Japan’s success explained

Press, 17 February 1983, Page 6

Japan’s success explained

If New Zealanders could establish a better work ethic, they might be able to emulate the Japanese economic “success story.” said the manager of the Reserve Bank in Christchurch, Mr R. E. Wilton, yesterday. Mr Wilton was speaking at a luncheon organised by the Japan Centre of Christchurch. He said that the Japanese people were very conscious of the need to be self-reliant.

“They would rather produce something themselves if they can possibly do it.”

A combination of shrewd business sense and its "unparalleled” socio-economic stability had enabled Japan to take advantage of the post-war economic situation. It had also been helped by its economic protectionism. Mr Wilton, who has attended an international banking course in Japan, said that Westerners knew little about the Japanese financial sys-

tem. The system needed to be analysed and explained to Westerners.

Japan’s post-war growth started with the “extra-

ordinary propensity” that the Japanese had for saving. About 20 per cent of disposable income was saved, which was one of the highest saving rates in the world.

People mainly invested their money in banks and the money was available to business firms. Money “poured out” of banks to firms that had been targeted for development. The money was available for costly research and development, capital improvement, and quality control. Companies did not have to make short-term profits to attract shareholders.

“The Japanese system of finance is geared to get a decided edge in the scramble for world markets,” he said.

Japan had been criticised by overseas observers because of its closed and controlled financial structure. Some expected that it would have to change in response

to international pressures and this view was probably correct. “It would be difficult for Japan to forestall such pressures and to operate on the basis of past practices." said Mr Wilton. Significant changes were already taking place in the Japanese financial system. The experience of the world economic crisis of the 1970 s suggested that Japan could no longer enjoy the luxury of concentrating on its domestic growth. It had to contribute to the collective good as well. Asked why New Zealand did not adopt the successful Japanese financial system, Mr Wilton said the Japanese and Western systems were too different. “It would be such a tremendous change and it would be almost impossible for us to break away from the financial structures that we have developed.” he said.