may 30, 2006 japan, moving toward a more advanced knowledge economy ho-chul lee
TRANSCRIPT
May 30, 2006
Japan, Moving Toward a More Japan, Moving Toward a More Advanced Knowledge Advanced Knowledge
EconomyEconomy
Ho-Chul Lee
May 30, 2006
Why Japan Study?Why Japan Study?
Japanese economy has shown ‘resilience.’
Ex: oil crises, yen shocks Japan has many leading companies. Ex: Toyota The strong industries coexist with
weak industries. The Japanese experiences offers
many useful insights.
May 30, 2006
Lessons and ImplicationsLessons and Implications
Economic and Institutional Regime Ex: Better supervision of the
financial sector, corporation governance, transparency, flexible labor market, open economy…
Telecommunications Infrastructure Skills and Human Resources National Innovation System
May 30, 2006
Evaluation of Japan’s Evaluation of Japan’s EconomyEconomy
The evaluations of J-type firm model are capricious.
from the best practice to a forgotten model
The evaluations of Japan’s economy shifted from ‘rising sun’ to ‘a lost decade.’
May 30, 2006
Q1. How to explain Japan’s ups Q1. How to explain Japan’s ups and downs consistently?and downs consistently?
Japan was “a victim of its own success.”
To Korea, “shock of the East Asian crises in 1997” was a blessing.
The Japan’s systems worked well at an earlier stage of development but were ill-suited to cope with changes of knowledge economy.
The J-type model is shop-floor-based knowledge but the Silicon Valley model is a open-standards approach.
May 30, 2006
What’s Knowledge EconomyWhat’s Knowledge Economy
Economic paradigm has been shifted to ‘knowledge economy,’
- due to globalization, IT, capital market. New economy differs from the
traditional economy. - The economics is not of scarcity, but
rather of abundance. - Pricing and value depends heavily on
ideas.
May 30, 2006
Manufacturing E. vs. Knowledge Manufacturing E. vs. Knowledge E.E.
4 Pillars framework
Manufacturing Economy
Knowledge Economy
Institutional regime
Lifetime employmentSeniority-based salary
Reward system based on performancetransparency
SOC(Information infrastructure)
Highway, harbor Information infrastructure
Education Large number of well-disciplined labor
Small number of the elite armed with creativity
Innovation system
Buying patentsR&D budget
Silicon Valley style open model
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Dynamic Development ModelDynamic Development Model
YangTraditional system
YinNew Trend
Principle of Progress: Yin & Yang Theory( 陰陽論 ) *West: Hegelian Dialectic
Yin(shaded) and Yang(sunny) are opposite but complementary,and continuously evolving.
Balance and Harmonization ApproachBy introducing new trend(Yin) and achieving new balancebetween Yin and Yang, society will develop.
May 30, 2006
Basic Conditions for Basic Conditions for ProgressProgress
Introduction of new ideas (Yin and Yang) - Openness and cultural tolerance
Leadership or Coordination system - Coordinated by nature (Taoism) - If impossible, then the government
intervenes. Strong, but small; leader with morals
(Zhong Yong)
Human-oriented approach - Well-educated people with morals
(Analects, Mencius)
May 30, 2006
Apply to Japan’s economyApply to Japan’s economy
1970’s-80’s 1990’s
openness Catching up Western technology
Japan that can say “No.”Low level of inward FDI
Coordination(Leadership)
Free marketStable government
Malfunctioned market unstable government
Education(Human capital)
Education boom Transition to education reform
Balance Creation of J type firm modelEconomic Miracle
Lost decade
May 30, 2006
Apply to Korea’s economyApply to Korea’s economy
Before the crisis After the crisis
openness K-style globalizationLow level of inward FDI
Introduction of global standardsRewards system
Coordination(Leadership)
Fail to reform billsTension of labor relation
IMF bailout program leadership of government
Education(Human capital)
Collapse of public education
Flexible labor marketEducating IT users
Balance Economic crisis in 1997
Achieve new balanceBroadband based K-type modelRapid recovery
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Q2. What’s Next? Q2. What’s Next?
Japan emerged from a lengthy stagnation.
Evolution to more advanced knowledge economy(Yang)
-Ubiquitous network societies New challenges(Yin) -Widening of income gap,
skyrocketing prices of raw materials, bursting of asset bubble
Can Japan create new model?