ABSTRACT
For a supporter, we emphasized the importance of supplementing the hegemon’s ability to provide a large open market to balance global supply and demand imbalances. In the past, Japan, instead of doing this, itself relied on the hegemon’s market to balance its supply and demand imbalances as part of its export-led growth strategy. According to Inoguchi Kuniko, if Japan was to become a supporter it had to provide: first, an open market by liberalizing its standards and certification procedures and rationalizing its distribution system; and second, a large market by boosting existing levels of domestic consumption.1 We looked at the former in chapter 5 and this chapter will concentrate on the latter aspect of increasing domestic demand. We will also consider the importance of economic restructuring in Japan. Economic restructuring can be expected to contribute to a reduction in the dependence on exports and promote reliance, instead, on internal stimulus for economic growth. The presence of a large open economy, we argued, was essential to the stability of a liberal trading regime because it provided a vent for occasional global supply and demand imbalances. The importance of a hegemon with a large and open market was explained in these terms. The present crisis of the LIEO stemmed from the American perceptions, based on its worsening trade position, that the openness of the US economy was being unfairly exploited, not only by the NICs whose development strategies were based on perpetuating an internal supply and demand imbalance, but also by countries like Japan which used market penetration in the United States to ensure prosperity at home. Thus, Gerald Curtis suggested
that Americans tended to perceive the success of Japanese economic growth as being the result of an ‘export-to-the-United States-led growth’.2 The resulting protectionism was a signal that the United States was no longer willing to continue in that role as a vent for sustained global supply and demand imbalances. This necessitated not only economic restructuring in Japan, but also, as its positive contribution to the stability of the LIEO, the provision of an open economy to relieve the burden on the United States. Japan’s ability to play this regimesupportive role was based on the fact that Japan had the third largest GNP in the world.
