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Grounding Asia's Flying Geese: The Costs of Depending Heavily on Japanese Capital and Technology

Walter Hatch argues that developing countries in Asia relied heavily on Japanese capital and technology in the 1970s and 1980s, and chose not to invest in the technological innovation that would have allowed them to compete globally in more advanced sectors. In the latter half of the 1990s, Japanese corporations have responded to difficulties at home by reducing the pace of technology transfer and supplying their plants and joint ventures in Asia with Japanese (as opposed to local) inputs. The evidence suggests that U.S. pressure on Japan to absorb the exports of afflicted Asian economies is misguided. The rapid growth of these economies never depended on exports to Japan, and Tokyo has attempted, unsuccessfully, to prime the pump for six years. Japan’s, and Asia’s, problems are supply-side in nature, arising from an inability to generate new technologies and the accompanying benefits.

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Grounding Asia's Flying Geese: The Costs of Depending Heavily on Japanese Capital and Technology