William W. Grimes

The Asian Monetary Fund Reborn?: Implications of Chiang Mai Initiative Multilateralization

Relations at Boston University, and a Research Associate of the National Asia Research Program. He is the author of Currency and Contest in East Asia: The Power Politics of Financial Regionalism (2009) and Unmaking the Japanese Miracle: Macroeconomic Politics, 1985–2000 (2001). He can be reached at . The Asian Monetary Fund Reborn? Implications of Chiang Mai Initiative Multilateralization

The future of regional liquidity arrangements in East Asia: lessons from the global financial crisis

Abstract The global financial crisis of 2008–09 presented a critical challenge to East Asian regional financial cooperation. Over a decade of efforts to reduce regional vulnerability to financial crisis and contagion were confronted with the worst global economic crisis since the 1930s. The results for East Asia were mixed. On the one hand, no economies were forced to submit to IMF-led bailouts, as had happened so painfully in 1997–98. On the other hand, the most highly-developed component of the project of ASEAN+3 financial regionalism – the Chiang Mai Initiative (CMI), which set up a system of emergency liquidity provision – appeared irrelevant, as the central banks of South Korea and Singapore prioritized the establishment of new swap agreements with the United States as a means of ensuring dollar liquidity instead of relying on their Chiang Mai partners. Nonetheless, in May 2009, the ASEAN+3 finance ministers agreed to a substantial expansion and ‘multilateralization’ of the initiative. This paper critically addresses whether CMI has been transformed into an ‘Asian Monetary Fund’ and argues that the events of 2008–10 make substantial additional movement in that direction unlikely.

Reassessing Amakudari: What Do We Know and How Do We Know It?

For decades, scholars and journalists inside and outside Japan have per ceived the practice of amakudari as an important and distinctive feature of Japanese political economy. But they have often disagreed over the ques tions of how it affects or is affected by larger forces. Observers have seen former bureaucrats as, variously, agents of ministerial influence or monitor ing in their postretirement organizations, pipelines for large and small firms back to their regulating agencies, and recipients of rewards for regulatory favors granted. But it has been difficult to compare the accuracy and ex planatory power of these various interpretations. Now, with the publication of several major new English-language empirical analyses of amakudari and informal regulation in Japan, it appears to be a good time to review and reappraise the evidence and arguments concerning it.1 The two books considered in this review employ different data sets,

Japan Confronts the Global Economic Crisis

In the face of the global economic crisis of 2008–09, Japan has played a positive role in helping to stabilize the regional and global financial systems. Among the positive actions it has taken have been large-scale fiscal and monetary stimulus at home, an unprecedentedly large loan to the International Monetary Fund, liquidity support to South Korea, and a proactive role in G-20 discussions. However, regional arrangements such as the Chiang Mai Initiative have been of minimal importance in preventing financial crises in East Asia. Japan can continue to demonstrate leadership in promoting regional economies and financial systems by expanding its current activities, while ensuring that regional arrangements continue to support global ones.

Japan as the “Indispensable Nation” in Asia: A Financial Brand for the 21st Century

This article addresses Japans global financial “brand.” It first examines the concept of a national “brand” and the difficulties associated with creating a desirable image of a country among outsiders. It adopts an instrumental concept of branding, which focuses on the behavior that the national image should elicit from foreign countries. It also notes that effective branding must accurately reflect reality. For Japan, the goal should be to promote economic cooperation where mutual interests exist. Efforts should be focused on East Asia, where mutual economic interests are least fully realized, and where Japans national image appears to be an important stumbling block. Japan should seek to demonstrate the potential for transition to a “post-developmental” financial model and to be the “indispensable partner” for regional cooperative and development initiatives. This will require continued progress in cleaning up and improving the competitiveness of Japans financial institutions and financial system.

The People's Post Office: The History and Politics of the Japanese Postal System, 1871–2010 by Patricia L. Maclachlan (review)

and retailers in general. On a related note, Chalmers Johnson has suggested that the Japanese government pursued a kind of “indicative” taxation policy by lifting taxes on targeted products, helping trigger consumer booms such as the celebrated “three sacred treasures” mania of the early 1960s. Among the many signifi cant points Metzler raises is that, from the standpoint of fi nancial history, Japan has repeatedly led the way as opposed to trailing the earlier industrializers. As the author indicates, Japan prefi gured by a generation the unprecedented worldwide price revolution of the twentieth century and was the fi rst to undergo both the global defl ationary crisis following World War I and a Keynesian-style refl ation during the Depression; it also preceded the recent Anglo-American bubbles and crashes by a decade and a half and may stand today as the fi rst industrial-capitalist country to have completed “the modern infl ationary process” (p. 222). On the other hand, according to Metzler, Japan during its high-growth years diverged from other major capitalist nations in having both the lowest rate of increase in wholesale prices and the highest rate of increase in consumer prices. The resulting gap represented a case of “‘forced savings,’ to the benefi t of Japanese producers and distributors” (p. 209). The author further points to a little-noticed “historic change” in the mid-1980s, when “the yen’s great appreciation . . . brought actual wholesale price defl ation to Japan,” a decade before the onset of the widely publicized consumer-price defl ation; he adds that the resulting windfall corporate profi ts “formed an underlying aspect of the bubble economy of the late 1980s” (p. 210). All in all, Metzler has produced an incisive work full of stimulating insights into the capitalist development process as well as new and challenging ways of thinking about Japan’s economic performance since World War II.

Japan’s Fiscal Challenge: The Political Economy of Reform

The year 2011 was an annus horribilis for Japan. The Tohoku earthquake, tsunami, and subsequent nuclear crisis were of course by far the worst of events of a bad year, but there was plenty of bad economic and political news to go around. Not only did the economic and human dislocations of the tsunami reverberate much longer than most had initially envisioned, Japan also shed its fifth prime minister in as many years, underwent a loss of confidence in the nuclear power plants that provided 30 percent of the nation’s electricity, saw an acceleration of fiscal deterioration and an apparent outsourcing of manufacturing, witnessed continuing legislative gridlock and confusion over rebuilding and restructuring, began a potentially wrenching debate over the character of Japanese economic policy in the form of the proposal to enter the Trans-Pacific Partnership, and ended the year with the nation’s first annual trade deficit in over 30 years. While there were bright spots, including the dignity and resilience of the Japanese people in the face of what was arguably one of the most devastating natural disaster in recorded history, as well as the effective coordinated response by corporations to the massive reduction in electrical power and the effective response of the US-Japan alliance to the Tohoku disaster, these successes paled in comparison with the losses suffered by the Japanese people.

The Changing Japanese Political System: The Liberal Democratic Party and the Minstry of Finance (review)

the feelings were hardly universal. In this account, “bilateral relations” mostly means the interaction between sets of elites. Swenson-Wright is surely correct in holding that the revised security treaty ratified in 1960 signified real progress toward institutionalizing greater alliance equality. However, his rather offhand discussion of how hundreds of thousands of Japanese took to the streets in protest, and the many more who condemned Prime Minister Kishi Nobusuke’s handling of this and other policy matters, fails to convey the depth and intensity of (or the reasons behind) the massive expression of discontent felt by many Japanese toward their closest ally after almost a decade of alliance. Swenson-Wright also has little to say about America’s decade-long covert effort to fund and promote pro-American factions within the governing but fractious Liberal Democratic Party. At the same time, he devotes a good deal of attention to describing Soviet-bloc efforts to spy on Japan and American military facilities and to influence public opinion. I found this long and detailed discussion somewhat confusing. It hardly seems surprising that Moscow attempted to gather information on the U.S. military presence in Japan, sometimes by using either dupes or ideological sympathizers as sources. Similarly, Soviet efforts to influence public opinion by funding leftist cultural groups and publications was neither unique nor especially effective. Washington made similar efforts, in Japan and elsewhere. Despite these quibbles, Unequal Allies is a thoughtful, well-researched, and provocative contribution to our understanding of how, in the wake of a disastrous war, two enemies forged a mutually beneficial and long-lasting relationship. Decades later, the Japanese-American alliance is still a pillar of the global security system.

Chapter 3. Internationalization as Insulation: Dilemmas of the Yen

The Asian financial crisis of 1997-98 was a shock to Japan and the world. The rapidity with which fast-growing economies were hit by currency attacks and then economic chaos, the spread of the crisis first among disparate regional economies and then as far as Brazil and Russia, and the seeming inability (or perhaps unwillingness) of the United States and the International Monetary Fund (IMF) to fix the problem left a huge impression around the globe. The size and rapidity of the capital movements appeared to make for a qualitatively different kind of currency crisis from those of previous decades, and presented global finance with a serious new challenge. Unlike those in most other countries, however, policy makers in Japan saw themselves as being in a position to reduce about the possibility of a repeat performance—particularly a repeat performance that would have a direct effect upon Japan itself.