JAPAN'S RECENT EXPERIENCES OF QUANTITATIVE ECONOMIC PLANNING

Introduction

The economic planning in Japan is a typical example of indicative planning supported by a fairly detailed quantitative framework. Since the Medium-term Economic Plan, 1964-68, employed a macro econometric model for the first time in Japan, the Government has kept updating and developing a set of economic models for quantitative planning. The present plan called the New Economic and Social Plan for 1979-1985 is supported by a set of a large-scale multi- sectoral econometric model with sixteen industrial sectors for medium- term economic analysis, an optimal growth model (of the « turnpike model » style) for long-run analysis, and a full-fledged input/output system. However, the experiences in the seventies have made many economists and bureaucrats suspicious about the practical meanings of drawing a big plan.

With the unforeseen changes and expected future variations in the surroundings of the Japanese economy, the twenty year history of quantitative economic plannings seems to have come to a point of rethinking. Some of the major factors that brings about air of suspicion are uncertainties rising out of the international scene. Sporadic rise of oil price has nullified or short-lived the two recent economic plans of the Government by causing large errors in inflation rate, trade balance and eventually the growth rate. Large changes in relative price have resulted in the shift of industrial structure much more quickly than the plans have assumed. Changes in terms of trade and the balance of payment situation have made the Yen one of most volatile-fluctuating currency. The Yen rate change brings about abrupt rise and fall of the domestic inflation rate through the ups and downs of imported material cost change. In short the experiences of the seve- ties were that the surroundings of the Japanese economy have changes

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Revue économique — N° 5, septembre 1980.