In my visit to Manila last August, I had interesting discussions with educators at the University of the Philippines (UP) regarding the two concepts of “Shared Growth” (SG) and “Inclusive Growth” (IG). In 1993, the World Bank came out with the “East Asian Miracle” report which used the word SG to summarize the economic performance of eight East Asian countries/economies [led by Japan], which were able to grow rapidly while improving their income distribution. As a graduate student then, I was attracted to this phenomenon, and at every chance I had continued to do my research on this concept. On the other hand, IG was adopted as one of the pillars of this region’s economic development strategy when Japan became the chair country for the APEC summit in 2010, and has become a buzz word in the field of economic development. It can be seen that Japan has played an important role in promoting both concepts.
At first glance, the two concepts appear to be the same, since both seek a growth which would eliminate economic disparities. Moreover, as somebody who has emphasized for many years now that Japan should put importance on its country’s peculiar features, I should be happy that a development strategy that seeks to balance efficiency and equity is once again being proclaimed. But, I seem not prone to be so. The Philippine government’s economic planning agency has even inscribed IG in its medium-term plan, and I have encouraged caution in the use of this term among UP educators. This is because that the two concepts have crucial, albeit subtle, different connotations.
The differences between the two concepts are as follows.
1. SG is an older term than IG, but the former still applies to the current situation. In short, the idea of equity + efficiency is not something that Japan has just recently became aware of. 2. The possibility of SG is based on Japan’s experience, which tends to differ from that suggested by mainstream economics. It was because of Japan’s aggressive lobbying on the World Bank that resulted in the “East Asian Miracle” report. 3. The economic strategy of SG is different from the market fundamentalism that is proposed by mainstream economics, since SG considers as important the role of [a more pro-active] government. On the other hand, IG leans towards market fundamentalism.
Based on the differences above, we can confirm that SG is a more powerful economic strategy than IG. When the SG strategy was published in the “East Asian Miracle” report, Japan was in a financially strong position and was, therefore, able to go against the mainstream. At that time, Japan was being told to “put up and shut up”, but instead it commendably took the position of “putting up [the money = Official Development Assistance] as well as not shutting up”. However, right now, Japan is not really in a good financial position, so it is very much possible that her independent proposals on economic development would be taken lightly. Could such a Japan, as in the past, be able to put forward an effective proposal?
I would like to answer “yes, she can!” Despite a weak financial position, the Japanese economy possesses the SG DNA, which I think she could emphasize when making development strategy proposals.
The SG strategy was coined in the 1993 World Bank report, but it was already being implemented several decades prior to the report. In short, SG was a concept that preceded IG by more than twenty years. I think that this tells us just how natural and important for Japan were the economic goals of efficiency + equity. It is in no way like IG, which seems to have recently popped up. The future of about three-fourths of the world’s population should not be treated as some kind of buzz word popularity contest.
The SG strategy is based on the Japan’s own experience. In economics, balancing efficiency and equity is very difficult, but Japan has showed that this is possible. On the other hand, IG has not been actually achieved, and remains an ideal or an aspiration. Some may say that IG is more appropriate to the present time, but this at best could only refer to the lost decades of Japan, where equity + efficiency were lost.
IG leans toward the market fundamentalism of mainstream economics, wherein the government plays the role of a referee. The government decides and implements the rules regarding the game (competition) in the market. In contrast, SG concedes the government’s selective intervention, wherein the government acts more like a coach. Together with the firms in the front line of competition, this government would mourn over loses, rejoice over victories, and burn with intensity over the contest. Such a government has actually contributed to improving the competitiveness of Japanese firms.
Looking back, it was such a picture of Japan that I was enamored to devote my life’s work. My activities in SGRA started with this plea for respecting such aspects of Japan’s identity. [SGRA’s] Manila Seminars are held under the philosophy of SG. The development concept/strategy of SG, which was cited in the “East Asian Miracle” report, requires further clarification, a task that I have been undertaking through SGRA’s activities.
Thankfully, plans are now underway to hold the 15th Manila Seminar on February 8, 2013 at UP, under the theme “Manufacturing as if People and Mother Nature Mattered”. In this seminar, we will be reporting the results of the survey research of Professor Hitoshi Hirakawa of Nagoya University on “Symbiotic Regional Institution Building Towards a Knowledge-Based Economy in Asia”. Together with Prof. Hirakawa, I had a chance to pay a courtesy call on Dean Sale of the School of Labor and Industrial Relations of UP, who was very encouraging in his active support of the SG concept.
Now more than ever, Japan has to be forthright in speaking of the good aspects of her identity. Wavering at this point is not very “CooL Japan” [a movement in Japan to emphasize the good points of her culture] and would only continue to invite widespread confusion.
During my last visit, we also had the pleasure of the company of Professor Toru Nakanishi of the University of Tokyo during our meeting for the 16th Manila Seminar, among other issues, tentatively to be held on August 2013. Despite the media reports in Spring of this year regarding the cancellation of tours from China to the Philippines, the increased stringency on China’s imports of primary goods from the Philippines, and the plight of Philippine workers in China, I was able to confirm in this meeting that “scholars should go beyond the conflicts of governments, and attend the Shanghai conference [Asia Future Conference] for as long as it is possible to do so”. We go for the sake of scholarly exchange. I was deeply moved by the burning resolve of my Philippine comrades.
For photos related to this Manila Report, please see the links below. Visits [SGRA Photo Gallery] Meeting at the UP College of Architecture [FaceBook]
SGRA Kawaraban 353 in Japanese (original)