Table Of ContentSPRINGER BRIEFS IN ECONOMICS
DEVELOPMENT BANK OF JAPAN RESEARCH SERIES
Kozo Horiuchi
Masayuki Otaki
Dr. Osamu
Shimomura's
Legacy and the
Postwar Japanese
Economy
SpringerBriefs in Economics
Development Bank of Japan Research Series
Series Editor
Akiyoshi Horiuchi
Editorial Board Members
Shinji Hatta
Kazumi Asako
Toshihiro Ihori
Eiji Ogawa
Masayuki Otaki
Masaharu Hanazaki
Masaaki Komiya
Hideo Oishi
Jun-ichi Nakamura
Kenji Tanaka
Thisseriesischaracterizedbythecloseacademiccohesionoffinancialeconomics,
environmental economics, and accounting, which are the three major fields of
researchoftheResearchInstituteofCapitalFormation(RICF)attheDevelopment
Bank of Japan (DBJ). Readers can acquaint themselves with how a financial
intermediary efficiently restructuring firms in financial distress, can contribute to
economic development.
Theaforementionedthreeresearchfieldsarecloselyconnectedwithoneanother
in the following ways. DBJ has already developed several corporation-rating
methods,includingtheenvironmentalratingbywhichDBJdecideswhetherornot
tomakeconcessionstothecandidatefirm.Toevaluatetherelevanceofthisrating,
research, which deploys not only financial economics but also environmental
economics, is necessary.
The accounting section intensively studies the structure of IFRS and Integrated
Reporting to predict their effects on Japanese corporate governance. Although the
disciplineofaccountingisusuallyisolatedfromfinancialeconomics,structuraland
reliablepredictionisneverachievedwithoutsufficientandintegratedknowledgein
both fields.
Finally,theenvironmentaleconomicssectionislinkedtotheaccountingsection
in the following manner. To establish green accounting (environmental account-
ing), it is indispensable to explore what the crucial factors for the preservation of
environment(e.g.emissioncontrol)are.RICFiswell-equippedtoaddresstheacute
necessityfordiscourseamongresearcherswhobelongtothesethreedifferentfields.
More information about this series at http://www.springer.com/series/13542
Kozo Horiuchi Masayuki Otaki
(cid:129)
’
Dr. Osamu Shimomura s
Legacy and the Postwar
Japanese Economy
123
Kozo Horiuchi Masayuki Otaki
HoseiUniversity Institute of Social Science
Tokyo TheUniversity of Tokyo
Japan Tokyo
Japan
and
and
Research Institute of Capital Formation
Development Bankof Japan Research Institute of Capital Formation
Tokyo Development Bankof Japan
Japan Tokyo
Japan
ISSN 2191-5504 ISSN 2191-5512 (electronic)
SpringerBriefs inEconomics
ISSN 2367-0967 ISSN 2367-0975 (electronic)
Development Bankof JapanResearch Series
ISBN978-981-10-5761-8 ISBN978-981-10-5762-5 (eBook)
DOI 10.1007/978-981-10-5762-5
LibraryofCongressControlNumber:2017946947
©DevelopmentBankofJapan2017
Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar
methodologynowknownorhereafterdeveloped.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfrom
therelevantprotectivelawsandregulationsandthereforefreeforgeneraluse.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontainedhereinor
for any errors or omissions that may have been made. The publisher remains neutral with regard to
jurisdictionalclaimsinpublishedmapsandinstitutionalaffiliations.
Printedonacid-freepaper
ThisSpringerimprintispublishedbySpringerNature
TheregisteredcompanyisSpringerNatureSingaporePteLtd.
Theregisteredcompanyaddressis:152BeachRoad,#21-01/04GatewayEast,Singapore189721,Singapore
IN MEMORIAM
Osamu Shimomura, 1910–1989
A Leading Economist: His Theory, Insight,
and Determination
Contents
1 Introduction.... .... .... ..... .... .... .... .... .... ..... .... 1
1.1 Economics of Shimomura: Shimomura Theory,
High Growth, and Zero Growth.. .... .... .... .... ..... .... 3
1.2 Career of Dr. Shimomura... .... .... .... .... .... ..... .... 4
References.. .... .... .... ..... .... .... .... .... .... ..... .... 7
Part I Vision, Theory, and Policy: High Growth and Zero
Growth
2 Postwar Reconstruction .. ..... .... .... .... .... .... ..... .... 11
2.1 Economic Situation During the Reconstruction Period. ..... .... 12
2.2 Policy for Controlling Inflation... .... .... .... .... ..... .... 13
2.3 From Reconstruction to High Growth.. .... .... .... ..... .... 16
2.4 Shimomura Theory... ..... .... .... .... .... .... ..... .... 17
2.5 Concluding Remarks . ..... .... .... .... .... .... ..... .... 18
References.. .... .... .... ..... .... .... .... .... .... ..... .... 19
3 Vision of High Growth and Performance in 1960s.. .... ..... .... 21
3.1 Shimomura’s Work and His Vision for the Japanese
Economy .. .... .... ..... .... .... .... .... .... ..... .... 21
3.1.1 Three Basic Factors for the Foundation of the Vision
of High Growth..... .... .... .... .... .... ..... .... 22
3.1.2 Growth Theory and Long-Term Forecast . .... ..... .... 24
3.1.3 Growth Controversy in 1959... .... .... .... ..... .... 27
3.1.4 New Vision of the Japanese Economy in 1961–1962. .... 30
3.2 Performance of the 1960s (1960–1970, 11 Years) .... ..... .... 32
3.2.1 Rate of Growth of the Japanese Economy .... ..... .... 33
3.2.2 Internal Equilibrium . .... .... .... .... .... ..... .... 33
vii
viii Contents
3.2.3 External Equilibrium. .... .... .... .... .... ..... .... 36
3.2.4 Industrial Policy .... .... .... .... .... .... ..... .... 37
3.3 Concluding Remarks . ..... .... .... .... .... .... ..... .... 38
References.. .... .... .... ..... .... .... .... .... .... ..... .... 40
4 Vision of Zero Growth and Performance After the Oil Crisis.. .... 43
4.1 Unrest in the World Economy ... .... .... .... .... ..... .... 43
4.2 Vision of Zero Growth..... .... .... .... .... .... ..... .... 45
4.3 Discipline.. .... .... ..... .... .... .... .... .... ..... .... 47
4.4 Performance After the Oil Crisis: 1971–1982.... .... ..... .... 52
4.5 Reaganomics: 1983–1985... .... .... .... .... .... ..... .... 54
4.6 Bubble Economy: 1986–1990.... .... .... .... .... ..... .... 60
4.7 Zero Growth in the First Half of the 1990s . .... .... ..... .... 62
4.8 Concluding Remarks . ..... .... .... .... .... .... ..... .... 64
References.. .... .... .... ..... .... .... .... .... .... ..... .... 65
Part II Implications of Zero Growth Vision: Lost Decades,
Sustainability, and Corporate Management
5 Current Zero Growth Era ..... .... .... .... .... .... ..... .... 69
5.1 Introduction .... .... ..... .... .... .... .... .... ..... .... 69
5.2 Effects of Globalization .... .... .... .... .... .... ..... .... 72
5.2.1 Labor Market Deregulation.... .... .... .... ..... .... 72
5.2.2 Surge in Foreign Direct Investment: Economic
Hollowing.... ..... .... .... .... .... .... ..... .... 73
5.3 Limit of Aggregate Demand Management Policy. .... ..... .... 76
5.3.1 Dissolved Organic Growth Mechanism: Inefficiency
in Management Is the Acute Cause of Stagnant
Growth .. .... ..... .... .... .... .... .... ..... .... 76
5.3.2 Aggregate Demand Management as Opium ... ..... .... 82
5.4 Our Theory and TFP Analysis: Reduction of Labor Force
and Economic Growth ..... .... .... .... .... .... ..... .... 85
5.5 Concluding Remarks . ..... .... .... .... .... .... ..... .... 86
References.. .... .... .... ..... .... .... .... .... .... ..... .... 88
6 Sustainability and Corporate Management.... .... .... ..... .... 91
6.1 Zero Growth and Sustainability .. .... .... .... .... ..... .... 91
6.1.1 New Problem . ..... .... .... .... .... .... ..... .... 91
6.1.2 Sustainability.. ..... .... .... .... .... .... ..... .... 92
6.1.3 Zero Growth and Stationary State... .... .... ..... .... 93
6.2 Vision of the Corporation... .... .... .... .... .... ..... .... 94
6.2.1 Environmental Management in Japan .... .... ..... .... 94
6.2.2 Corporate Management in Japan.... .... .... ..... .... 98
Contents ix
6.3 Corporate Social Responsibility and Stakeholders .... ..... .... 99
6.3.1 Three Basic Trends.. .... .... .... .... .... ..... .... 99
6.3.2 Fiduciary Obligations and Professional Ethics.. ..... .... 101
6.4 Visionary Companies and Sustainability.... .... .... ..... .... 102
6.5 Concluding Remarks . ..... .... .... .... .... .... ..... .... 104
References.. .... .... .... ..... .... .... .... .... .... ..... .... 105
7 Conclusion. .... .... .... ..... .... .... .... .... .... ..... .... 107
References.. .... .... .... ..... .... .... .... .... .... ..... .... 109
Index .... .... .... .... .... ..... .... .... .... .... .... ..... .... 111
About the Authors
Kozo Horiuchi is a professor emeritus, Hosei University, Tokyo, Japan. He
received his B.A. from the Department of Commerce, Hitotsubashi University in
1968. He then joined the Development Bank of Japan and received his M.A. from
the Graduate School of Johns Hopkins University in 1973. Returning from the
USA, he served as a research officer before becoming Chief Economist at the
Research Institute of Capital Formation, DBJ. He received his Doctor of Business
AdministrationfromHoseiin2008.WhileteachingatHosei,healsostudiedatthe
Beijer Institute, the Royal Swedish Academy of Sciences.
Masayuki Otaki is a professor of economics at the University of Tokyo Institute
of Social Science, and academic advisor at the Research Institute of Capital
Formation, Development Bank of Japan. His main areas of research are macroe-
conomic theory, environmental economics, educational economics, and economic
thought.Bornin1957,Prof.OtakireceivedaBachelor’sdegreeineconomicsfrom
the University of Tokyo in 1981 and a Ph.D. in economics from the University of
Tokyo in 1990. He was appointed professor of economics at the University of
Tokyo Institute of Social Science in 2001.
xi
