under strong leadership of the government
in such development from basic to applied research, and in
making achievements practical. Governmental roles in capital
and the courdination of research, primarily through compre-
hensive new energy development organization which started
in October, 1980, must be drastically extended. Again, it is
necessary to complete systems for putting achievements to
practical use.
In additiun, where acliievements mny possibly disperse
before commercialization, after success in technological
development, it is necessary to make it a point to retain supply
facilities and keep them in operation even at some cost. This
can be considered to be the reserving of technology.
< Quulitative Improvement of Life and Enrichment of Com-
- munities >
There are many oroblems in technological development to
mert a variety of needs by the public who desire qualitative
- impruvemen ts.
First, it is required to develop products having new and
complex functions and Iiigh performanue, and designs with
increased safety and endurance. Furthermore, considerate
- care aiid qualitative improvements are desired in distribution
anti rhe supply of other services.
Sccundly, it is likely that there will be increasing social
needs in respect of huusing, cities, transportation, medicine,
welt'are and educatiun. To meet these needs, it is necessary
to develop and promote the following:
(I) Layer modules to make effective use of land and develop
yuality dwellings by making effective use of natural energy.
New transportatiun systems such as linear motor cars,
trat'fic cuntrol systems and piggy�back systems.
(3) Social systems for daily life including medical data
systems and life video data systems.
(4) Medical apparatus such, as artificial organs and instru-
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ments for examination, and welfure apparatus such as thuse
fur handicapped pcrsuns.
Thirdly, strenuous efforts are also required to develop
technology for environmental preservation, safety and hazard
prevention for improving life environment. Thus, the following
must be developed:
(1) Technology for utilizing reclaimed sewage and drainage
to meet pressing demands for water.
(2) Tectinology for safety and hazard prevention including
predictiun of earthquakes and wide�range protection against
calamities.
(3) Technology for preserving the environment newly re-
quired in consequence of changing energy source types
including technology for treating smoke and ash produced by
direct combustion of coal, technulogy for treating heavy gas
uil, and technology for treating drainage produced by processing
biumass.
Fuurthly, in order tu improve the gruwth of local economies
and as well as balanced natiunwide use of land, it is important
tu develup cummunity technology for local energy systems
and resources recycling systems in addition to conventional
large�scale centralized technology. This can be the nucteus
of Iocal industry, prumuting efficisnt use of resources and
meeting needs of residents fur employment and the living
environment in local areas. Here, local governments are expected
to play the role of developers of technology, not simply the
users, by improving public experiment and research agencies,
and Iielping establish links between naiional experiment and
research agencies, universities and local industry.
< Technological Development for Inteneifying Creative Know-
ledge in Industry >
The intensificatiun of knowledge in industry is supported
by technological development. In order to exercise creativity,
raising the level of existing industrios and to exploit new
industrial tields, continued effurts should be made to develop
lechnology.
tn tie 1980's, main cuurses will be the following two:
( I) Teclinology Fur Forming Systems and [ncorporating
Software
Although industrial technolugy in Japan has matured to a
liigh level in many fields, there are trends towards increasing
impurtance of technulogy for forming systems provided with
new functiuns by combining component units and processes
and techn:)lugy for incorporating suftware, including techniques
fur application, design and services, in liardware.
For technulugy for forming systems, it is required, where
pruductian activitits have become huge as we see them today,
tu recugnize the whule as a large system and give consideration
to its efficiency in addition to the efficieneies of individual
processes. Tlie emergence of new systems produced by links
brtween difCerent industries is very likely to induce striking
increases in efficiency, new pruducts and new services.
Teclinolugy fur incorporating software is represented by
making machines and processes intelligent by incorporating
microcomputers in them. The emergence of VLSI elements
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makes it casier to use microcomputers by reducing costs and
tlie size uf equipment. Tlie application of microcomputers
in production processes, together with advances in sensor
technology, will make industrial robots intelligent, enablinR
unmanned plants to be realized. This will make possible (1)
multiline small-lot production, (2) energy and resources saving,
(3) uniformiry of quality, (4) improvement of the labor
environment. Again, application of equipment will enable
functions to become versatlle and advanced.
Software and systems technology wiL conceivably develop
not independently but interdependently or with making up
for each other's disadvantages.
(2) Technology Based on New Scientific Knowledge
It is necessary to develop the following:
a) New materials, such as amorphous materials, optical
fibers, new ceramics, highly functional cesins, composite
matecials and ultimate materials.
b) Laser-applied technology.
c) VLSI elements and sensors.
d) Advanced software, including pattern recognition and
artifcial intelligence.
These will bring new industrial fields into existence in the
1980's, while representing common basic techniques for raising
the quality and performance of products and the quality of
production processes.
< Attempt at New Technological Innovations for Coming
Generadona >
It takes much lead time for new scientific knowledge to
be fully adopted in industry and society. This requires repeated
efforts to search, cultivate and industtialize all technological
~ � seeds. The 1980's, in particutar, will be an important period
for preparations for innovative technological improvoments
which are expected to emerge in and after the 1990's.
Seeds uf technological innovations currently presumed for
the coming generations include the following:
(1) Life Science
It will give limitless dreams to the development of economy
and society to apply life phenomena in medical, chemical,
and dietary analyses while explaining and giving appropriate
and careful consisderation to them.
a) The Jiscovery of chemical reactions in live systems and
the advanced use of enzymes will permit the synthesis of.
highly functional materials and chemical processes at normal
room temperature and pressure.
b) The establishment of technology for manipulating genes
will bring about epochal development in medical, dietary and
ehemical fields by curing genic diseases, increasing the produc-
tion of food by plant breeding, using biomass and micro-
- organisms in fine chemistry.
c) For interferon, considered hopeful as a specific drug
fur cancer, commercial production is expected in the mid
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1980's. Again, if the generation mechanism of cancer is
explained at the molecular-biological level, great progress in
cancer therapy will result.
d) The application of photosynthetic functions after explain-
ing them will enable the production of foodstuffs to be
increased.
e) The use of sensory organs of biological entities will
develop advanced sensors.
(2) Energy
There is much expectation for nuclear fusion as the in-
exhaustible energy supply of the 21st century, along with
solar energy, which is coming into practical use. Nuclear
fusion which produces about IOO,OOOkWh of energy from
denterium which is contained in seawater at a ratio of about
one g per 251 of seawater will be Japan's most hopeful resort
for che supply of energy.
(3) Information Frocessing
Josephson elements which make use of the phenomena
of electrons under cryogenic conditions exceed current LSI
elements by a factor of some decades in operational speed
and by a factor of a 1000 in power consumption economy.
A Josephson element, a little more than lOcro square, is
expected to provide the same functiuns as those of a current
large computer. Again, artificial intelligence can be further
developed by developing information processing systems in
which memories and sensory systems in live entities are applied.
(4) Space and Marine Development
[t is expected that efforts will be made at technological
innovations in various fields including the supply and trans-
mission of energy, making use of outer space, space plants,
the development of resources such as manganese nodules in
deep sea bottoms, and the production of food by making use
of the seas.
Section 4. Fields of Technological Development under
Governmental Leadership

Technology for social systems here means not to deal with
systems for producing goods but to supply quality social
services by developing individual units and utilizing techniques
for infocmation processing and communication. Here, technol-
ogy often involves cases which require not only simple
technological means but also changes in social systems and
customs.
For instance, in developing medical information systems,
it is necessary to shift from examination and treatment systems
in individual hospitals, to systems for prevention, examination
and treatment in communities. Also, in propagatinR traffic
control rystems, it will be necessary to revise traffic regulations
and change various rules. For social systems relating to develop-
ment of urban areas, it is essential to position them appro�
priately in local developments. Many of these systems assume
the character of being public assets for which it is difficult
to seek proFits and determina prices.
For :hese reasons, technology for social systems is in the
fields for which development incentives of private enterprises
can hazdly be provided, and the government or the third
sector should take the lead in development and propagation.
Here, it is essential to provide coUaboration and close affiliation
betwecn government ministries in pazticular and further
between local governments, and this will enable technology to
be established smoothly.
Technology for social systems is closely concerned with
society, life and humanity. In order to elevate its social
acceptance, it will be important to make additional use of
knowledge in the social sciences and humanities.
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SCIENCE AND 'PECHNOLOGY
HIGHLY
SENSITIVE
PHOTOSENSITIVE
RESIN DEVELOPMENT APPLAUDED
Tokyo
TECHNOCRAT
in English Vol
14 No 8, Aug 81 pp 40-41
[Text ] Those industries making extensive use of IC's, LSI's and
other eiectronic technology are thriving at present: This has
been made possible by development of high-resolution and
highly sensitive photosensitive materials that make it possible
for ISI's incorporating tens of thousands of elements to be
quickly printed on a substrate only Smm square. But realizatiun
of photosensitive materials with higher resolution and sensitivity
is in demand, s:nce development of a super ISI integrating a
million elements on a substrate of the same size is the immediate
TE
target.
To meet this demand, the Resea:ch Institute for Polymers
actd Textiles of the Industrial Science and Tcchnology Agency
has started a project to develop a"higtily sensitive polymer
material of the screen image type (photosensitive resin)" and,
at the same time, has started similar study using an argon laser,
etc. and study to develop a suitable photosensitive material
for holograms, also using an argon laser.
The object is to develop by 1985 a highly sensitive
photosensitive photo-resist matetial fur printing, with a sensi-
tivity 10 times greater than previous levels, and a photosensitive
material for copying and photography that is more than five
times as sensitive as those presently available.
When realization of these photosensitive materials is made
pussible by these studies, the printing of hundreds of thousands
uf elemrnts. un a single substrate through the appearance of a
photosensitive material seasitive to a laser of 1 mJ/cm= (ASA
approx. 1I100) will no longer be a dream, and remarkably
enough, great advances of not only electronic technology but
also information processing will become possible.
This article summarizes recent achievements in development
uf highly sensitive photosensitive resins.
1. What Are P'hotosensitive Materials?
Photosensitive materials are materials that react chemically
when they receive light. In this category, there are, for example,
silver halides for photographic fiim and cinnamic acid for
photoseny;five resin.
Industrially, the photo resist for ISI manufacture hyperfine
processing, and the phuto resist, used for such purposes as
78
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for printing and platemaking represent present efforts to
produce ISI patterns for semiconductors by applying the
photosensitive resin to semiconductor material, exposing the
LSI circuit pattern to light, then dissolving the portion not
exposed to light by a chemical solution, and finally removing
the resin from the surface of the semiconductor. These resins
are now indispensable to CSI manufacture because they are
inexpensive and easy to handle.
2. To Increase Resolution
However, if the resolution of a photosensitive resin is to be
increased in an attempt to project a fine I.SI pattern, the
resin's sensitivity to light inversely becomes less.
A photosensitive resin with a resolution of l�m to O.S�m,
sufficient to cause light diffraction, has already been manufac-
ttired tentatively and at present this degree of resolution
seems to be the limit. Some resins used in mass production
have a resolving power of 2- 2.5�m. A super LSI with 64K bits
can be developed using a photosensitive resin at this level.
Under these circumstances, it is the sensitivity that is the
problem. Different reseitrch organizations are now studying
to develop materials that will enable an image the size of a
newspaper page to be projected in two minutes by merely
applying energy of ! mJ/cm1 to a photosensitive resin. Also,
attempts are being made to increase the photosensitive base
of resins by adding suitable sensitizers because of poor
sensitivity to light.
The development of highly sensitive photosensitive materials
is, indeed, important enabling resins meeting these requirements
to be produced.
3. New Photosensitive Materials and Their Capacities
Present research and development are concerned with the
fotlowing:
(1) Development af a photosensitive material that has a
photosensitive capacity 10 times greater than previous
levels without using a sensitizer
This is an effort to develop a highly sensitive resin free from
reduction of se::sitivity and resolution below their theoretical
values, which is the case of cenventional photosensitive resins,
which often show abnocmal reactions to light (including the
combination of photosensitive bases).
The method employed consists of taking advantage of
paraisopropyl cinnamic acid which releases electrons when the
photosensitive material receives light, and paracyano cinnamic
acid which absurbs electrons when the photosensitive material
receives light.
In a photosensitive resin produced by combining these
photosensitive materials separately with polyvinyl and mixing
them together, paraisopropyl cinnamic acid releasing electrons
and paracyano cinnamic acid absorbing electrons combine as
soon as the rosin receives light.
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Since these acids naturally attract each other as positive
and regative, the resin shows satisfactory sensitizing effects and
selectivity, and in the Fast studies, the sensitivity has reportedly
been increased nearly fivt. times.
The sensitivity further increases through the addition of a
sensitizer. The Research Institute is trying to develop photo-
sensitive material with a sensitivity 10 times greater than
previous level and also by changing the combination of
photosensitive base materials.
A : -(CHZCHI-
OCOCH-CHOCH
O : -aCH2CH)-
OCOCH_CH CH~
I O /CH3
CH3
>
i
.a
c
~
0
~
m
0
Q
7C
0
0.6
(!L/q�p)
Mixinp ratlo (sentltim: 5�nitroseonephtheno)
Fig. 1. Effect of Mixing on Relative Sensitivity
(2) Development of photosensitive material using the polymer
effect
This effort is aimed to develop photosensitive material that
has a low photosensitive base density and high sensitivity. More
specifically, the purpose is to develop a copying and photo-
graphic sensitive material with a sensitivity greater than five
times the present level of similar materials now on sale.
Already, a photosensitive material with a styrile pyridium
group and another with a styrile quinolium group have been
developed. These photosensitive materials have excellent
characteristics of being sensitive to 'light, with long waves of
up to 460nm for styrile pyridium and up to 520nm for styrile
quinolium.
It has reportedly been confirmed that photosensitive resins
made of these materials and polyvinyl alcohol are 10 times
more sensitive than conventional resins of polyvinyl alcohol
and ammonium dichromate. Furthermore, only a mol percent
is sufficient for either photosensitive materi�'. These are
attracting attention as the latest materials available.
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The Research Institute wants to develop film for survey
drawings, design drawings and display by clarifying the mechan-
ism by which photosensitive resins react.
It is also studying an argon laser phc:;,:,ensitive material
and has already developed a styrile quinolium group sensitive
to argon laser with wavelength of 488nm, produced by
combining a resin with polyvinyl alcohol and has conficmed
that the resin is photosensitive even at the low energy of
l OmJ/cmz . It is said to have also confirmed that a material
sensitive to low energy of just a few millijoules can be
developed if a different resin is used in combination with the
photosensitive material. This photosensitive material equals
silver which, at present, is considered best as a photosensitive
material.
The target of the research project is to develop a photo-
sensitive resin with a sensitivity of 1 mJ/cm2.
When this research is completed, it will be possible to print
100,000-1,000,000 elements on a semicoaductor 5^-7mm
square using low energy and instantaneously, and the appear-
ance uf the super LSI seems near at hand.
Much is expected of it also as a material useful for the
information society since its function as a material for informa-
tion processing including printing will improve. Indeed, the
public is looking forward to the outconle these research
projects.
COPYRIGHT: 1981 Fuji Marketing Research Co., L,.d.
CSO: 4120/105

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SCIENCE AND TECHNOLOGY
COMPREHENSIVE WASTE HEAT USE.SYSTEM COMPLETED
Tokyo TECHNOCRAT in English Vol 14 No 8, Aug 81 pp 41-43
[ Text ] A comprehensive "waste heat use system" has been complet-
ed under the "Moonlight Plarz", and R&D project to find tech-
niques for large-scale energy conservation that has been promot-
ed by the Agency of Industrial Science and Technology,
Ministry of Internationll Trade and Industry. This is a practical
system developed as the result of a six-year V3 billion project
with participation of 10 manufacture*s in efforts to conserve
energy by recovering and using by the best methods, large
amounts of waste heat discharged from thermal power plants,
steelwarks and other factories. Since this is the last fiscal year
of this project, the Agency is planning to consolidate research
results by constructing a single system using a steelworks
with an annual crude steel production of 8 million tons as the
model. A survey and calculation of costs the effect of (energy
conservation, etc., will be made, and on this basis, they hope to
pave the way for full�scale use of the new system. Much is
expected of its far-reaching effects, since the development of
energy conservation techniques is even more important to
Japanese industry than the development of new energy sources.
lapan's energy consumption is said to amount to about 400
million kl annually in terms of petroleum products. But about
5017o of this is discharged into the air, rivers and sea as waste
heat. [f even 10% of this waste heat can be recovered and used
effectively, the nation can save energy amounting to about 20
milliei kl of oll annually. Particulazly, since the mining and
manufacturing industries reportedly account for 60%of Japanese
energy consumption, efficient recovery and effective use of this
waste heat is paramount to the nation's energy conservation
measures.
Under these circumstances, the Agency of Industrial Science
and Technology stacted research and development on a com-
prehsnsive "waste heat use system" from FY 1976 as squasi-
giant project, and with the start of the Moonlight Plan, stepped
up research efforts to make the system practical.
A waste heat use system consists genorally of developing,
basic techniques for (1) heat recovery and exchange, and (2)
heat transport and storage. As techniques for heat recoyery and
exchange, (1) techniques to recover heat by comprossive heat
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_ pumps, (2) techniques to recover heat by absorptive heat pumps,
(3) techniques to recover heat from solid materials, i.e., of
coke by dry quenching using an inert gas, (4) techniques to
generate high-pressure gas from waste heat, (5) a technique to
use a small high-efficiency rotary heat exchanger, and (6) a
technique of using a moving�bed type heat exchanger using non�
- corrosive heat pipes have been developed and are already in a
stage of actual use. In parallel with these techniques, the
development of a large low�temperature h eat pipe to recover
low-temperature discharged heat 30-60 C, a heat exchanger
for high-temperature gas, an automaac circulating heat recover-
ing unit for industrial fumaces, and a direct contact heat ex-
changer have been undertaken by the Government Mechanical
Engineering Laboratory, the Natioral Research Institute for
Pollution and Resources, and the National Chemical Research
' Laboratory for Industry.
- As for heat transport and heat storage, techniques for hot
water transport by thermosiphon and heat transport by chemi-
cal energy may well become'practical.
The following are the technical achievements accomplished
under this research project: First, there is the "waste heat re-
covering high-temperature heat pump system" has been pro-
duced on a commercial basis as a method for compressive heat
pump heat recovery. it can recover heat from waste hot water
of relatively low temperature 30-60�C and efficiently generate
high-temperature water 100-160�C. Whereas, by using a con-
ventional heat pump, hot water only 50-60�C, at the most, can
~ be . obtained, As the new system produces hot water two to
three times this, it can be us;d not only for local heating as at
present but also for regional heating and heat used by nearby
industries.
The method of heat recovery using an absorptive heat pump
is that, though it also uses low-temperature waste hot water
30-60�C, high-temperature hot water 70-90�C and cooling
water (7- -10�C) are freely obtained by using lithium bromide
~ at normal air pressure. T'his technique is most suitable for
factories and regional air-conditioning.
~ For rocovering heat from solid materials, such as coke, a
j rotary system to recover the heat of redhot coke, 900-
! 1,O00�C produced in making coke, adopts drq quenching using
~ nitrogen gas. Conventionally, the heat from redhot coke is
i released into the air by dousing with water. Use of the new
' system not only makes effective use of the heat possible but
also contributes to preventing pollution by eliminating dust.
It is designed to move redhot coke from a hopper to a closed
rotary plate (cooler grate) as the coke leaves the coke oven,
and thus obtain cooled coke, by using nitrogen gas as the
cooling medium to recover the heat, 7500C. The recovered heat
is conveRed by a waste heat boiler into steam; 180�C, pressure
I Okg/cm'
The moving�bed heat exchanger is a system to remove waste
and corrosive gases and dust from a steelworks converter and,
st the same time, recover heat by combining a moving�bed
dust collector and a heat axchanger. Since a lieat exchanRer uf
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this type, that combines dust coUecting and heat storing func-
tions, never previously existed, much is expected of it as a
method for use in steelworks and cement mills.
As for results of research on methods to generate high-
pressure gas using waste heat, an "oil-Freon-electric generating
system has been developed. It recovers waste heat at fust
by oil, an intermediate heat medium, and then uses this heat to
evaporate Freon, the turbine medium, and to generate electri-
city by a turbine generator. It is estimated that, if waste gas in a
cement mill's clinker cooler is used, 480,00ONm3 of waste gas
at 2500Cgemerates 3000kW,enabling 19.3 million kWh annual-
ly to be recovered, which is equivalent to 5,300k1 of oil annual-
ly.
[n the development of rotary heat exchangers, a"rotary heat
pipe heat exchanger" has been completed with the object of
recoverini heat from medium- and low-temperature waste gas
150^-300 C and generating hot air or steam for combustion
puposes. [t is a small heat exchanger capable of efficiently re-
covering heat from medium- and low-temperature dirty waste
gas, which previously has been impossible to use. It involves
rotating a number of noncorrosive heat pipes attached to a
parting strip in the form of a drum. [t is claimed that, in a
plant test, 2t/h of 130�C steam was obtained from 100,000 Nm'
of coke uven waste gas at 200�C.
ApaR from those heat recovery and exchange techniques,
the development of inethods to transport or store heat that has
beEn recovered have been conducted under the same project.
As a thermosiphon heat transport system, an energy-saving
unii to move hot water without using a mechanical pump or
other form of power has been developed for actual use. The
p:inciple is to use a thermosiphon that can cause a two-phase
flow of gas and liquid by using part of the waste heat 120-
400�C, and its merit consists in being able to move large
amounts of heat in the form of hot water. In this research, a
thermosiphon test plant with a riser 15cm in diamater znd
more than 20m high, and a pilot plant comprising a 300-m
circulating loop were completed; much test data were gained
from this experiment, though when the flow decreased sorne-
what, the amount of available heat decreased accordingly, but
the result showed that the system is quite,practical.
Fifty-four Japanese patents and utility models and three
overseas patents have been applied for in connection with the
development of the various waste heat use systems. Many of
these techniques have been made practical by combining not
only maicrilal techniques but also most up-to-date techniques,
Now thar development of all the basic techniques concerning
the project has been completed, the Agency of [ndustrial
Science and Technology, as mentioned earlier, is planning to
design a single system composed of all these elementary tech-
niques using a steelworks with an annual crude steel pro�
duction ot' 8 million tons as the model, and use this system to
cuntinue further research on actual energy conservation effects
and to check costing oi' the techniques. The whole project will
be completed by the end of the current tiscal year.
COPYRIGHT: 1981 Fuji Marketing Research Co., Ltd.
CSO: 4120/105
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SCIENCE AND TECHNOLOGY
TOSHIBA COMPLETES FULLY AUTOMATED PRODUCTION OF IC'S
Tokyo TECHNOCRAT in English Vol 14 No 8, Aug 81 pp 47-48
[Text] Toshiba Corp., at its Kitakyushu plant, has completed a
fully automated fabrication system under computer controi for
bipolar integrated circuits, and the system is now in full opera-
tion. This is a 3�stage control system with a TOSBAC 7/40
cumputer at its core, under which, three minicomputers and
74 our microcomputers are interconnected. All preprocessing,
such as lithography, diffusion, ion injection, and CVD, is con-
troiled based on through control information.
Toshiba has decided to introduce automated production of
bipolar IC's eariler than for MOS IC's, because of greater
; benefits. Toshiba is said to have spent five years and V3 billion
for development.
Three points have greatly contributed to system develop-
ment as follows:
; (1) There were so many control elements that a thorough
investigation was necessary to allow a test pattern on a wafer to
be read accurately.
(2) Interface to freely connect each unit was newly developed.
I~ . (3) An ontine monitor to measure film thickness was de-
veloped.
The system has brought about the following effects:
(t) Production losses between lots have been reduced to
half by process control of each production process under an
optimum condition while providing feedback controi status of
i any other process stage.
- (2) Time lost between processes has been reduced and overall
pruduction time has been shortened.
(3) Quatity variations and operational errors caused by human
' factors have been eliminated.
(4) Qperation with human intervention has been reduced and
the degree of cleanliness overall has been vastly unproved.
(5) Centr:!lized monitoring of production prucesses has im-
proved operational efficiency uf facilities and f7exibility in
production planning.
These effects have improved production yields 10 to 15
percent bet::r than previously and production time has been
reduced by 20 to 40 percent. ~[n addition, only three persons are
- required in the photo resist process, one�third of that previously.
Productiun has doubled in volume over the previous year with
- the same staff. Configuration of the entire system is as shown
85
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in Fig.l and the total line is managed centrally. For example,
a CRT terminal is placed at each group of devices such as dif-
fusion, lithography, ion injection, and etching.
Control for each process is as indicated in Fig.2, and con-
ditions in the previous process are taken into consi3eration in
the next staqe to obtain optimum accuracy.
The new lines can keap yields of current amplification, a
factor that is a problem for bipolar integrated circuits, within
the range of two for a given value, against three or four
previously.
At present, 60 percent of the Kitakyushu plant has been
automated and in future Toshiba intends to apply the new
system to the remaining lines. It also intends to include the
system in the new lines for super LS[ MOS that were completed
at its Oita plant.
C-)
J
Produet fite.:
process file.
"
Csntral computer
1__~
TOSBAC 7/40
Dlsk
(main rnamory
t340M bytes)
,12k bytot)
MT
~.~�i ~ ,
Printer 0 Inteprotion of proceft date
TAPE � Cornetive eeleulstion of process dats
TTY � Annlyfif of process data
Card reader � Monitorinp of operatlon ststus
� Alarm display
CRT
Cq1
Block eontroller I
Imieroeomputer/ ~
minieomouterl TTY
Mleroproc*swrl I tylicroprocesior
iuctlon I I produttion
unit unlt
Level 2
Imprs
�
Baekup for contral computer at downtime
diffuslon/
�
Control parameter monitorinp
evaporatlon
�
Alarm syrtem
LP�CUD
Level3 ~
Etehlnp
meuurinp
�
Sequenee control
unit
�
proehs eontrol
�
Alarm displsy
Fig. 1. Toshiba's Automated Production of IC's

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Shape
Protosf nsm� outlin�
Thin film
formation
V
aN,a co+:ino
V
Fluor
~
pw6lopi~p
V
Etchinp
3
0000 fflm
formation
V
I Diffu~ion
V
FOR OFFICIAL USE ON1.'!
Control of
produetion
Produetion
Food forward
Fsedb
aek
fsellities
facilities
CVD
Temporsture,
Film
diffusion
I time, 1
C>
thicknoss
lurnaee
tlow rste
 /
Numb ri of
Coater
rotatiom,
C:>
~
temperature
T
Int~nsiY of
F
-
P
7
0
-U
r4
Ollpner
iiluminstion,

o
,
U
M
\ time /
f
~
P
OweloPer
T~mre'
~
~tt~r
dimensfon
time
Temperature,
Etcher
I tlme, I
~
Pattern
}low nte,
dim~Mlon
\ ete.`
Tompdntun,
~mpurity
Fllm
CVD
I time� 1
*
tImporatur�
thicknnf
flow nte,
~ ae. /
1~
Temperature,
Diffusion
/ time. \
~
furnae�
}low rat�
Chanp* of prOeessin0
~ ote.`
eOnditlonf for
Produet
the next ttape
eharaet~rl~tlc
cheek
Chanpe of standard
procefslnQ cOndidonf
Fig. 2. Process Control Conceptual Diagram
COPYRIGHT: 1981 Fu,ji Marketing ResLarch Co., Ltd.
CSO: 4120/105
87
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SCIENCE AND TECHNOLOGY
MECHANICAL ENGINEERING LAB DEVELOPS TRANSFER ROBOT
Tokyo TECHNOCRAT in English Vol 14 No 8, Aug 81 pp 50-52
[Text ] The Mechanical Engineering Laboratory, Agency of lndustrial
Science and Technology, has developed a robot that travels
along a path by following three kinds of instructions, of posture
angle, position and judgment, from marks corresponding to
traffic signs posted intermittently along the route.
At present, conveyance of goods in a manufacturing plant
is mostly done by belt conveyors. A belt conveyor is best
suited for conveying large quantities of goods continuously but
it suits only an exclusive route, thus making it impossible to
make best use of floor space. With the system; usually the
the path cannot be easily changfa,
The transter robot was develnped with a view to making
better use of floo~ s},ace as well as providing for changes of
route. The following i-, a,1 outline of the robot.
To givP the transter robot running functions; such as to
proceed straight ahead on a straight path, make a left or right
turn, or to proceed straight ahead an intersection, make a stop
at a designated point - functions which are required for the
robot to travel along a predetermined path, 16 kinds of symbols
each corresponding to a traffic sign, are used. These marks
have varying features, and they are roughly classified according
to the size of their surface areas. Mark 1 and Mark 92' have an
identical area ratio of 4. To teli the difference between the
two marks, shown in Fig.l, the different values of the specific
shapes calculated from Formula (1), are given by three features
- the extent of maximum width AX in X d'uection, maximum
height Ay in Y direction and area A. - in the projection
drawing drawn by a projection incident on the base line, are
veritied for judgment.
S= AO (0S.Started to extend the CAPTAIN service, Character and Pattern Information Net-
work. It intends to include access to external online network services, such
as referring bank accounting positions and making seat reservations for air-
planes and trains. [Text] [Tokyo TECHNOCRAT in English Vol 14 No 9, Sep 81
p 721 [COPYRIGHT: 1981 Fuji Marketing Research Co., Ltd.]
'ORBIT-1.' PROGRAM DEVELOPED--Kokusai Denshin Denwa Co., Ltd. (KDD) has recently
developed a program "ORBIT-1," which optimizes the orbit positions of a number
of stationary satellites. They have offered it to the International Telecom-
munication Union (ITU). "ORBIT-1" is a program which enables optimizing the
positions of several hundred satellites by adopting an optimization method
known as nonlinear programming and a method of "determining the optimal posi-
tions of satellites in launching order" referred to as evolutional modelling.
It is also provided with such function as to indicate the orbit position of a
satellite, when launching the new one, that minimizes the mutual interference
between satellites and makes more efficient use of orbits. That is to say, it
gives such satellite position that the sum of the orbit lengths of all satel-
lites is minimized within a certain range of a standard value of total inter-
ference between each satellite, thereby providing the maximum margin for future
demands. KDD says that the program, using the 6/4 GHz frequency band, can cope
sufficiently with the situation in ten years time when about 200 satellites
may bE orbiting. [Text] [Tokyo TECHNOCRAT in English Vol 14 No 9, Sep 81 p 721
- [COPYRIGHT: 1981 Fuji Marketing Research Co., Ltd.]
CSO: 4120/103
END
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