Page 45 - Global Political Economy_Understanding The International Economic Order

CHA PTER T WO
economist) and Miles Kahler (a political scientist). 16 The contribu-
tions to the book revealed that these two groups of specialists, as they
attempted to answer Feldstein’s questions, asked different questions,
used different methods, and reached different conclusions regarding
the nature of the evolving Pacific Asia economy.
The political scientists’ analysis concentrated on the trade/invest-
ment behavior of Japanese firms and on official Japanese foreign aid
to the region (Official Development Assistance). Evidence, they as-
serted, revealed that Japanese corporations, with the active support
of the state, were attempting to incorporate the Pacific Asian econo-
mies into regional industrial and financial structures or networks or-
ganized, managed, and dominated by large Japanese corporations.
Through their trade, investment, and other activities, these giant mul-
tinational firms working together with Japanese foreign aid agencies
were consciously fashioning a regional division of labor composed of
highly integrated production and distribution networks centered on
the Japanese home economy. The political scientists concluded that
the Japanese, as they had done in the 1930s, were again attempting
to create and dominate an East Asian sphere of influence, albeit this
time by peaceful economic means. The political scientists defined the
Pacific Asian economy as a hierarchical structure increasingly deter-
mined and dominated by Japanese multinational corporations and
the Japanese state.
The economists, on the other hand, concentrated their analysis on
trade flows and other measurable economic quantities that could be
formally modeled. Their analysis of the data led to the conclusion
that the Japanese state and corporations were not attempting to cre-
ate an exclusive economic sphere in Pacific Asia. On the contrary,
they insisted that what was taking place in the region could be ex-
plained entirely in terms of market forces and the responses of indi-
vidual firms to those forces. For example, the increasing Japanese in-
vestment in the region and growing trade with the region were
considered responses to the substantial appreciation of the yen fol-
lowing the Plaza Agreement of September 1985 and to subsequent
changes in Japanese comparative advantage. Moreover, analysis of
gross trade statistics showed that, although intraregional trade in Pa-
cific Asia was growing, it was growing less rapidly than trade between
Pacific Asia and the rest of the world. Thus, economists found no

16
Jeffrey A. Frankel and Miles Kahler, eds., Regionalism and Rivalry: Japan and the
United States in Pacific Asia (Chicago: University of Chicago Press, 1993).
32