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$Unique_ID{bob00336}
$Pretitle{}
$Title{Japan
Chapter 4D.   Mining and Manufacturing}
$Subtitle{}
$Author{Stephan B. Wickman}
$Affiliation{HQ, Department of the Army}
$Subject{percent
industry
production
japan
japanese
average
income
nation's
products
economic
see
pictures
see
figures
}
$Date{1981}
$Log{See Morning Rush Hour*0033601.scf
See Dried Squid*0033604.scf
}
Title:       Japan
Book:        Japan, A Country Study
Author:      Stephan B. Wickman
Affiliation: HQ, Department of the Army
Date:        1981

Chapter 4D.   Mining and Manufacturing

     In 1979 the nation's industrial activities (including mining,
manufacturing, and the power, gas, and water utilities) contributed 32.5
percent of GDP. Together with the construction industry, they employed 34.8
percent of the work force in 1980. Most industry catered to the domestic
market, but exports were important for several key commodities (see table 8,
Appendix). In general, industries having the highest level of exports were
those producing basic iron and steel manufacturers, metal products, electrical
equipment, transport equipment, and precision equipment. Industry was heavily
dependent on raw material imports.

     Industry was concentrated in several key regions. In order of importance
these were the Kanto region surrounding Tokyo, especially the prefectures of
Saitama, Chiba, Tokyo, and Kanagawa (also called the Keihin industrial
region); the Nagoya metropolitan area, including Aichi, Gifu, Mie, and
Shizuoka prefectures (Chukyo-Tokai industrial region); Kinki (also called the
Keihanshin industrial region); the southern part of Chugoku and northern
Shikoku around the Inland Sea (the Setouchi industrial region); and the
northern part of Kyushu (Kitakyushu). In addition the long narrow belt of
industrial centers along the Sea of Japan from Fukui to Niigata, formed the
Hokuriku industrial region; and a number of cities established by particular
industries were mill towns. These latter included Toyota City, in what is now
part of Nagoya, the home of the auto manufacturer.

     The structure of industry altered significantly in the 1970s (see fig.
9). Compared to the 1960-70 period, industries that used raw materials and
energy intensively (pulp and paper, petroleum and coal products, nonmetallic
minerals, and basic metals) tended to increase their capital investments,
while suffering slow output growth. The labor-intensive industries (food
processing, textiles, metal products, general machinery, and light
manufactures) experienced reduced growth and less value-added productivity.
The technology-intensive industries (chemicals, electrical machinery,
transportation equipment, and precision machinery), however, increased their
rates of growth and enhanced their productivity.

     In 1978 MITI and the Ministry of Transportation formed "recession
cartels" to cut back production in a number of declining industries. The
industries affected were those producing electric furnace steel, aluminum,
nylon filaments, polyester filaments, ships, ammonia, urea, and spun cotton.
The freezing of production levels and scrapping of plant and equipment was
expected to continue through the early 1980s.

     The need to replace outmoded or aging equipment was also becoming
apparent. In 1981 the average age of industrial plants was 7.3 years, lower
than the ten-year-old average in the United States, but beyond the legally
acceptable depreciation period for some types of plants. The problems were
greatest for pulp and paper, aluminum, petrochemical, oil refining, and
synthetic fiber manufacturers. The government estimated that the nation would
require an annual increase in new plant investment of 10 percent or more to
reverse the aging trend. Performance in 1980 and 1981, however, failed to meet
this target.

[See Morning Rush Hour: Morning rush hour at Shinjuku station, Tokyo Courtesy
Consultate General of Japan, New York]

Basic Manufactures

     As the coal-mining industry has declined, so has the general importance
of domestic mining in the whole economy. Only .2 percent of the labor force
was engaged in mining operations in 1979, and the value-added from mining was
less than .7 percent of the total for all mining and manufacturing. Domestic
production contributed most to the supply of such nonmetals as silica sand,
pyrophyllite clay, dolomite, and limestone. Among the metals, domestic mines
were contributing declining shares of the requirements for zinc, copper, and
gold. As a result almost all of the ores used in the nation's sophisticated
processing industries were imported.

     Iron and steel production was the largest in the noncommunist world in
1980, second only to the Soviet Union and ahead of the United States for the
first time ever (see Iron and Steel Industry, ch. 5). The government had
promoted the industry heavily during the immediate postwar era, supplying
priority finance, special tax breaks, and research and development funds for
new technologies. Since 1974, however, MITI and the major producers have been
reluctant to expand capacity. The five major integrated steel firms, which
controlled three quarters of the market in 1980, have therefore concentrated
on improving efficiency by replacing outmoded plant and equipment.

     The country has been a world leader in adopting two important innovations
in steel making. More than 80 percent of the total output in 1980 was produced
from basic oxygen furnaces, and over 60 percent was made from the continuous
casting process. Each of these processes were fundamentally new technologies
that not only conserved inputs of labor, raw materials, and energy but reduced
waste. Nippon Steel, which produced almost a third of the nation's production,
has added seven continuous casters since 1973 and was adding three more in
1981. Continuous casting has caused the ratio of usable steel products to
crude steel inputs to rise to more than 90 percent, compared with 70 to 80
percent in the United States and Europe. The industry has also been converting
from petroleum sources of energy to coal, and in 1980 twenty-nine of forty
blast furnaces at the largest companies used no oil at all. This reduced the
industry's overall dependence on oil to about fifty-six liters per ton of
steel produced, a 30 percent reduction since 1974.

     The steel industry was, however, characterized by high fixed costs and
unstable demand. The industry depended upon the expansion of the construction,
automobile, and consumer appliance industries to maintain profitability. Since
Japanese employment practices were to avoid layoffs of regular personnel, it
was difficult for the industry to stabilize earnings over business cycles.
Japan's steel firms, moreover, tended to be undiversified. During recessions,
therefore, the companies have turned to vigorous competition in the home
market and to exports to reduce their inventories. At times this behavior has
forced MITI to intervene to reduce price competition at home and to foster
export cartels.

     In the nonferrous metal industry, copper, lead, and zinc smelting, and
the production of wires and cables survived the second energy crisis and
slumping international demand, but the aluminum industry collapsed. Most of
the nation's smelters were in financial crisis because of skyrocketing
electricity costs, but the output remained among the world's highest. The two
major problems faced by the industry were how to secure stable supplies of
ores and how to produce higher value-added products for sophisticated
electronics material and nuclear power generators. The sharp decrease in
aluminum prices on the international market dealt what was perhaps a fatal
blow to that industry in 1980. The importation of cheap ingots forced the
industry to form a "recession cartel" and cut capacity by a third. If the
aluminum smelters were to survive, the five major manufacturers would have to
expand their operations overseas, where cheaper sources of power and local raw
materials would allow efficient production. The industry's lack of
international experience, however, made for high risks.

     The Japanese petrochemical industry, the world's second largest after the
United States, was heavily dependent on foreign supplies of oil and
increasingly on overseas projects. The volume of output declined to 67 percent
of capacity in 1980, and future expansion was expected to be modest. The major
producers were concentrating on developing high-quality products and reducing
energy costs. Among the innovations being introduced in 1981 were the
production of acetic acid from carbon monoxide and methanol and linear,
low-density polyethylene, according to procedures developed in the United
States as well as Japan. Major foreign ventures included Mitsui's war-torn
Iranian petrochemical complex and planned facilities in Singapore, Australia,
Canada, and the United States.

     High-quality and specialty products were the mainstays for the chemical
industry. Since the late 1960s the production of nitrogenous fertilizers has
well exceeded the nation's own needs, and Japan has exported fertilizers often
at concessionary prices for foreign aid. The domestic and international
environment for the production of titanium oxide and caustic soda remained
supportive to producers in 1980, but the production of chemical dyes lagged
behind that of foreign competitors. Future growth in the chemical industry
depended on major breakthroughs in biotechnology, and most firms were
expanding their research capacity in 1981. Although such breakthroughs were
liable to develop only slowly, Japan's industrial leaders were confident that
the substantial profits reaped in 1979 would suffice to promote a successful
research effort. Biotechnological research was also proceeding in the
pharmaceutical industry, and the public demand for new antibiotics and wonder
drugs was booming. Revisions in the Drug Law in 1980 would protect the
producers of new drugs from competitors for six years. Changes in the national
health insurance pricing standards, however, were likely to cut into corporate
profits.

Equipment, Machinery, and Other Manufactures

     The nation was one of the world's leading producers of transportation
equipment and perhaps the leading force in the automobile industry. Although
automobile exports were higher than domestic sales, most of the innovations in
new car technology were stimulated by high domestic standards. The extensive
use of robots and automatic processes has enabled car producers to meet these
demands for quality at competitive prices. The newest wave of technology
emphasized automobiles with sophisticated electronics systems, turbo-charged
engines, and lighter, tougher materials (see Automobile Industry, ch. 5).

     The shipbuilding industry, which suffered a deep recession after 1973,
began to rebound in 1978. The Ministry of Transportation supervised the
successful reduction of capacity from 9.7 million to 6.2 million gross tons
during 1978-80. As a result the major shipbuilders recorded profits in 1980.
The outlook for the industry in the 1980s suggested that there would be a
gradual recovery from the low point of 14.2 million tons in 1979 back to the
30-million-ton levels of the industry's boom years. The average size of new
ships was likely to be reduced, and the success of the industry would depend
on the development of energy efficient models.

     The aerospace industry has lagged behind other sectors and was heavily
dependent on government contracts and joint ventures. Industry sales, which
totaled only 277 billion Yen in FY 1980 were expected to expand only as joint
ventures with Rolls Royce of the United Kingdom and the Boeing Company of the
United States resulted in the production of new medium-sized engines and
aircraft, respectively. Meanwhile the space program, under the aegis of the
National Space Development Agency, had run into a snag with the second failure
of its Ayame series communication satellite in February 1980. The development
of aircraft for the defense program, mostly helicopters and light aircraft,
was likely to benefit as the defense budget allocated proportionally greater
resources to research and development (see Defense Industry, ch. 8).

     In the manufacture of electronic equipment and machinery Japan's industry
was a world leader. The ongoing demand from NTT, research efforts both on the
part of NTT and the leading corporate groups, and the growth of mechanical
applications for integrated circuitry, propelled even the smaller producers
into the world limelight. The nation's manufacturers were routinely producing
64-kilobit random-access memory microchips, and NTT had developed prototypes
for microchips as large as 256 kilobits. Applications of the new electronic
technologies to other manufactures has permitted the country to excel in the
production of "smart," or numerically controlled, machine tools, robots,
audio-visual equipment, watches, calculators, copiers, cameras, electronically
controlled engines, and computers. Indeed after years of dominance by the
Japanese subsidiary of the United States-based IBM Corporation, Fujitsu became
the leading producer of computers in Japan in 1980.

     The food processing industry was the leading sector among light
manufactures. As increasing numbers of women entered the work force, the
demand for simple prepackaged foods and frozen foods rose sharply. Annual
production was growing at a rate of 10 percent during the late 1970s. Other
light industries had come upon hard times, however. The textile industry was
caught in a squeeze between high costs and deteriorating prices as competition
from producers in the Republic of Korea (South Korea) and other Asian
countries cut into Japan's international sales. The outlook was better for
highly specialized items. The apparel industry, which was dominated by small
designing outlets, geared its marketing towards high-quality fashions that
changed style each year. In the future, Japan was likely to become a regular
importer of cheaper mass-produced textiles, while maintaining a share of the
high-quality market for its own textile industry.

Domestic Trade and Services

     The nation's service industries were the major contributors to GNP and
employment, generating about 54 percent of the national totals in 1979.
Moreover this was the fastest growing sector and would likely outperform
manufacturing in the 1980s. The service sector comprised a number of varied
industries, however, but they had little in common. Wholesale and retail trade
was dominant, but advertising, data processing, publishing, tourism,
entertainment, and other industries were also important. The vast majority of
service enterprises were small-scale and labor intensive but were becoming
more technologically sophisticated as computer and electronic products were
incorporated by management.

     The wholesale and retail trades have often been denigrated as barriers to
foreign participation in the Japanese market as well as for being antiquated
and inefficient. Small retailers and "ma and pa" stores predominated, and in
1979 there was one retail enterprise (exclusive of eating and drinking
establishments) per sixty-nine persons, more than twice as many as in the
United States or West Germany and a slight increase in number since 1972. The
wholesale system was multitiered, and among the larger stores, wholesalers
were twice as numerous as retailers. Although there were legal restrictions on
the types of arrangements allowed between manufacturers and distributors, many
large manufacturers had written or unwritten contracts with distributors to
handle their products exclusively.

     In the mid-1970s a "revolution" among the Japanese distribution networks
was to have taken place. The advent of large supermarket chains and
self-service stores, franchises, and convenience stores proceeded rapidly in
the 1976-78 period. The number of department stores alone more than doubled
from 1972 to 1979 to almost 2,000. Increasingly the nation's largest chain
stores and department stores were collaborating to set up shopping centers and
malls, though in much more cramped quarters than in the United States. But the
decline in price margins that accompanied the rush of large-scale business to
the retail markets has reversed since 1979. Japanese consumers preferred
personalized service, and personnel and advertising costs have forced up
margins. Furthermore much of the competition between chain stores was
internecine and did little to jeopardize the smaller shops, which were
protected by local zoning laws and chambers of commerce. In 1981 it became
clear that any shift to large-scale, price-cutting retailing was likely to be
slow and evolutionary.

     Among the many other types of service industries, the restaurant,
advertising, and data processing businesses were growing most rapidly. The
fast-food industry has been profitable for both foreign and domestic
companies. Particularly in the urban centers, families have shown an
increasing preference for eating out, and workers have been trying to
economize on dining time. The number of eating establishments grew by 6.3
percent per year from 1972-79, but the number of regular employees was
decreasing. Although there were signs that the boom in eating out was
diminishing in 1980-81 and that competition was driving many entrepreneurs out
of the market, the leading chains were likely to remain strong during the
1980s.

     Since a great portion of the competition for sales in Japan was of the
non-price variety, advertising was extremely important. Consumers had to be
attracted to follow-up services and repair work and the suitability of
products to their life-styles. Advertising messages were designed to
capitalize on these requirements. The intense competition for capturing the
domestic market spurred the growth of what had become the world's largest
advertising agency in 1978, Dentsu, Inc.

     There were few limits on the potential growth of data processing. Because
of the expansion of the computer industry, the need for sophisticated software
was growing daily. Sales from data processing firms grew at over 20 percent
per year in the 1975-80 period. About 1,600 companies, employing 77,000
people, shared the market in 1980. Most of the business came from contracts to
process scientific and engineering data and to develop specialized software.
One of the problems for this industry was that the large computer firms only
reluctantly allowed other companies to develop competing software packages.

Agriculture, Forestry, and Fishing

     Japan's agricultural sector has contributed greatly to the economy by
supplying food, land, and labor to other sectors. Because of the increased
output of foodstuffs, the per capita caloric supply reached over 2,500
kilogram calories in 1979, and the availability of dairy products, vegetables,
and fruits improved sharply. The production of barley and soybeans dropped in
the 1970s, but rice had been overproduced since 1968. Productivity increases
occurred primarily as the result of technological advances in agricultural
machinery, seed, and chemical inputs, and the productivity per hectare of land
was high for many products. Nonetheless productivity per capita could not keep
pace with that in industry, and more and more farmers have found it necessary
to find supplementary work in industry.

     Because of the high population density, mountainous terrain, and postwar
land reform that favored small producers, the average farm was only 1.1
hectares at the start of the 1980s. The small farm size and high labor
intensity was similar to production patterns in other Asian countries but
significantly different from the norm in the world's major industrial
economies. In fact the small farms have been able to cover their operating
costs only through government price supports and off-farm income.

     Three types of farm households have developed: families engaging
exclusively in agriculture (13 percent of the 4.6 million farm households in
1980); those deriving more than half their income from the farm (21 percent);
and those making the major share from nonagricultural labor (66 percent). As
more and more workers turned to nonfarming activities, the farm population
declined. The rate of decrease slowed in the late 1970s, but the average age
of farmers rose to fifty-one years, twelve years older than for industry. At
the start of the 1980s, the rate at which younger male workers left the farm
was slowing down, while many retired workers seemed to be returning to the
countryside.

     The Ministry of Agriculture, Forestry, and Fisheries continued to
administer grain price supports in 1981 which, though benefiting farm incomes,
were straining the national budget and leading to major production
inefficiencies. The nation's 9,841 agricultural cooperatives were in charge of
purchasing grain at prices indexed to the average wage rates in the
nonagricultural sector. As a result rice, wheat, and barley prices have
followed productivity trends in industry, rather than in agriculture. This
type of support system, enacted in 1960 along with the Basic Agricultural Law,
was developed to increase the nation's agricultural self-sufficiency but has
resulted in large government rice stockpiles and high agricultural prices.
Even a major rice crop failure in 1980 was unable to reduce the accumulated
stocks by more than a quarter of the total reserves, and the Suzuki
administration was seriously considering ending the support system as part of
a drive toward fiscal austerity. The entrenched rural political interests,
including the agricultural cooperatives, were major obstacles to such a reform
(see Agricultural Interest Groups, ch. 6).

     Given the change in demand from rice to dry-field crops and animal
products, altering the production structure has become a virtual economic
necessity. The government scored some success in diverting agricultural
resources from rice to other crops during the late 1960s and early 1970s by
limiting the amount of rice purchases through government channels, but these
were upset in the confusion of the first oil crisis. Since 1978 the government
has redoubled its efforts to convert paddy land to other uses. Through various
subsidies and restrictions, the conversion of paddy land to dry land for
soybean, wheat, and feed grain production has exceeded government targets and
totaled 585,000 hectares in 1980 (see table 9, Appendix). Many farmers treated
the new program as temporary at first, but increasingly, whole villages have
worked collectively to switch production. Many farmers were less reluctant to
lease their land to full-time managers, and the government hoped that such
practices would increase the scale of farming to an average of twenty to
thirty hectares in the future.

     Nevertheless in 1979-80 the structure of production strongly favored
paddy rice. Of the 5.5 million hectares of farmland, 3.1 million were wet
paddies; 600,000 were orchards; 530,000 were pastures; and about 1.3 million
were for dry crops. Production of rice was at about 12 million tons per annum,
compared to less than 1 million tons for other grains. The self-sufficiency
ratio for rice in 1979 was estimated to be 107 percent, over ten times that
for other grains (see table 10, Appendix).

     Livestock raising and greenhouse farming were becoming more productive,
and the self-sufficiency rates for these types of products was much higher
than for non-rice grains. The number of dairy cattle was increasing rapidly,
and the productivity of dairy farms was improving. The difficulty in securing
animal feeds, however, made the expansion of beef cattle raising slow.
Domestic beef production was about 70 percent of the demand. Japan's farmers
produced well over 90 percent of all the nation's vegetable and fruit needs.

     Rice production was centered in Chubu, Tohoku, Shikoku, and Kyushu, but
only in the southernmost areas of the latter two regions was it
double-cropped. Major regions producing fruits and vegetables were Kanto and
Kinki, while three quarters of the nation's apples came from Tohoku. Cattle
were raised primarily in Hokkaido and Kyushu.

     The nation's forest resources, though abundant, were not well suited to
extensive forestry efforts. Of the 24.5 million hectares of forests, 19.8
million were actively forested in 1978. Log production, however, has been
decreasing steadily since the 1950s for all species, as have the number of
forestry households and cooperatives. Forestry took place as a supplement to
farming activities in most instances, often as the combined efforts of groups
of households or forestry cooperatives. There were also thousands of private
forestry companies that either owned and operated their own forest land or
obtained the rights to other land. About a third of all forest land was owned
by the national government and its agencies. Production was highest in
Hokkaido and in the Aomori, Iwate, Akita, Fukushima, Gifu, Miyazaki, and
Kagoshima prefectures. Although the government had established a number of
long-range accounts to finance reforestation efforts, they were increasingly
running into deficit and afforestation fell from about 500,000 hectares per
year in the 1950s to about 250,000 hectares in the late 1970s.

     Fishing was essential to the economy for its contribution to the food
industry, although the total number of fisheries workers has declined. About
315,000 fishermen were self-employed in 1978, and an additional 163,000 were
employed by fisheries companies. Until the late 1970s the fastest growing and
largest share of the total yearly catch came from the deep-sea fisheries, for
which the nation had built up a fleet of over 370,000 gross tons in 1976,
including factory ships and trawlers. Since the enactment of 200-mile
exclusive economic zones around most of the world's coastal nations in the
late 1970s, the deep-sea catch has tapered off, and the fleet has been reduced
to less than 300,000 gross tons. Offshore and coastal catches as well as
marine and inland aquaculture production have risen to take up part of the
slack, but the total catch seemed to have leveled off at about 10.6 million
tons. The catch was still high enough to make Japan the world's second largest
fishing nation in 1979 and the largest in per capita terms.

     Japan was also one of the world's few remaining whaling nations in 1981.
As a member of the International Whaling Commission, the government had
pledged that its fleets would restrict their activities to the agreed
international catch quotas. In 1981, however, the government attracted
international opprobrium for refusing to sign an agreement to stage a
moratorium on sperm whaling. The total whale catch in 1978 was reported to be
2,950 carcasses, half of the 1975 catch. Whales were utilized for their meat,
oil, and skin.

Living Standards

     In general the nation's consumers have benefited from economic growth,
while in turn they have stimulated the economy through their demand for
sophisticated products and by saving at a high enough rate to pool investment
funds. But personal disposable income has not risen as fast as the economy as
a whole in many years. In the words of one housewife, quoted in the Christian
Science Monitor. "I'm proud when I read about how Japan has become an economic
world power. But I certainly don't feel rich. In fact, life for my family has
become more difficult." Or as one journalist saw it, the economy might be
characterized as a case of "rich nation, poor people." The reason for such a
negative view of the economy was that the average consumer had to pay dearly
for goods and services that were comparably much cheaper elsewhere.

     Household expenditures grew during Japan's rise to economic prosperity,
but not all of this gain was because of inflation. Living standards in 1980
were probably 22 percent higher than in 1970-over 54 percent better than in
1965. The share of total family expenditures devoted to food have continued to
decrease-from 34 to 29 percent during the 1970-80 period for urban households
and from 32 to 23 percent for farm households. At the same time, expenditures
for miscellaneous items not related to food, housing, and clothing increased
from 42 to 48 percent of the total. However, earned income taxes, other taxes,
and social security contributions increased from an 11.2 percent share to 18.5
percent of expenditures, or 12.3 percent of the average worker family income.
Fuel and lighting costs have also risen rapidly since 1970.

     Family income data from official surveys show that among worker
households, real income rose by about 3.5 percent per year during the 1970s,
compared to a 4.9 percent average rate for the nation's GNP. Income from other
household members besides the family head increased from 10 to 12 percent of
household income during the same period. City families and those whose wage
earners were full-time regular employees or farmers with manufacturing jobs on
the side seemed to be better off than the average. The monthly income of
farming households surpassed that of worker households by 21 percent in 1979,
a substantial change from 1970 when incomes were approximately the same in
both types of households. The comparison was somewhat artificial, however,
since on average some two-thirds of the income of so-called farming households
came from nonfarming activities in 1979. In general, however, farming
households received 10 percent less income (net of work-related expenses),
than nonfarming households while raising larger families than average. In 1969
when systematic income share data were last available, the wealthiest 10
percent of the population claimed about 27 percent of the nation's income,
while the bottom 20 percent received 8 percent of the wealth. In 1978 one
quarter of working households surveyed by the government earned below 2.2
million Yen at a time when the lowest tax bracket for individuals was 2.2
million Yen.

[See Dried Squid: Squid is dried in a small fishing town; many generations of
Japanese fishermen have used the same technique. Courtesy Japan Air Lines]

     Of the goods and services for which the typical Japanese consumer paid
much more than in other advanced economies, housing topped the list. Land
prices have skyrocketed, both in the cities and in the countryside, at twice
the increase rate for wages. Although international comparisons were difficult
to make, in 1976 Japan (next to Hong Kong) seemed to have the world's most
expensive land prices. High land prices in turn have pushed housing costs
beyond the reach of many consumers. A middle-class family having an annual
income of 4 million Yen in 1979 could ill afford to buy a quality house in a
large city, and rental apartments were also expensive. A family with this type
of income would normally be able to afford a three-bedroom apartment with a
total of seventy square meters of floor space. The national average for middle
and high-rise apartments was about sixty-five square meters. A typical room
was only ten square meters.

     Furthermore since the 1970s the number of rental housing units has fallen
dramatically. The Japan Housing Corporation and local public enterprises have
tried to fill the gap left by reluctant private construction firms, but they
have never achieved the housing plan targets. Average rents in these
"low-cost" facilities were 47,000 Yen per month, twice the average spent on
housing by most families. Most large companies provided employee housing. Even
considering that tastes differed from those in other countries and that the
nation was short of building space, the facilities available were often
regarded as substandard. Besides their small size, as late as 1977 only 37
percent of all dwelling units had been connected to a public sewerage system,
and in 1978 about half of the total lacked a flush toilet.

     Another negative aspect of Japan's economic growth has been the
occurrence of industrial pollution. Since the pollution issue came to a head
in the early 1970s some progress has been made in cleaning up the environment.
Most of the progress, however, has been in the reduction of sulfur dioxide
from the air. Although the amount of nitrogen oxide, carbon monoxide,
photochemical smog, and suspended particulate matter has been reduced, they
were still higher than the desired national standards in the late 1970s. The
nation's supplies of drinking water were unpolluted, but many of the rivers
running through urban areas were still below standard. In general and in
comparison with other industrialized countries, however, the nation had gone a
long way in reducing the worst aspects of industrial development.

     Typically Japanese consumers have been savers as well as buyers, partly
because of habit and partly because of the slow development of the consumer
credit industry. But in 1980 the consumer credit industry was finally starting
to develop, and outstanding credit totaled 11 percent of consumer
expenditures. This was a major increase over the amount of credit in the
1965-75 period, when only 6 to 8 percent of expenditures was available.
Younger families were particularly prone to take on debt. Housing was the
largest single item for which consumers contracted loans, but as credit card
and finance agency facilities expanded, the use of credit to procure other
consumer durables was spreading. Still only 20 percent of the nation's retail
sales were purchased on credit in 1979, compared to 70 percent in the United
States.

     The Japanese consumer benefited mostly from the availability of compact,
sophisticated consumer products. The average buyer was attracted to the myriad
of products that have been popular as exports. Television sets, stereos,
watches, clothing, automobiles-these were the quality items that industry
provided in quantity. In 1979 almost 98 percent of all households surveyed by
the government had color television sets, 84 percent owned sewing machines, 57
percent had stereos, 61 percent possessed cameras, 55 percent had automobiles,
and nearly all had washing machines, refrigerators, and small space heaters.
Few households had installed central heating, and most still preferred the
Japanese style of sleeping on a bed roll (futon), but three quarters of those
surveyed had installed gas water heaters. The most rapidly spreading durable
consumer items in the late 1970s seemed to be electric ranges and air
conditioners, owned by 31 and 36 percent of the respondents, respectively, in
1979.

     It was difficult to make cross-cultural comparisons of living standards,
but one Japanese social scientist attempted to rank Japan with a group of ten
other industrialized states across a variety of variables. In this comparison,
for which most data came from the mid-1970s, Japan was better than average in
terms of overall income distribution, per capita disposable income, traffic
safety and crime, life expectancy and infant mortality, proportion of
owner-occupied houses, work stoppages and labor unrest, worker absenteeism,
and air pollution. The nation was worse than average on such variables as wage
differentials by sex and firm size, labor's share of total manufacturing
income, social security benefits, weekly workdays and daily work hours,
overall price level, river pollution, sewerage facilities, and recreational
park area in urban centers. Some of these variables have improved since the
mid-1970s, and in general living standards in Japan were comparable to those
of the world's wealthiest economies.

                                     * * *

     There are numerous excellent works on the Japanese economy from a variety
of perspectives. Historical studies charting the full scope of the nation's
modernization from the prewar era include William W. Lockwood's The State and
Economic Enterprise in Japan; G.C. Allen's Japan's Economic Policy; and any
edition of Allen's A Short Economic History of Modern Japan. The best source
for prewar data is Patterns of Japanese Economic Development: A Quantitative
Appraisal, edited by Ohkawa Kazushi and Shinohara Miyohei. Among the general
works on the postwar economy are Asia's New Giant: How the Japanese Economy
Works, edited by Hugh Patrick and Henry Rosovsky, and The Japanese Economic
System: An Institutional Approach, by Haitani Kanji, although they are
slightly out of date; the latter work is somewhat simplistic in discussing
Japanese management. Rodney Clark's The Japanese Company is an easily read
summary of the research on the Japanese corporate system and labor-management
relations. Up-to-date and sophisticated economic analyses appear annually in
the Organisation for Economic Cooperation and Development's OECD Economic
Surveys, Japan, published every July. For a Japanese perspective on the
economy, articles in the English-language Japan Economic Journal, Japanese
Economic Studies, Journal of Japanese Studies, and Japan Quarterly are useful.
The Far Eastern Economic Review devotes two or three special issues to Japan
each year, as does the Financial Times. (For further information see
Bibliography.)