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Japan's New Foreign Economic Policy: A Shift Toward a Strategic and Activist Model?

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  • Mireya SOLÍS
  • Shujiro URATA

Abstract

This article analyzes key departures in Japanese foreign economic policy: the development of an extensive network of free trade agreements thereby abandoning the exclusive focus on the multilateral system as the vehicle for trade liberalization, and the revamping of the official development assistance (ODA) program by slashing its budget, emphasizing national interests in aid giving, and phasing out yen loans to China. We argue that the remarkable degree of policy activism in both trade and ODA represents the Japanese government's attempt to respond strategically to common challenges: domestically the economic recession, internationally the pressure for policy convergence and competition with China. However, in both issue areas the ability of the government to embark on swift policy changes has been compromised by domestic politics: opposition from vested interests and politicization of policy‐making, bureaucratic sectionalism, and weak executive leadership. We conclude with some policy recommendations to improve the coherence of foreign economic policy formulation in Japan.

Suggested Citation

  • Mireya SOLÍS & Shujiro URATA, 2007. "Japan's New Foreign Economic Policy: A Shift Toward a Strategic and Activist Model?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 2(2), pages 227-245, December.
    • Handle: RePEc:bla:asiapr:v:2:y:2007:i:2:p:227-245
    DOI: 10.1111/j.1748-3131.2007.00071.x
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    References listed on IDEAS

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    1. Shujiro Urata & John Sasuya, 2009. "Analysis Of The Restrictions On Foreign Direct Investment In Free Trade Agreements," World Scientific Book Chapters, in: Christopher Findlay & Shujiro Urata (ed.), Free Trade Agreements In The Asia Pacific, chapter 3, pages 81-130, World Scientific Publishing Co. Pte. Ltd..
    2. Inkyo CHEONG & Jungran CHO, 2007. "Market Access in FTAs: Assessment Based on Rules of Origin and Agricultural Trade Liberalization," Discussion papers 07016, Research Institute of Economy, Trade and Industry (RIETI).
    3. World Bank, 2003. "World Development Indicators 2003," World Bank Publications - Books, The World Bank Group, number 13920, December.
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    Cited by:

    1. Masahiro Kawai & Shujiro Urata, 2010. "Changing Commercial Policy in Japan During 1985–2010," Trade Working Papers 23056, East Asian Bureau of Economic Research.
    2. Takahashi, Katsuhide & Urata, Shujiro, 2010. "On the Use of FTAs by Japanese Firms: Further Evidence," Business and Politics, Cambridge University Press, vol. 12(1), pages 1-15, April.

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