The Japanese Developmental State:

The Case of Cool Japan

Nicolas Garvizu, University of Sheffield [About | Email]

Volume 19, Issue 3 (Article 10 in 2019). First published in ejcjs on 24 December 2019.

Abstract

This article offers strong evidence of the persistency of the Japanese developmental state. Neoliberal globalisation and the free capital movements have not caused its demise, but rather its adaptation to a new context. This paper expands the developmental state to a new industry, the cultural industries, by analysing the Cool Japan policy that the Japanese government currently implements to increase the exports of the Japanese cultural industries and to present a friendly image of Japan overseas. It demonstrates that the Cool Japan policy is an industrial policy and focuses on the role of the Ministry of Economy, Trade and Industry (METI), as well as on the Cool Japan Fund.

Keywords: Japanese developmental state; cultural industries; industrial policy; Cool Japan.

1. Introduction

Chalmers Johnson (1982) elaborated the concept of the developmental state in his seminal MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 in order to account for the rapid economic transformation of Japan after the Second World War. His work concentrates on the role of the Ministry of International Trade and Industry (1) (MITI) in steering the industrial take-off of Japan. Inspired by Johnson’s concept, Alice Amsden (1989), Stephan Haggard (1990), and Robert Wade (1990) studied the economic development of other East Asian countries such as South Korea, Taiwan, and Singapore. At the end of the 1980s and early 1990s, studies of the developmental state were at their peak (Stubbs 2009, p. 2). The developmental state literature owes much to the state-centred approach conceptualised by Theda Skocpol (1979) and in the classic Bringing the State Back In (Evans et al., 1985). Two contributors to this collective book, Amsden (1989, 1994) and Peter Evans (1992, 1995), have greatly contributed to our understanding of the developmental state in East Asia.

The economic globalisation and implementation of neoliberal policies (2) have nurtured the debate on the viability of the developmental state. A group of scholars recognises the important contribution of the developmental state in East Asia to economic growth, but holds that this model is no longer a viable option in an era of globalisation of financial markets and neoliberal drive. Against this background, the developmental state has become obsolete and redundant. The liberalisation of capital flows mean that companies are less dependent on the state for their financial resources. As a result, the developmental state is heavily deprived of its capacity to monitor the private sector (Pang 2000; Maswood 2002).

The East Asian financial crisis of 1997-98 demonstrates that the developmental state is incompatible with financial globalisation and that development shifted from state-led to market-led (Pang 2000; Jayasuriya 2001; Maswood 2002). According to Graham Wilson (2003, pp.81-101), the developmental state is in crisis because bureaucrats lost a large part of the instruments they previously had. Moreover, since the end of the Cold War, the United States (US) has repetitively called the East Asian states to deregulate their national economies (Cumings 1999; Pempel 1999). This call for substantial liberalisation has been echoed by the World Bank, the World Trade Organisation, and the International Monetary Fund. As Hayashi Shigeko notes, ‘the model of the developmental state is under fire’ (2010, p.45).

This article takes issue with the claim that neoliberal globalisation has caused the death of the developmental state. The reports of its demise are largely exaggerated (Fine 2013, p. 21; Gabusi 2017). This model of the state has adapted to an evolving, new context. Globalisation does not imply an automatic convergence towards an Anglo-Saxon, minimalist state. In Taiwan, South Korea, Japan, and China, the developmental state has not been static but adaptive (Chu 2016b). In these countries, it continues to conduct industrial, social, as well as research and development (R&D) policies in spite of many more constraints. It still promotes and matters in the promotion of national development. What has changed is how it matters (Wong 2004, pp. 347 and 357). Drawing upon Breznitz (2007), Wang (2016) suggests that the state can continue to play a crucial role if it moves away from the role of top-down leader to supporter and facilitator, for example to promote the growth of innovation-based industries.

The shift in Japan from a catching up economy in the 1970s to a caught up one does not mean that the developmental state disappeared. A new logic has emerged, the logic of keeping up, in order to ensure the competitiveness of the Japanese economy. Weiss prefers using the expression ‘transformative state’ in order to distance the developmental state from its catching up stage (2000, pp.27-29). The Japanese government still considers that its responsibility includes the detection and promotion of promising industries (Pekkanen 2003, pp. 211-213). It is strongly committed to the improvement of the Japanese industries, too. It is why it implements the restructuration of industries in decline, helps emerging industries in the high-tech sector, supports R&D to find new products and technologies, as well as financially backs mature industries for their continuous growth (Weiss 2000, p. 27).

The debate on the developmental state has also been enriched by researchers who have applied this concept outside East Asia, for instance Brazil and Mexico (Schneider 1999), India (Chibber 2003; Mukherji 2016), Ireland (Ó Riain 2000), and Kazakhstan (Cummings and Nørgaard 2004; Ahrens and Stark 2014). These recent studies of the developmental state testify that this model of state is not limited to East Asia.

The purpose of this article is to participate in the ongoing debate on the developmental state by analysing the current Cool Japan policy framed and implemented by the Japanese government to boost the exports of the Japanese cultural industries. (3) Among them, this article focuses on three sectors: anime studios, manga publishers, and video games companies. These three sectors have strong connections between them as it is very common that manga will be adapted into anime and later into a video game. This represents a feature of the Japanese cultural industries named media mix, that is to say ‘the cross-media serialisation and circulation of entertainment franchises’ (Steinberg 2012, p. viii). Media mix is thus similar to the concept of convergence (Jenkins 2006, p. 2). Ian Condry calculates that already-popular manga characters amount to 60 per cent of the Japanese animation (Jenkins 2013). For a long time, the Japanese state did not view the anime companies as an industry, but rather as an extension of the manga publishers (Choo 2009, p. 217).

The Japanese cultural industries have been the centre of attention since the release of Douglas McGray’s article "Japan’s Gross National Cool" in 2002. In this well-known article, he details the vitality of Japanese pop culture (anime, music, manga and so on) and its global success. He is above all the first to have linked Joseph Nye’s concept of soft power (4) and Japanese popular culture. The fact that this publication initiated discussions among Japanese policy-makers and intellectuals about their country’s soft power testifies it has been very influential (Lam 2007, p. 352). Be it manga, animation or video games, they have been enthusiastically embraced by fans around the world, especially young ones (Johnson-Woods 2010; Katsumata 2012; Condry 2013).

The aims of this article are twofold. Firstly, it expands the developmental state to a new industry, the cultural industries. As far as the author of this article knows, this has not already been done. As previously shown by Pekkanen (2003) and Weiss (2000), this confirms that the developmental state is not only linked to the industries of coal, steel, and textile (Johnson 1982). Secondly, this publication offers strong evidence that Cool Japan is an industrial policy. A commonly accepted definition (5) of an industrial policy does not exist. Definitions depend on stage of development, states, regions, and their stretch over time (Aiginger 2007, p. 297; Vanden Bosch 2014, p. 11). They also offer different views on whether industrial policy refers to targeting sectors or general measures for many or all industries; restructuring big firms or promoting new competitors; boosting competitiveness via general measures or focusing on specific regions, industries and companies; and providing subsidies to avoid the decline of industries or supporting innovation and training (Aiginger 2007, p. 299).

The definition employed in this article is the following: ‘Industrial Policy is any type of intervention or government policy that attempts to improve the business environment or to alter the structure of economic activity toward sectors, technologies or tasks that are expected to offer better prospects for economic growth or societal welfare than would occur in the absence of such intervention’ (Warwick 2013, p. 16, emphasis in the original). Drawing upon this definition, this work testifies that Cool Japan represents an industrial policy. To clear up any possible misunderstanding, this article does not have the aim of evaluating the Cool Japan policy, because it is beyond its scope. Furthermore, it does not argue that only the developmental state carries out industrial policies. Even the beacon of neoliberalism, the US, intervenes in the economy (Block 2008). Yet, this country is not a developmental state as it does not fulfil its criteria.    

The first part of this article focuses on the characteristics of the developmental state. The second one employs this concept to investigate the Cool Japan policy and offers strong evidence that this policy is an industrial one.

2. The concept of the developmental state

The definition of the developmental state comprises three elements: firstly, the ideational foundation; secondly, the state institutions; and, thirdly its links with the society (Gabusi 2017, pp. 236-238).

2.1    Ideational foundation

Various authors point out the ideational basis of the developmental state. For instance, Manuel Castells contends that ‘a state is developmental when it establishes as its principle of legitimacy its ability to promote and sustain development, understanding by development the combination of steady high rates of economic growth and structural change in the production system, both domestically and in its relationship to the international economy’ (1992, p. 56). Elizabeth Thurbon emphasises that the developmental state underlies a politico-economic worldview where ‘the goal of the economic activity is to strengthen the nation in an international arena perceived as a place of rivalry and struggle. The continuation of techno-industrial transformation and competitiveness is thus a political project’ (2014, pp. 64-65). In this model of state, economic interests are subordinated to political elements (Johnson 1982, p.24). Priority is given to the catching up with the Western economies in order to secure the survival of the nation and its independence (Johnson 1982, p.22; Leftwich 1995, p.401; Weiss 2000, p.23). Authors exploring the significance of the normative basis insist on the economic nationalism of the developmental state (Johnson 1995; Woo-Cumings 1999; Chu 2016a). This nationalism represents a source of legitimacy for the elite and is used to mobilise the nation for development (Chu 2016b, p.6).

2.2    State institutions

Researchers have more paid attention to the structures of the developmental state than its normative dimension. In Johnson’s definition of the developmental state (1982, pp. 315-320), two features deal with state bureaucracy. The first element is ‘the existence of a small, inexpensive, but elite bureaucracy staffed by the best managerial talent available in the system’ (1982, p. 315). In Japan, METI bureaucrats are recruited from the best law schools, usually from the University of Tokyo, and selected through national examinations. They possess the necessary qualifications to formulate and implement industrial policies to guarantee economic growth (Johnson 1982, p. 315). Drawing upon Weber, Peter Evans (1995) highlights the importance of a rational bureaucracy governed by formal rules and based on meritocratic recruitment and promotion in order to facilitate economic development. Unlike the developmental state, a predatory one is chiefly based on personal relations and extracts wealth at the expense of the society (Chu 2016b, p. 9).

The second element that concerns state bureaucracy is a pilot organisation like the MITI in charge of industrial policy (Johnson 1982, pp. 319-320). This pilot agency needs to supervise ‘at least planning, energy, domestic production, international trade, and a share of finance (particularly capital supply and tax policy)’ (Johnson 1982, p.320). The developmental state literature has researched on pilot agencies similar to the MITI, such as Singapore’s Economic Development Board, South Korea’s Economic Planning Board, and Taiwan’s Council for Economic Planning and Development (Amsden 1989; Wade 1990; Weiss 1998).

A pilot agency such the MITI is rooted in wartime Manchuria and Japan. Those years constitute the period of gestation in which bureaucrats learned how to frame industrial policy and implement it. In other words, MITI benefited from the experience accumulated by its Manchurian and wartime predecessors (Sasada 2013, pp. 165-174). Individuals, for instance Kishi Nobusuke, Yoshino Shinji, and Shiina Etsusaburō, who initiated industrial policy in the late 1920s and were responsible of it during the 1930s and 1940s, were the same who conducted industrial policy in the 1950s and 1960s (Johnson 1982, pp. 112-115). This shows the continuity of state intervention in the Japanese economy.

Although it is widely accepted among scholars that a pilot agency represents an important aspect of the developmental state (Weiss 2000, p. 23; Hayashi 2010, p. 50), this publication does not use this element. The Japanese state did not trigger the exports of Japanese pop culture. It rather reacted to its dissemination at the beginning of the 2000s and is nowadays conducting the Cool Japan policy to grow its worldwide commercialisation.

Bureaucratic regimes such as the developmental state produce two sorts of conflicts: first, conflicts within the bureaucracy; secondly, conflicts between the bureaucracy and the politicians (Eisenstadt 1956). As aptly observed by Johnson, ‘the greatest threat to a bureaucrat’s security comes not from the political world or private-interest groups but from other bureaucrats’ (1982, p. 321). The sectionalism of the Japanese bureaucracy can be traced back to the Meiji period (Boyd 2006, p. 52). It thus came before the rise of the developmental state after the Second World War. Struggles between ministries and agencies to protect jurisdictional domains, and competition over resources and prestige, are legion within the Japanese bureaucracy, thereby complicating the cooperation and cooperation between governmental bodies.

The sectionalism of the Japanese bureaucracy testifies that it is not a unitary, monolithic actor (Hook et al. 2012, p. 41). Clashes among the bureaucracy are numerous: for instance, between the MITI and the Ministry of Finance (MOF) over macro-economic policy, between the Ministry of Foreign Affairs (MOFA) and the MITI concerning export promotion and foreign aid, as well as between the Ministry of Internal Affairs and Communications (MIC) and the Ministry of Education, Culture, Sports, Science and Technology (MEXT) over Japan’s information industry (Campbell 1984, pp. 297-299; Hook et al. 2012, p. 46). The Cool Japan policy represents another example of sectionalism of the Japanese developmental state. The ‘Cool Japan craze’ (Matsui 2014) renders difficult to coordinate all the ministries and agencies involved because they want to protect their jurisdictional domains and are prone to apprehend this policy based on their respective domains. As a result, the METI views Cool Japan as an industrial policy to increase the cultural industries’ revenues overseas in order to stimulate growth and job creation. The Agency for Cultural Affairs considers this policy as a gateway to Japanese traditional culture for foreigners. And the MOFA hopes that Cool Japan will boost Japan’s soft power.

2.3    Institutional links with business actors

One of the main challenges of the developmental state is to secure ‘embedded autonomy’ (Evans 1995). Bureaucratic autonomy results from recruitment and career progression on a meritocratic base. Evans (1992, 1995) stresses the credentials and prestige of the bureaucrats. Autonomy also lies on a strong capacity of the bureaucracy to collect information. This capacity ‘gives state agencies a formidable competence in areas normally left to the private sector. The other is that it nurtures bureaucratic independence vis-à-vis sectoral interests within the business community’ (Weiss 1995, p. 598, emphasis in the original).
 
However, the autonomy of the developmental state does not mean that it is isolated from the society. The existence of deliberation councils (shingikai), commissions and other institutional arrangements putting together bureaucrats, scholars and managers of major firms provides ‘institutionalised channels for the continual negotiation and renegotiation of goals and policies’ (Evans 1995, p. 12). For instance, the Industrial Structure Council is the shingikai where the promotion of the Japanese industries is discussed and METI’s (previously MITI’s) visions formulated. These visions provide an evaluation of the Japanese economy and announce the strategic industries that the government wants to assist in their growth (Uekusa 1988, p. 99; Okimoto 1989, p. 24; Wakabayashi et al. 1999, p. 11). The Industrial Structure Council was the main tie between the business world and the MITI (Johnson 1982, p. 102).

The institutional links between the state and the business world are important because through regular meetings, consultations and discussions, the developmental state collects in-depth information in order to implement sound industrial policies. Be it ‘embedded autonomy’ (Evans 1995) or ‘governed interdependence’ (Weiss 1995), both terms underscore the significance of the relationships between the bureaucratic elite and the business community. If the developmental state is too close to the business world, it may be captured by rent-seeking firms. If the developmental state is too distant, the risk is high of policy failures because of incomplete information (Weiss 1995, p. 604).

The relationships between the developmental state and the private sector are facilitated by the structured nature of the representation of the companies. In East Asia, business associations are generally deeply centralised and participate in the decision-making process and implementation of policies (Weiss 1995, p.602). In Japan, zaikai include the main business associations such as the Japan Business Federation (Keidanren), the Japan Chamber of Commerce and Industry, and the Japan Association of Corporate Executives (Hamada 2010, p.334). Gyōkai refer to industry-specific associations. They represent their respective sectors vis-à-vis the state (Hamada 2010, p.334). For instance, the Association of Japanese Animations (AJA) and the Computer Entertainment Supplier’s Association (CESA) are the voice, respectively, of the anime and video games sectors.

3. Cool Japan and the developmental state

The Cool Japan policy aims to boost the exports of the Japanese cultural industries and to present a friendly image of Japan abroad. The origin of this policy can be found in the annual speech of Prime Minister Koizumi Jun’ichirō (2002) to the Diet. He stated that the government would implement a policy of intellectual property to increase the competitiveness of the Japanese industries. Coincidentally, McGray (2002) published his seminal article ‘Japan’s Gross National Cool’ three months later. As a result of Koizumi’s speech (2002), the Diet adopted The Basic Law on Intellectual Property in November 2002, and its implementation occurred at the same time (March 2003) as the creation of the Intellectual Property Strategy Headquarters (IPSH) (Basic Law on Intellectual Property 2002).

In January 2003, in his annual address to the Diet, for the first time for a prime minister, Koizumi (2003) had referred to the international success of a popular culture work, Miyazaki Hayao’s Spirited Away. One year later, again in his annual address to the Diet, he repeated the plan of his government to make Japan a ‘nation founded on intellectual property’ and to promote the exports of Japanese films, animation, and game software (Koizumi 2004). These successive discourses to the Diet attest that the authorities want to assist in the growth of the cultural industries.

In the beginning, the IPSH did not pay much attention to the cultural industries (Choo 2009, p. 140). Nevertheless, it quickly changed its position as evidenced by the publication of The Policy Proposals for the Promotion of Content Business: National Strategy in the Age of Soft Power (IPSH 2004). According to the IPSH, the promotion of the Japanese cultural industries is of paramount importance due to their market size, economic ripple effects, and the overseas projection of Japan’s soft power (2004, p. 2). Although estimated at ¥11 trillion, the Japanese cultural industries represent only 2 per cent of Japan’s Gross Domestic Product (GDP) compared to 5 per cent in the US and an international average of 3 per cent (IPSH 2004, p. 2). The enactment of The Content Industries Promotion Law in June 2004 again shows that the Japanese state wants to promote the content industries. In this law, the term ‘content’ refers to anime, music, video games, manga, drama and movies. After its enactment, the MOFA, the Ministry of Agriculture, Forestry and Fisheries (MAFF), the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), the Ministry of Health, Labour and Welfare, the Japan External Trade Organisation (JETRO), and the Japan Foundation joined the initial implementers of the Cool Japan policy, that is to say the Cabinet Office, the METI, the Agency for Cultural Affairs, and the MIC (Choo 2012, p. 89).

The law clearly states that the IPSH is in charge of supervising the entire policy to support the cultural industries (Content Industries Promotion Law 2004). It mediates conflicts that occur between ministries and agencies in their promotion of the Japanese cultural industries. Most of the tension is due to competition of governmental bodies to secure more budget from the Cabinet Office (Choo 2012, pp. 89-90). The Cabinet Office tries to mitigate this struggle. It formulates recommendations to ministries so that they adjust their policies. Nevertheless, they are often ignored, as an official of the IPSH, Ōji Masahiro, puts it: ‘Theoretically it is the case where each ministry accepts our requests or asks us for help when needed. But, we are often told that things cannot be done when we ask them to do things’ (Choo 2009, p. 145). As Cool Japan involves a very large array of state actors, it is not a surprise that this policy is a complex one, even for METI bureaucrats (METI Official 1 Interview, 02/09/2014). (6) In the current Abe government, Matsuyama Masaji is minister of state for the Cool Japan strategy (7). Without a ministry, that is to say without a specific bureaucracy, it is highly likely that he cannot coordinate all the state actors involved in Cool Japan.

Ministries and agencies in Japan are locked into a system of competition because of sectionalism. Struggles between governmental bodies to protect their jurisdictional domains, and to increase their budget as well as their number of bureaucrats are a recurrent feature of Japanese politics which makes their coordination a thorny issue (see Section 1.2).

3.1 The Ministry of Economy, Trade and Industry

The METI is the main ministry in the implementation of the Cool Japan policy because it has institutional links with the industries related to Cool Japan. Since the onset, it has taken part in the policy to strengthen the Japanese cultural industries. Furthermore, it supervises the Cool Japan Fund whose objective is to assist in the global dissemination of Cool Japan products. It regards Cool Japan as a way of stimulating domestic growth and creating more job opportunities against the backdrop of a rapid aging population and a low birthrate (METI 2012b, p. 4). This is consistent with the definition of an industrial policy offered in the Introduction.

The strong interest of the METI in the content industries dates from the beginning of the 2000s. Until that time, the Japanese government did not consider that anime and manga were part of Japanese culture. The Ministry of Education (MOE) recognised them as part of Japanese traditional culture in its White Paper in 2000. For the first time, anime and manga were considered as ‘valid’ arts (MOE 2000) since the release of MOE’s White Paper.

The former head of METI’s Media and Content Industry Division, Hirozane Ikuro, summed up the prevalent attitude to the cultural industries until the end of the 1990s: ‘It was often said: “Why should the nation bother with such a thing?” That is what people said for a long time’ (Hatayama 2005, p. 86). A former official of METI’s Media and Content Industry Division, Sakai Masayoshi, confirmed this widespread opinion among bureaucrats: ‘The media industry is not directly connected to the rise and fall of a nation or to the life and death of its people, and it has a distance with authorities such as traditional art and imported art. Therefore, even if it increases GDP or even if it contributes to the development of the telecommunication industry, [bureaucrats] are not willing to tackle such policies seriously’ (Sakai 2008, p. 38). This negative perception explains why the Japanese developmental state neglected the cultural industries for many years.

The worldwide success of television series such as Pokemon and Yu-Gi-Oh!, and of anime movies such as Princess Mononoke and Spirited Away, in the late 1990s and early 2000s contributed to change the view of the bureaucrats. They now deem that the support of the cultural industries can stimulate the Japanese economy and spread a positive image of Japan through soft power (Matsui 2014, p. 92). Nevertheless, the fact that bureaucrats have a better opinion on the cultural industries than before does not mean that negative judgement is absent. As put by an interviewee, young bureaucrats and politicians better grasp the appeal of anime than the older generation (Roland Kelts Interview, 27/03/2014). The quantity of official reports on the anime, video games and manga industries, and overall on the content industries sharply rose in the 2000s (see Table 1).

Table 1. Official reports on the content industries
   

Content-related reports

Video games content reports

Anime content reports

Manga content reports

1980s

0

0

0

0

1990s

97

17

5

1

2000s

516

43

82

37

Source: Choo 2012, p.88.

The publication by the METI of The Industrial Structure Vision 2010 attests that Cool Japan represents for this ministry an industrial policy. This report suggests assisting in the growth of five strategic industries, for example the creative industries (8) (METI 2010a, pp. 34-35). It notes the crisis of the Japanese economy and the worsening of its competitiveness. For instance, between 2000 and 2008, the GDP per capita dropped from the 3rd to the 23rd global ranking. In 2008, Japan’s GDP accounted for 8.9 per cent of the world GDP in contrast to 14.3 per cent in 1990 (METI 2010a, p. 5). The population is quickly aging and is going to shrink in the future. The domestic demand has become sluggish (METI 2012b, p. 3).

The METI recommends to lower the high dependence of the Japanese economy on the automotive industry by the promotion of five key industries: advanced areas (robots, space etc.), the creative industries (tourism, contents, food, fashion etc.), environment and energy industries (smart community, next-generation vehicles etc.), child rearing, nursing, medical and health services, as well as infrastructure-related and system export (nuclear energy, railways etc.) (METI 2010a, pp. 34-35). This ministry considers that the success of the creative industries will lead foreigners to buy Japanese products (cosmetics, cars, electronics etc.), and to visit Japan, thereby developing the tourism industry (METI 2010a, pp.118-119).

Interestingly, this report recommends the establishment of the ‘Contents Overseas Development Fund’ because the Japanese cultural industries have a very low export ratio (1.9 per cent) compared to the American ones (17.8 per cent) (METI 2010a, p. 128; METI 2010b, p. 5). The ‘Contents Overseas Development Fund’ was created as the Cool Japan Fund in November 2013 (see Section 2.2). The New Growth Strategy published a short time after The Industrial Structure Vision 2010 repeats that the creative industries have not completely exploited their growth potential (Cabinet Office 2010, p. 43). Through Cool Japan, the METI wants to increase the exports of the cultural industries because they are too domestic-focused (METI Official 2 Interview, 19/03/2014; METI Official 1 Interview, 02/09/2014). The table below shows that the video game industry is the only net exporter.


Table 2. Creative industries’ trade balance in 2011 (9)
   

Games

Make-up

Fashion (Textile)

 Films

Music

Books

Magazines

Copyright

Tourism

Exports

2,930

1,292

376

46

22

73

43

1,317

8,752

Imports

21

1,674

18,516

408

240

217

72

7,007

21,716

Trade balance

2,909

-382

-18,140

-362

-218

-144

-29

-5,690

-12,963

Unit: hundred million ¥. Source: METI 2014, p.8.

The Japanese cultural industries have a large domestic market to explain why they are mainly domestic-focused. This differs from the priority of the South Korean cultural industries to disseminate abroad their products because the domestic market is smaller. The METI has analysed several policies of the South Korean government to promote pop culture overseas. This ministry regards this country as a model for the support of cultural industries (METI Official 1 Interview, 25/02/2014). However, the South Korean policy-making process is much more centralised than the Japanese one (Matsui Takeshi Interview, 03/09/2014).   

According to the METI, the world market of creative industries will reach ¥932.4 trillion in 2020 (respectively media and content ¥42.3, food and beverage ¥682.8, and fashion ¥207.3). This will represent about double of the 2009 total (¥463.9 trillion10). This ministry aims for the Japanese creative industries earning between ¥8 and ¥11 trillion of the world market in 2020 (METI 2012b, p. 6). Their share of the world market is assessed at ¥2.3 trillion (METI 2012a, p. 4). The METI not only wants to create a community of fans abroad, but also to convince them to visit Japan (METI Official 1 Interview, 25/02/2014). This demonstrates that the METI sees Cool Japan as an industrial policy.

Within this ministry, the Media and Content Industry Division deals with the content industries. This division was established in 2001 when the MITI turned into the METI. Its mission is to contribute to the development of the content industries in Japan. The METI believes that this sector has a lot of multiple ripple effects on the Japanese economy. Even if two METI bureaucrats could not give a precise figure, they ensured this author that they are important (Munakata Saho and Sakamoto Yūko Interview, 08/04/2014).

The Media and Content Industry Division has institutional links with the business associations representing the industries of the animation (AJA) and video games (CESA). A bureaucrat of this division is in contact for each sector of the Japanese cultural industries. These bureaucrats occasionally meet representatives of each business association. Yet, in the case of the organisation of well-known shows such as AnimeJapan and Tokyo Game Show, contacts are very frequent (Munakata Saho and Sakamoto Yūko Interview, 08/04/2014). These facts illustrate the institutional links between the METI and two business associations, a characteristic of the developmental state (see Section 1.3).

The specific case of the manga industry shows that the Japanese developmental state is also in relationship with two informal associations: the Association of Manga Publishers11 (AMP) and the Digital Comic Association (DCA). The Japan Book Publishers Association (JBPA) and the Japan Magazine Publishers Association (JMPA), both formal associations, do not really focus on manga (Munakata Saho 2014). While the All Japan Magazine and Book Publishers’ and Editors’ Association publishes reports on the book industry, including manga, it does not have close connection with the Media and Content Industry Division (Sasaki Toshiharu and Wakabayashi Hideki Interview, 30/04/2014). The DCA and the AMP do not have legal status. The DCA is less informal than the AMP. A METI bureaucrat sometimes attends meeting of the DCA depending on the subject. The Media and Content Industry Division has close relationships with the major manga publishers which are members of these two informal associations (Munakata Saho 2015).

The METI has also another division in charge of the content industries: the Creative Industries Division. It promotes the exports of the Japanese creative industries through Cool Japan. For this section, Cool Japan means not only the content industries, but also food, fashion, design, regional products, craft industries and so on. Cool Japan is thus a catch-all term not restricted to the content industries (METI Official 1 Interview, 25/02/2014). The domains of the Creative Industries Division and the Media and Content Industry Division can easily overlap. Although the latter copes with domestic issues of the Japanese content industries, it supervised the Subsidy for the Localization and Promotion of Japanese Visual Media 4 (J-LOP4), a body allocating subsidies for the promotion and localization of these industries. Sectionalism does not only take place between ministries, but also within them (Boyd 2006, p.53; Hook et al. 2012, p. 41).

3.2 The Cool Japan Fund

In summer 2012, a team of bureaucrats of the Media and Content Industry Division and the Creative Industries Division was set up to establish the Cool Japan Fund. MOF bureaucrats were also part in this task force. The drafting of the bill lasted ten months. During the process, the Media and Content Industry Division contacted the business associations of the Japanese cultural industries in order to inquire into the potential projects that could be supported by the Cool Japan Fund and requested their collaboration. This division also contacted many Japanese companies, between 200 and 300, including the major ones. The METI wanted to find private investors for the Cool Japan Fund. The name of the corporations contacted is secret (METI Official 3 Interview, 30/04/2014).
 
The drafting of the bill started under the Democratic Party of Japan (DPJ) Cabinet. After the victory of the Liberal Democratic Party (LDP) at the December 2012 House of Representatives general elections, METI bureaucrats were worried about what the new governing majority would decide concerning Cool Japan. As the LDP consented to this policy, these bureaucrats could pursue the drafting of the law. The bill creating the Cool Japan fund was enacted in June 2013. Five months were necessary to recruit the staff and collect the firms’ funds. Finally, the Cool Japan Fund was established in November 2013 (METI Official 3 Interview, 30/04/2014).

In the beginning, the Cool Japan Fund had a capital of ¥37.5 billion. It is expected to conduct its activities for a maximum of twenty years, demonstrating the long-term commitment of the Japanese state. Nuclear energy (Shadrina 2012), space policy (Pekkanen and Kallender-Umezu 2010), and electric vehicles (Åhman 2006) also testify that industrial policies are in the long term. Yet, in fact, the government would like the Cool Japan Fund to exist as short as possible, approximately ten years, and plans then to withdraw its money. In the meantime, it hopes that banks and other private investors will be more willing to fund the expansion of the Small and Medium Enterprises (SMEs) of the content industries outside Japan (METI Official 3 Interview, 30/04/2014). As of July 2019, the capital of the Cool Japan Fund amounts to 82.8¥ billion. The Japanese state is the main funder with 72.1¥ billion. Private companies have contributed to the remainder, ¥10.7 billion (Cool Japan Fund 2019a).

The Cool Japan Fund was created to resolve three difficulties that the Cool Japan-related firms, especially the SMEs, meet when they want to grow abroad. Firstly, the Japanese banks and investors are risk-averse when it comes to the overseas expansion of the SMEs as they consider that their projects are too hazardous. Therefore, it is difficult for them to collect money to do business outside Japan. Secondly, the SMEs are most of the time not well-versed in the foreign markets. They have little knowledge and information on them. They lack the experience and the expertise to expand abroad. Lastly, it is hard for them to have access to foreign malls where they can sell their products (Cool Japan Fund 2014, p.2). The objective of the Cool Japan Fund is to settle these bottlenecks (METI Official 1 Interview, 25/02/2014), thereby providing strong evidence that Cool Japan is an industrial policy.

The Cool Japan Fund attests that the Japanese developmental state represents a catalytic agent that offers incentives and disincentives for managers (Lind 1992). By creating this fund, the authorities want to encourage the Japanese cultural industries to boost their presence outside Japan, and the investors and banks to lend them money. Yet, the Cool Japan Fund is dissimilar to the Japan Robot Leasing Company (JAROL) and the Japan Electronic Computer Company (JECC). Both are instances of public risk absorption as the state absorbed most or all of the risk (Weiss 1995, p. 609). The JAROL could offer advantageous leasing conditions since the Japan Development Bank financed 60 per cent of its capital by low-cost loans (Mansfield 1989, p. 190). The JECC was funded around 50 per cent by low-interest government loans. From 1961 to 1981, the Japanese developmental state allocated some $US2 billion in generous loans to the JECC so that the Japanese firms could rent computers (Anchordoguy 2005, p. 131). Although the Cool Japan Fund is mainly financed by the state, it does not represent public risk absorption because it is a minority investor in the chosen projects. This shift, from absorbing most of the risk to being a minority shareholder, is likely to manifest the impact of neoliberalism and the complicated situation of the Japanese developmental state’s current budget.

The Cool Japan Fund has three objectives: firstly, the global dissemination of Japanese products and services, and the creation of successful business models; secondly, the support of corporate activities, especially the development of human skills to conduct business outside Japan; thirdly, the improvement of the image of Japan overseas by establishing and increasing business ventures (METI 2014, p. 26).     

The Japanese domestic market will shrink as a result of a rapidly aging population and a decrease in young people. Therefore, the METI wants to encourage the Japanese cultural industries to boost their exports. This attests that the Japanese state still believes that its role is to ensure the competitiveness of the national economy, a feature of the developmental state (see Section 1.1). The METI expects that the increase in the commercialisation of the products of the Japanese cultural industries will lead more foreigners to visit Japan, thereby stimulating the tourism industry. This ministry aims to develop ‘inbound tourism’ (2014, p. 11), for instance contents tourism that is based on the characters, narratives, and locations of contents (Seaton and Yamamura 2015, p. 2). Since the 1980s, Japanese pop culture has become highly popular, especially among young people. Philip Seaton and Yamamura Takayoshi observe that ‘this is driving many people’s desire to visit Japan, and, as all academics working in Japanese studies departments know, it drives many students’ desires to study about and study in Japan, too’ (2015, p. 5).

For the Cool Japan Fund, Cool Japan has a large meaning. It is not limited to media and content industries, but also includes fashion, lifestyle, craft, food, and tourism. Even if the Cool Japan Fund assumes that the media and content industries are the most effective to induce foreigners to come to Japan, it does not have a priority sector (Cool Japan Fund Official Interview, 12/06/2014).

It invests through the buying of shares, that is to say equity investments, to become a minority investor in the selected projects. After the sale of its shares, the money is funneled to other projects (Cool Japan Fund Official Interview, 12/06/2014). The duration of the investments is determined on a case-by-case basis, but the average length is about five or seven years (METI Official 3 Interview, 30/04/2014). Several requirements exist for the investments. Firstly, it is essential that the projects stimulate demand for the Japanese products and services abroad, and consequently, raise the domestic growth. Secondly, as the Cool Japan Fund is a minority investor, the applicants must indicate private ones. It is also necessary that they detail the redemption conditions of the Cool Japan Fund’s shares. Lastly, the projects must create ripple effects by consisting of either a consortium of corporations among several industries, or a platform for the regional SMEs, or a pioneer in the foreign markets, or a ‘broadcasting effect to consumers worldwide’ (Cool Japan Fund 2014, p. 5). However, the assessment of the ripple effects is a tricky task (Cool Japan Fund Official Interview, 12/06/2014). The Cool Japan Fund gives priority to the regional firms and the SMEs. This does not mean that big companies are ineligible. They can represent the platform for the SMEs (METI Official 1 Interview, 25/02/2014).

A committee consisting of the Chief Executive Officer (CEO), the chairman, and five external board members select the projects according to the government’s investment guidelines (METI 2014, p. 27). Though the state is the most important shareholder of the Cool Japan Fund, the METI has no decision-making influence on the applications. The Creative Industries Division supervises the activities of this fund that notifies to this division the chosen projects (METI Official 1 Interview, 25/02/2014; METI Official 3 Interview, 30/04/2014).
 
As of August 2019, the Cool Japan Fund (2019a) has invested in 38 projects that amount to ¥86.1 billion. Fourteen projects deal with media and content, twelve with food, seven with lifestyle and fashion as well as five with inbound (tourism) and others (Cool Japan Fund 2019a). This testifies that, up to now, the Cool Japan Fund has given priority to the foreign expansion of the media and content sectors, followed by the food industry. Most of the investments (fourteen) takes place in the whole world. The second area of investments (twelve) is East and Southeast Asia where prospects of high growth for Japanese firms exist in countries such as Vietnam, Indonesia, China, and Malaysia. Six projects target Europe and the US, and two the Middle East. The remainder is focused on Japan (Cool Japan Fund 2019b).

Conclusion

In the context of an ongoing debate on the Japanese political economy and capitalism (Chiavacci and Lechevalier 2017), this article reminds us that the developmental state, a key institution, persists in Japan. It has not been relegated to the past. The shift from the take-off stage to economic maturity did not imply its death. Rather than asserting its demise, it is more illuminating to investigate how it has evolved to adapt to new circumstances, in this case neoliberal globalisation and free capital flows. Globalisation does not necessarily mean the adoption of an Anglo-Saxon, minimalist state.

The Japanese developmental state continues to detect promising sectors, for instance, the cultural industries, and to promote them through industrial policies. The goals of the Cool Japan policy are to increase the cultural industries’ revenues overseas and to diffuse a friendly image of Japan to foreigners. This policy is an industrial one as the METI views Cool Japan as a way to reinvigorate the national economy against the background of a rapidly aging population and a low birthrate. The creation of the Cool Japan Fund testifies that the government wants to encourage the Japanese cultural industries to strengthen their presence outside Japan, and the investors and banks to lend them money, another evidence of an industrial policy. The institutional links that the authorities have with the AJA, the CESA and two informal business associations, the AMP and the DCA, as well as their willingness to secure the competitiveness of these industries attest to the persistency of the developmental state.  

Acknowledgements

This author wants to express his sincere gratitude to the Arts and Humanities Research Council (ARHC) for its generous funding of his doctoral research. He is deeply indebted to the participants of the session ‘Entrepreneurship and New Industries II’, in particular its discussant Professor Cornelia Storz, for their stimulating comments on an earlier draft at the Society for the Advancement of Socio-Economics (SASE) Annual Conference in Lyon. He would like to thank two anonymous reviewers for their incisive feedbacks, too.

List of Interviewees

(Chronological Order)

METI Official 1, 25/02/2014 and 02/09/2014

METI Official 2, 19/03/2014

Roland Kelts, Visiting Scholar at Keiō University, 27/03/2014

Munakata Saho and Sakamoto Yūko, METI’s Media and Content Industry Division, 08/04/2014

METI Official 3, 30/04/2014

Sasaki Toshiharu and Wakabayashi Hideki, All Japan Magazine and Book Publishers’ and Editors’ Association, 30/04/2014

Cool Japan Fund Official, 12/06/2014

Matsui Takeshi, Professor at Hitotsubashi University, 03/09/2014

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Notes

[1.] In 2001, the MITI became the METI.


2.    For a definition of neoliberalism, see Thurbon (2012, p.278).


3.    In Japan, the cultural industries are also referred to as the content industries (Xiang 2014, p.3). For more details on these sectors, see Throsby (2008) and Hesmondhalgh (2013).


4.    Nye introduced soft power for the first time in his book Bound to Lead: The Changing Nature of American Power (1990). He has then continued to develop his concept in further publications (2004, 2011).


5.    In an appendix, Karl Aiginger lists fourteen different definitions of industrial policy (2007, pp.319-320).


6.    For the sake of clarity, it is important to clarify that the author of this article interviewed twice the same METI bureaucrat on the 25 February 2014 and on the 2 September 2014. It is why he uses the same term “METI Official 1 Interview” for two different dates.


7.    Also minister of state for measures for declining birthrate, for the intellectual property strategy, for science and technology policy, and for space policy. He is in charge of information technology policy, and for promoting dynamic engagement of all citizens, too.   


8.    The term “creative industries” has a broader meaning than the word “cultural industries” (UNDP and UNESCO 2013, p.20). In Japan, the creative industries include the cultural industries, and also food, fashion, design, craftwork, tourism and so on (METI 2014, p.11). For further information on the creative industries, see Hartley (2005) and Flew (2012).


9.    Figures of music data from 2005, fashion from 2009. These figures do not include online sales.


10.    Respectively media and content ¥22.7, food and beverage ¥339.2, and fashion ¥102.


11.    In Japanese, Komikku Shuppansha no Kai.

About the Author

Nicolas Garvizu completed his thesis on Cool Japan at the School of East Asian Studies of the University of Sheffield (United Kingdom). His research interests include the evolution of the developmental state, international relations of East Asia, Japan’s industrial and innovation policies, and the Japanese cultural industries..

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