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Evolution of Government’s Role on Economic Development. 23 rd January, 2009. J I C A. Masaki Miyaji. Japan Today. Small Islands surrounded by sea ( Land area : 338 Sq Km, less than 1/2 of Zambia, Its 70% is mountainous) Population : 127 Million (X 12 of Zambia)

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Evolution of government s role on economic development

Evolution of Government’s Role on Economic Development

23rd January, 2009

J I C A

Masaki Miyaji


Japan today
Japan Today

  • Small Islands surrounded by sea

    ( Land area : 338 Sq Km, less than 1/2of Zambia, Its 70% is mountainous)

  • Population : 127 Million (X 12 of Zambia)

  • GDP : over 4 Trillion US$ ( 2nd largest in the world)

  • No mineral resources ( Coal mines were closed 30 years ago)

  • 60% of Japan’s Food consumption is based on import

  • Japan’s only but the most important resource is “Human Capital Resources”

  • Japanese Economy stands on Manufacturing with Technologies and highly controlled Skills


The Importance of

Human Capital Resources Development

Experiences and Instructions

of FDI (Foreign Direct Investment)

“Mozal Project” in Mozambique

Japanese experiences in developing Investment by the Private Sector

(Large enterprises and MSMEs)


Japanese experiences in developing

Investments by the private Sector

(Large Enterprises and MSMEs)


Impacts of micro, small & medium-sized manufacturing firms (2004/2005)

Notes :

MSMEs are companies with <300 regular employees (<100 in wholesaling & services, <50 in retailing, eating & drinking places) or with capital stock of < \300 million (US$ 2.7 mill) (< \100mill in wholesaling, < \50 mill in services, retailing, eating & drinking places)

Small enterprises are companies with <20 regular employees (<5 in wholesaling, retailing & services)


Japan’s (2004/2005 Policy fostering Economic Development and Changing Business Climate

1945~54

Reconstruction Era

1955~72

High Growth Era

1973~84

Stable Growth Era

1985~

Transition Era


1945 (2004/2005~54

Reconstruction Era

●The War destroyed production & distribution facilities

& systems

●The economy was democratized such as:

① Land Reform② “Anti-Monopoly Law” established

③“Trade Unions” allowed④ “Conglomerates” resolved

● “Priority Production Systems” as a core industry

①Iron-Steel manufacturing ② Shipbuilding ③ Coal Mining

●Fostered SME’s (established SME’s Agency)

●Improved diverse infrastructure, such as Laws, Systems & Institutions and Electricity, Railway, Port, & Road

●Established Financial Institutions to supply ample Funds


RECONSTRUCTION DAYS (2004/2005(1945-1954)

~Establishment of Institutional Framework~

Small & Medium Enterprise Agency (1948)

Laws/ Regulations

Banks

Insurance Schemes

Financial Schemes

Small & Medium Enterprise Credit Insurance Law

MSMEs

Default

Small Business Finance Corporation

People’s Finance Corporation

Credit Guarantee Association Law

Corporative Union Law

Credit Guarantee Association

Medium-sized Enterprises

Micro, Small Enterprises


  • Promoting modernization and upgrading in hardware (2004/2005

  • “Pyramid structure” was developed

  • Adverse effects of expanded sub-contracting system (i.e.; pressure from parent company) became problematic.

  • Tackled to solve “Dual Economy” : Gaps (productivity, wages, technology, funding, etc.) between large and small enterprises widened

  • Annual GDP growth was over 10% until 1973

  • Japan became the World No.2 in terms of GNP in 1968

1955~72

High Growth Era


HIGH GROWTH DAYS (2004/2005(1955-1972)

How to Tackle “Dual Economy”

~Coping with “Dual Economy”~

Productivity ◎

Some Prescriptions

~STRONG~ LARGE FIRMS

Wages ◎

Modernization of Equipments or MSMEs

Technology ◎

Funding ◎

Lower Corporate Tax for MSMEs

Exemption of MSMEs from Anti- Monopoly Law

Adverse Effects

Productivity ×

Revitalization of MSMEs Nationwide

Wages ×

Technology ×

Sub-contracting Systems

Funding ×

~WEAK~

MSMEs


Phase Two: Stable Growth Era ~ (2004/2005

1973~84

Stable Growth Era

  • Promotedmodernization & upgrading in software

  • “Core” business structural shifts of enterprise was inevitable by business climate change due to oil crises

  • Subsidies in place to industrial structural shifts, in designated areas

  • Stronger Yen currency damaged industries and regional economy

  • Energy-saving measures taken by enterprises

  • (led to international competitiveness)


Business Climate Change (2004/2005

Human Recourses Development

Small & Medium Enterprise College

Oil Crisis

Oil Crisis

Hard

Structural Changes

Soft

・Information

Soft

・Human Capital

Hard

・Technology Upgrading

Dissemination

・Modernization of Equipments

・Government Financial Institutions

Small & Medium Information Centers

・Tax Regimes

・Legal Institutional Framework

STABLE GROWTH DAYS(1973-1984)

~Paradigm Shift~

Towards Knowledge Intensification


  • Strong Yen encouraged enterprises to invest overseas (2004/2005

  • Low interest rate policy led to economic boom

  • “Bubble economy” burst in 1991: “lost decade”

  • -Globalization led to enterprise restructuring

  • -De-regulation led to change in human resource

  • management & subcontracting systems

  • Recovery since 2002 due to export to emerging markets

1985~

Transitional Era


Virtuous Trajectory of Industrial Clusters (2004/2005

~TowardPoverty Alleviation~

Infinite Business Opportunities

JUMP

STEP

HOP

“Qualitative Improvement” Phase

Limited Job Creation

“Quantitative Expansion” Phase

Geographical Concentration of Enterprises

Increasing Employment Opportunity

Agriculture-based Society

Industrial Clusters

Africa

ChinaIndia

Japan


Industrial cluster
Industrial Cluster (2004/2005

Industrial Park


Industrial cluster1
Industrial Cluster (2004/2005

Industrial Park

Anchor Firm


Industrial cluster2
Industrial Cluster (2004/2005

Industrial Park

Anchor Firm


Industrial cluster3
Industrial Cluster (2004/2005

Industrial Park

Anchor Firm


Industrial cluster4
Industrial Cluster (2004/2005

Industrial Park

Anchor Firm


Industrial cluster5
Industrial Cluster (2004/2005

Industrial Park

Anchor Firm


Major Industrial Clusters, led by the Government (2004/2005

Tsubame Sanjo-City,Niigata

Higashi-Osaka City

Ohta-ku,Tokyo

Suwa-City, Nagano

22


Ohta (2004/2005-ku, Tokyo(Population 667 Thousand)

・Industrial cluster for mechanical metalworking

Less than 5 Employees occupy almost 60%.

Bird’s Eye View.

Kamijima Heat Treatment Industry (42 Employees)

・Heat treatment which makes stiffness of the cutting utensils (brooch, hob, drill.) .

Azuma Manufacturing Factory

(2 Employees)

・Slotter (the machine to

process the groove inside

the gear) is processed.

・Precise processing to the

curved surface are possible.

Sources: Ministry of Public Management, Home Affairs, Posts and Telecommunications                                       「A Statistical Table for Companies」

23


Higashi-Osaka City (2004/2005(Population 513 Thousand)

Tokai Factory (18 Employees)

・Industrial cluster for machinery plastics

・Philosophy is “ Only One“

・”Niche Top” MSMEsare 61/ 548 in Japan.

・ Plastic formation and the quality control aspect 3 dimensional measurement equipment of computer control.

・ Interior part ( for high accuracy formation technology of the micro unit ).

”Special Economic Zone for Manufacturing”.

Bird’s Eye view

Asahi Manufacturing (121 Employees)

・Part product enterprise (worldwide share 80%), concerning the cylinder head which is the heart of the VTR from compilation to casting.

・ Various aluminum materials.


Suwa (2004/2005-City, Nagano( Population53 Thousand )

・Industrial cluster for precision instrument industry

・De facto “Oriental Switzerland"

・Aiming toward “Manufacturing Kingdom Suwa”

Bird’s Eye View

Takashima Industry

( 250 Employees)

Production of the clock part, other than

precise part processing.


Tsubame-Sanjo City, Niigata (2004/2005

( Population44 Thousand)

・Industrial cluster for the metal house wear

Ezawa Manufacturing(17 Employees)

Stainless steel, aluminum, iron, brass and titanium.


Experiences and Instructions of (2004/2005FDI (Foreign Direct Investment)“Mozal Project” in Mozambique


Mozal S.A.R.L. (2004/2005

Photograph from


Mozambique at a Glance (2004/2005

GDP: US$2.897 billion

GDP: US$7.839 billion

GDPPC: US$180

GDPPC: US$382

Photograph taken before 2005

After (2007)

Before (1996)

Namibia

Virgin Bush

Cutting Edge Facility

Data Source: IMF World Economic Outlook

IMF staff estimation for 2007



MOZAL Project Scheme (2004/2005

Mozal Project

Mitsubishi Corp

25%

Mitsubishi Corp

BHP-Billiton

47%

Offtake

IDC

24%

BHP-Billiton

Mozambican Govt

4%

Dividend

Project Finance

DEG

COFACE

JBIC

DBSA

IFC

CDC

PROPARCO

EIB

CGIC

EDC


Key drivers for investment
Key Drivers for Investment (2004/2005

  • Competitiveness of production cost

  • Governments’ strong commitment and supports (both Mozambique & SA GVMT)

  • Participation of Reputable Policy lending institution (IFC, JBIC, IDC, DBSA, DEG, CDC, COFACE, EIB, PROPARCO, CGIC, EDC)

  • Reliable Partner (BHP-Billiton & IDC)


Key drivers for investment1
Key Drivers for Investment (2004/2005

  • Competitiveness of production cost

  • Governments’ strong commitment and supports (both Mozambique & SA GVMT)

  • Participation of Reputable Policy lending institution (IFC, JBIC, IDC, DBSA, DEG, CDC, COFACE, EIB, PROPARCO, CGIC, EDC)

  • Reliable Partner (BHP-Billiton & IDC)

The production cost is the cheapest in the world.

This project is strong against depression through special purchasing contract of 2 major cost factors, electricity and alumina.


Key drivers for investment2
Key Drivers for Investment (2004/2005

  • Competitiveness of production cost

  • Governments’ strong commitment and supports (both Mozambique & SA GVMT)

  • Participation of Reputable Policy lending institution (IFC, JBIC, IDC, DBSA, DEG, CDC, COFACE, EIB, PROPARCO, CGIC, EDC)

  • Reliable Partner (BHP-Billiton & IDC)


Key drivers for investment3
Key Drivers for Investment (2004/2005

  • Competitiveness of production cost

  • Governments’ strong commitment and supports (both Mozambique & SA GVMT)

  • Participation of Reputable Policy lending institution (IFC, JBIC, IDC, DBSA, DEG, CDC, COFACE, EIB, PROPARCO, CGIC, EDC)

  • Reliable Partner (BHP-Billiton & IDC)

DEG

COFACE

JBIC

DBSA

IFC

CDC

PROPARCO

EIB

CGIC

EDC


Key drivers for investment4
Key Drivers for Investment (2004/2005

  • Competitiveness of production cost

  • Governments’ strong commitment and supports (both Mozambique & SA GVMT)

  • Participation of Reputable Policy lending institution (IFC, JBIC, IDC, DBSA, DEG, CDC, COFACE, EIB, PROPARCO, CGIC, EDC)

  • Reliable Partner (BHP-Billiton & IDC)


Why mozambique
Why Mozambique? (2004/2005

Q: No bauxite - Alumina, in Mozambique.

Electricity coming from SA.

Why Mozambique?

A: 1)Potential charm point: Cahora Bassadam

– future Hydroelectric-power generation

Full production would fully cover the electrical demand in whole Africa of today.

2)Port capability in Maputo


MOZAL CSR Activity (2004/2005

Mozal Community Development Trust (MCDT)

  • Mozal Community Development Trust (MCDT), as a None Profitable Organization,started its operation in January 2001 and its main aim is to share the success of Mozalwith local community via various programs.

  • It has a very transparent activity by disclosing budget and audit each year and also report to Mozal the progress of each activity on monthly basis.

  • Mozal donates approximately US$5Million each year.

Mozal S.A.R.L

In Mozal Board, amount and

menu of activity of MCDT is

checked and discussed.

MCDT has close

communication with Mozal every month.

Financial and Know-

How support

Mozal Board

IFC, Government, NGO

Local Community,

Private Company

MCDT


MCDT Activity (2004/2005

  • Policy“Together we make a difference” (Mozal CSR policy aims for the sustainable development in harmony with Local Community.)

  • Principal of Activity

    • ・Align development initiatives with those of National, Provincial and Local

    • Government to fight poverty within the framework of the action plan to Reduce

    • Absolute Poverty (PARPA)

    • ・Act as catalyst by creating pilot projects in other areas

    • ・Establish partnerships with various organization to achieve sustainable results

    • Involve all relevant stakeholders, including government, NGOs, community

    • structures and the private sector.

  • Main Development

  • ・Small Business Development

    • ・Education & Training

  • ・Health & Environment

  • ・Sports & Culture

    • ・Community Infrastructures


MCDT (2004/2005

Support to the Chicken Farm

Agricultural Development Program

Production of the Carpets

Teacher’s training and capacity building

Donation of the computers to the University

Support to the Primary Schools

Donation of the equipment to the Hospital

Support to the National Park

Total Control of the Epidemic


MCDT (2004/2005

Sponsoring of the art exhibition

Uniforms distribution to the teams

Community Sports Tournament

Construction of the Clinic

Classroom Building

School Project


Development
Development (2004/2005

The Importance of

Human Capital Resources Development


Innovation (2004/2005

Marketing

Branding

Strategy

Collaborating with Research Institutes

Stable Operational Financing

Go for a “Niche” Markets

Challenge the “Status Quo”

Product Differentiation

Human Capitals

Not NecessarilyHighly-Academic

Ambition

Willingness

Curiosity

Passion

Craftsmanship

Aspiration

Kaizen

Backbone of the Economic Requirement


1 compulsory educational system since 1947 a key driver for significant literacy improvement
1.Compulsory Educational System (2004/2005(Since 1947) -A Key “Driver” for Significant Literacy Improvement-

Drastic Increase in High School Attendance

Almost 100% Enrollment Ratio

Within 50 years

Almost double

Basic Literacy Improvement

Students Pursuing Higher Degree Sky-rocketed

Source: Ministry of Education, Culture, Sports, Science and Technology

”Basic Report on Schools”2004


Domestic Resource Mobilization Efforts for AFRICA (2004/2005

~”Sequencing” IS THE KEY WORD~

Efforts

・Appropriate Tax regimes

・Proper Legal/Institionary Framework

-Export Credit -Insurance

・Technology Transfer From Abroad

・EPZs(Export Processing Zones)

Efforts

・Enactment of basic SME laws

-Dispatch Exports

・Primary Industry Development

-TA for Farmers

-Initiation of fishers Program

・Basic Infrastructure Development

-Road, Bridge, Ports etc.

Ⅳ. INDUSTROAL AGGLOMERATION

Ⅲ. REGIONAL INDUSTRIES

Ⅱ.PRODUCT SERVICES

Efforts

・New Product Development

-Dispatch Export

・「One Taw ban, One Products」Initiative

・Rural Credit Scheme for SMES

・Credit rationing by the Governments

・Collaboration via Cooperative in

Local Communities

Efforts

・Mapping Exercise

-Identification of Market Needs

(ex) African Food Show Case

・Rural Credit Scheme for Individuals

(ex)Gramean Bank Model

Ⅰ. NEED × SEEDS


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