Case Analysis

The rapid growth in East Asian economies was led by Japan who first made use
of industrial transfers and industrial optimization. From the mid-1950s to the 1960s,
Japan relied on second-mover advantage through introducing and mastering advanced
technologies from developed countries to transfer its industry from simplification and
low level to diversification and high level. It achieved the catch-up-and-surpass
development of ‘import-import-substitution-export’ and transformation from
low-value-added products to high-value-added ones. From the 1970s, with the
development of the Japanese economy and the establishment of a comparative
advantage, its economic development focus gradually shifted to information
technology, electronic products, fine chemical engineering, cultural innovation
industry and so on. In addition, it sped up the transfer of labor-intensive industries, the
iron and petrochemical industry to the Four Asian Tigers. By the period of the
mid-1980s, Japanese electronic devices and household appliances were the most
competitive export commodities around the world, and its export commodity structure
had transferred from textiles to capital and products that involved advanced technical
aspects. However, after the Plaza Accord, the depreciation of the yen and the increase
in costs affected Japanese export-oriented industries and drove Japan to speeding up
shifting investments to the Four Asian Tigers, ASEAN and China's coastal regions. It
developed a division pattern of research and development in Japan while producing
aboard. However, such a pattern not only led to the decline of the Japanese
manufacturing industry, but also led to a high reliance on a fragile external market.
After entering the 21st Century, Japan focused on constructing international
coordination of industrial structure, transforming from an export-oriented strategy to
servicing the domestic market. It shifted the centralized industry which mainly
consists of the automobile and electronic devices industry to a ‘multipole’ industry
where new industries and potential developing industries jointly grow to maintain the
trade surplus. Japan strengthen the development of its tertiary industry, while using
the service and manufacturing industries as the engine to increase the Japanese
economy and cultivating a new comparative advantage that is focused on a
knowledge-intensive industry and service-intensive industry. Currently, Japan regards
itself as the center of innovation around the world with a potential to be a technical
leader in new industries.