Institutionalization of kaizen in Ethiopia (May 2010)
GRIPS Development Forum and JICA are conducting industrial policy dialogue with the Ethiopian government. One of the key issues in this dialogue is the introduction of kaizen, Japanese style factory improvement technique, into Ethiopia. In late 2009, JICA started a pilot project to improve 30 factories. However, under the strong guidance from the prime minister, the Ministry of Trade and Industry has decided to scale up and institutionalize kaizen as soon as possible, and even before the pilot project is completed. I welcome this move which exhibits strong policy ownership and commitment to fast implementation which are often missing in other countries.
GRIPS and JICA are discussing with Mr. Getahun Tadesse, a MOTI official in charge of kaizen institutionalization, regarding the roadmap and details. Mr. Getahun is to produce the "framework" document by June 2010. GRIPS and JICA are exchanging views and ideas via teleconference. The Ethiopian Kaizen Institute will be established by this autumn as the core federal agency to execute the task. Unlike in East Asia, kaizen is a new concept in Ethiopia. This means the Ethiopians must learn and plan from the scratch but East Asian experiences should be a variable input to their endeavor.
Consultation with Vinh Phuc Province (May 2010)
Vinh Phuc is a province in Northern Vietnam, near Hanoi, where Toyota, Honda, and Piaggio factories are located. Taiwanese and Korean firms are also investing there. The Vinh Phuc People's Committee (i.e. local government) has set up the One Stop Services Center under the JICA project for improving investment climate. Industrial parks, roads, sewage, power and other industrial infrastructure are being built, but the province is still unsure how to attract more FDI, especially supporting industries (part and component suppliers).
I was invited to Vinh Phuc on May 11 to hear the plans and exchange views with officials in charge regarding investment attraction. Experts from Vietnam Development Forum, JICA, and Hanoi University of Industry also accompanied me. My impression after the discussion is that Vinh Phuc's FDI policy remains elementary and the province has to learn much more, especially from successful neighboring countries, about the concrete details of strategic FDI marketing.
Flexible structure of Meiji politics (Apr. 2010)
Japan faced globalization and strong Western pressure when it opened its ports in 1859. How did Japan not only avoid being colonized but also quickly modernize its society and become one of the "first class" powers within half a century? I have written a Japanese book with Professor Emeritus Junji Banno of Tokyo University on the political mechanism which generated Meiji Japan's economic and political reforms. It argues that Meiji Japan was very different from authoritarian developmental states of East Asia in the post WW2 period. It exhibited dynamism and flexibility in evolving national goals, shifting coalitions, and flexible leaders which successfully achieved multiple goals. There was no charismatic leader. Distinction between leaders and supporting elites, or between the government and the oppositions, remained unclear.
This book has three parts: (1) Flexible structure of Meiji Restoration; (2) Comparison of political power of influential han; and (3) Edo society as a preparation for modernization. The first part has just been translated into English. The first and third parts are discussed in my lecture on Economic Development of Japan.
Part 1 in English: full paper (46 pages); short version (19 pages)
Comparing SME & SI policies in Malaysia and Thailand (Mar. 2010)
Kuala Lumpur (left) and Bangkok.
Supporting industries (SI) are a cluster of domestic producers that supply parts and components to electronics, cars, and other machinery assemblers. Most SI firms are SMEs. Since parts and components occupy 80-90% of the production cost of these products, having strong SI greatly strengthens the country's manufacturing capability. Malaysia and Thailand have promoted SI for decades. Malaysia now hopes for leapfrogging by independent high-tech SMEs while Thailand continues to support SMEs in their effort to link with and learn from FDI giants. Vietnam Development Forum has studied their experiences and drafted a report.
Replicability of the Japanese Shindan (SME consultants) System (Mar. 2010)
The GRIPS Development Forum (GDF) plans to compile a Handbook of East Asian Industrial Policy which contains popular measures adopted in the region. The Shindan (enterprise diagnosis and advisory) System and shindanshi (Japanese style SME business consultants) are one of them.
Japan's Shindan System was launched in 1948 to implement SME policy effectively. The Government certified excellent consultants and institutionalized the system by providing laws, budget, official curriculum and exams, renewal procedure, Shindanshi Association, etc. By now, about 20,000 registered shindanshi work in the public and private sectors. Many of the JICA industrial experts are also shindanshi. Shindanshi pursue public purposes by improving SMEs, in comparison with MBA-holders who usually practice consultancy with big companies for commercial profit.
Some countries, such as Thailand and Indonesia, have introduced the Shindan System in a limited way. Vietnam is also considering adopting it. I have written a report explaining the history and current status of Japan's Shindan System and its selective adoption in other countries.
How can Vietnam avoid a middle income trap (Mar. 2010)
Symposium at Nikko Hotel, Hanoi attracted media attention, especially TV.
A middle income trap occurs when growth is driven by geography, natural resources, FDI, ODA and the like. True development must come from continuous upgrading of human capital. A country that fails to create a mindset and institutions for this will sooner or later hit a heavy wall and growth will slow before reaching a high income.
There are at least two countries in Southeast Asia whose governments are seriously worried about being trapped in middle income. Warned by the World Bank Report in Oct. 2009, PM Najib Tun Razak of Malaysia considers overcoming this trap as national priority. His strategy is summarized in his New Economic Model. Vietnam, a country just joined the lower middle income group, is also discussing the middle income trap as a future possibility in drafting the Socio-Economic Development Strategy 2011-2020. For this, my paper and book contributed to ignite the debate, which was taken up by DPM Nguyen Sinh Hung.
Vietnam Development Forum (VDF), which I preside, organized an annual symposium in Hanoi on March 18, 2010. It analyzed the causes of and measures for the middle income trap in three areas: industrial policy formulation, social and demographic issues, and environmental control.
The symposium attracted media attention. VTV1 (the most popular public TV) aired our sympo and interview for over 3 minutes in 7 o'clock evening news. VITV created a long program from my interview, and another TV broadcast my entire presentation (40 min.) and Dr. Long's presentation (15 minutes). We detected about 10 online news in the evening of the symposium.