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2. Long-Term Development Planning - Early GOJ and Okinawa Initiatives

Given the nagging fears among a large section of the population that reversion would bring destabilisation and economic chaos, one of the most pressing matters was the formulation of a viable long-term economic development plan. GRI representative Senaga Hiroshi put this before the ADCOM, asserting that USCAR should allow the dispatch of economy specialists from the GOJ to study conditions and participate in the drafting process.[1] Although there was much crossover with the broader ittaika process, the GOJ sent two economy-specific groups: the Okinawa Keizai Shisatsudan (Economic Inspection Group), which focused in on long-term economic planning, and the Suzuki Kinyu Chosadan (Suzuki Financial Study Mission), which investigated the transfer of the Ryukyu Kaihatsu Kinyu Kosha (Development Loan Corporation) from USCAR to the GRI, and the future of development-oriented financial institutions.[2] Since these groups had yet to complete their investigations, and to provide ADCOM members in the interim with a basis for economic discussions, it was agreed the Daniel, Mann, Johnson and Mendenhall and Japan Economic and Engineering Consultants Ltd (DMJM-JEEC) Economic Development Study: Ryukyu Islands,[3] which had just been completed on behalf of USCAR and the GRI, would be used as a basis for discussion. In the three years following this study, as many as 15-20 official and unofficial long-term development plans popped up, each with varying levels of credibility.[4] These scattered the road to the first official 10-year Okinawa shinko kaihatsu keikaku, or ‘Okinawa Promotion and Development Plan,’ enacted on 18th December 1972.[5]

 

The DMJM-JEEC study was one of the most comprehensive to be carried out in the postwar period. As it pointed out, the local economy had been agrarian prior to W.W.II. With a population of 500,000, Okinawa’s PCI from 1934-36 was estimated at $25.[6] By 1965, the population had increased to 930,000, and expected to rise at 1% per year. The population was actually above one million if the 80,000 US military personnel and their dependents were factored in. While Okinawa’s PCI rocketed up to $497 by 1967, this was 50% of the Japanese level and just 25% of the US level. The report noted that the most profound postwar economic change was the gradual shift in employment away from the primary sector into services, trade, and construction, as a result of US bases and the troop presence, to the point where a heavy dependence on these developed.[7] The DMJM-JEEC report foresaw significant problems maintaining Okinawa’s impressive growth rate over the next few years[8] since this was linked to large US defence expenditures for the Vietnam War. A modest 8% growth rate was predicted, with Okinawa’s gross national product (GNP) reaching $1,370-million by 1977. Another big problem was Okinawa’s over-reliance on imports. It was estimated that by 1977 imports would reach $900 million.[9] Okinawa would have to increase the export of goods and services to cover this.[10] The study argued that while Okinawa’s human resources were good, its physical resources were poor. Amongst its advantages were: geographical location, a long growing season, and an excellent climate for tourism. Moreover, the island’s topography facilitated the construction of ports: a basic requirement if increased manufacture and transhipment are to be realised. Although it should improve and diversify agricultural activities, tourism and manufacturing offered the best long-term hopes for economic growth.[11] Okinawa had to attract more tourists from Japan and the US, and reorganise its private financial system, the availability of long-term credit being unsatisfactory.[12]

Like the DMJM-JEEC study, the GOJ’s Okinawa Keizai Shisatsudan report, published in November 1968,[13] founded its assumptions on the premise that US base employment would remain stable in the near future. It recognised that recent growth was sparked by Vietnam-related defence expenditures and increased aid from the USG and GOJ, but that positive progress continued to be undercut by its heavy reliance on imports. Okinawa had to boost trade and tourism, encourage sound consumption, and greatly reduce imports. To improve the economy and strengthen competitiveness,[14] production costs had to be sliced, productivity elevated, commodity quality raised, and markets expanded.[15] The local fear of unemployment was, the report intimated, genuine. This had to be addressed by broadening economic activity. Manufacturing and tourism were key areas for expansion. With regard to the former, smaller-scale industries would absorb much more labour.[16] Interestingly, and certainly illustrating a philosophical difference between the GOJ plan and US-style DMJM-JEEC study, an increase in public works projects is advocated as another labour sponge,[17] though this dovetailed well with the clear need for infrastructural improvement in transportation, communication, public utilities, and beyond. The report argued that economic promotion initiatives had to be devised factoring in Okinawa no tokusei, or Okinawa’s uniqueness,[18] its location at the southwesternmost edge of Japan in a subtropical zone, and its geographical proximity to other Asian countries.[19] The study stressed that Okinawa expected benefits from attachment to the Japanese economy, but feared that local industries currently supported by import restrictions and tariffs would be swept away by a large influx of mainland capital upon reversion. The study concurred with requests from Okinawa for GOJ aid and reversion counter measures to strengthen and protect local industry were required, at least on a temporary basis.

The first indigenous economic development initiative put before ADCOM was Okinawa keizai kaihatsu no kihon to tenbo (Basics and Perspectives for the Economic Development of Okinawa)[20] from the Ryudai Keizai Kenkyusho (Ryukyu University Economic Study Institute) in April 1968. The timing of its publication was somewhat unfortunate since the DMJM-JEEC report had just been released and was the subject of most discussion at the time. That said, and though interesting, the Ryudai study did not offer a radically different assessment of the Okinawan economy than other studies, nor was it as comprehensive as the DMJM-JEEC report. The economy was defined as “abnormal” in that high growth was due to US base demand; that, as a result, the service sector developed at the expense of the primary and secondary sectors; that the trade balance was highly unstable, and; that the balance of payments deficit had been covered mainly by base income and US and GOJ aid. As such “changeable demand, influenced by exogenous and heteronomous factors, has been the main factor for economic growth…impeding…development of a normal economy and breaking the cycle of…dependence.”[21] With growth so reliant on increases in US base demand the goods-producing primary and secondary industries have been retarded. The report advocates economic development in Okinawa for three reasons: to elevate Okinawa’s living standards; to achieve a self-reliant (jiritsu) economy for Okinawa, and; so that Okinawa’s growth can also contribute to the national economy. Three targets were outlined with the above factors in mind. Firstly, disparities existing between Okinawa and other prefectures have to be narrowed (kakusa zesei). Secondly, the concept of kakusa zesei needs to be applied in dealing with the gaps between regions within Okinawa itself. Finally, to aim for self-reliant economic development for Okinawa to reduce the current heavy reliance on military bases.

Technically a joint Okinawa-Japan private effort, the Okinawa keizai no jiritsu ni mukatte (Road Toward a Self-Reliant Economy for Okinawa), devised by Okinawa Keizai Kaihatsu Kenkyusho (Okinawa Economic Development and Research Centre) in November 1969,[22] was viewed more favourably than the Ryudai plan, albeit with major doubts.[23] While isolating the same factors contributing to growth it stressed that the energy of Okinawans themselves had been overlooked. It criticised earlier plans as too “heteronomous and undependable...lacking concern for the goal of a self-sustaining economy.” Counter measures were needed in preparation for the ‘reversion shock,’ and a credible long-term policy for self-reliance.[24] A major goal was the establishment of industrial estates.[25] On the production side, Okinawa’s economic potential could be better mobilised by the grouping together of related industries.[26] Secondly, Okinawa’s living environment could be improved by having industry located away from centres of population where possible.[27] For US military bases, the plan advocated “a gradual liquidation or unification.” Returned land and facilities would then be used for public purposes. Those who lost base jobs, as well as the annual additions to the labour force, would be (re)trained for a modern labour market.[28] Although tourism was recognised as important, the plan opposed it becoming the centrepiece of a long-term strategy.[29] Interestingly, while pushing Okinawa’s traditional primary sector, further government subsidies are rejected in favour of rationalisation and the introduction of new higher value-added crops more suitable to Okinawa. The report urged a rethink of the Free Trade Zone (FTZ) idea that was successful in the early-1960’s but had stagnated by the mid-1960’s.[30] Although fascinating for its locally-biased, perhaps rather idealistic, perspectives, the Keizai Kaihatsu Kenkyusho plan set some quite ridiculous targets. It assumed that US military base receipts would reach zero by 1972, and that Okinawa’s PCI level would reach parity with Japan’s by 1975. ADCOM felt that the projected period of three years to realise self-reliance with no further benefit from US bases was just nuts. Moreover, economic success for Okinawa after reversion would depend on favourable tariffs and massive GOJ investment.



[1] ‘Official Minutes of the Second Meeting of the Advisory Committee to the High Commissioner of the Ryukyu Islands, 5th March 1968,’ (Naha: ADCOM, 1968). Senaga’s proposals were attached to the official minutes as tabs. His suggestion for the ‘Early Dispatch of an Economic Planning Survey Team from the Japanese Government,’ was marked Tab A. See also the ‘Official Minutes of the Third Meeting of ADCOM,’ 8th March 1968,’ (Naha: ADCOM, 1968).

[2] Suzuki Kinyu Chosadan, Okinawa no kinyu kiko nitsuite (Tokyo: GOJ, March 1969). It will be recalled that Suzuki Gengo, head of the mission, recommended US lawyer Noel Hemmendinger to the Nampo Doho Engokai to present before Congress the pre-treaty compensation payment issue on behalf of Okinawan landowners. He had formerly been the GOJ’s Executive Director of the International Monetary Fund (IMF), and was then Auditor of the Bank of Japan. There is too little space to cover the Suzuki report. Suffice it to say, the group pointed to four major problem categories: the shortage of long-term funds; the close relationship between fluctuations in international balance of payments and the monetary situation and the influence on business conditions in Okinawa; the inefficient allocation of funds, and; the small size of financial institutions in Okinawa. Accordingly, the goal of efficiently allocating funds is to facilitate the supply of funds to priority areas. Suzuki also wanted to subdue moai activities: a traditional system of private mutual assistance financing.

[3] Daniel, Mann, Johnson and Mendenhall & Japan Economic and Engineering Consultants Ltd., Economic Development Study: Ryukyu Islands. A study conducted for the USCAR/GRI Committee on Economic Development, (Naha: USCAR-GRI, 1968). The report was published in Japanese as Ryukyu keizai kaihatsu chosa hokokusho (Naha: Okinawa Kyoiku Tosho Kankokai, 1972). At least internally, the GOJ would have given equal, if not higher consideration to a study completed in August 1967, by the Sorifu General Affairs Office chief, Mr. Tsukahara, titled Okinawa keizai hatten no hoko to shisaku (Economic Development Okinawa: Measures and Directions). On the “The Tsukahara Vision,” see Sengo Okinawa keizaishi, 793-797. For the record, Tsukahara recommended much the later DMJM-JEEC report would. He urged an increase in beef cattle and pineapple production, reform of the finance system, harbour development, investigation of exploitable natural resources, and tourism promotion.

[4] Beside the plans focused on in this text, no less interesting or important were: Showa Doninkai (‘Showa Fraternity’), Nichi-Ryu no ittaika to Okinawa no sogo kaihatsu seisaku (1968), Sorifu Tokubetsu Chiiki Renraku Kyoku, Okinawa keizai shinko no kihon koso shian (1969), and Nihon Keizai Chosa Kyogikai, Okinawa keizai kaihatsu no kihon hoko (1970), as well as tangential planning by the Sorifu, and efforts by political parties like the Minshato, Jinminto, and Shakaito. Sengo Okinawa keizaishi, 792.

[5] On the first Promotion and Development Plan see Okinawa-ken, Kikaku Choseishitsu, Okinawa no shinko kaihatsu keikaku kankei shiryo (Naha: Okinawa-ken, 1995).

[6] Daniel, Mann, Johnson and Mendenhall & Japan Economic and Engineering Consultants Ltd., Economic Development Study: Ryukyu Islands (Naha: USCAR-GRI, 1968).

[7] About 13% of the labour force worked for the military. Of the total goods and services produced in 1967, valued at $887 million [$522 million domestically-produced and $365 million imported] about $200 million was purchased by the US forces or their families

[8] Per capita Gross National Product in real terms increased to 12% in FY 1966, and 11% in 1967.

[9] The figures were based on three assumptions: that US defence expenditures will remain stable for the next 10 years; that there will be moderate rates of increase in GOJ and USG aid, and; that there will be an inflow of foreign capital. While foreign receipts will be used to pay for imports, however, they will still fall short of requirements.

[10] In 1967, exports totalled $120 million, but would need to increase to $512 million in 1977 for an estimated $900-million of imports are to be purchased in that year.

[11] Although high domestic wages compared with competing Asian countries and a shortage of land for industrial estates conspired against Okinawa in the latter respect. Interestingly, if not surprisingly, the report stresses the idea of land reclamation rather than base reductions

[12] The report made 11 recommendations: that the present USCAR economic plan needs revising to prioritise growth; a survey of long-range water supply and demand is required; a masterplan for roads and streets is required; the sugar industry needs revitalising; a cattle production centre should be established; a study of vegetable growing, marketing, and exporting should be conducted; an industrial development board must be established and incentives offered to foreign and domestic investors; a reclaimed land feasibility study is required; a marine park feasibility study is needed; the Ryukyu Development Loan Corporation should be organised in such a way as to expand capital resources, and; a central-southern Okinawa planning commission be established to prepare a masterplan for the area.

[13] GOJ, Okinawa Keizai Shisatsudan, Okinawa keizai ni kansuru shisatsu hokoku, 15th November 1968 (Tokyo: GOJ, 1968). Part translated into English for the ADCOM Economic Subcommittee. The current writer obtained a poor quality photocopy of the English document. In future, such documents obtained by the writer where precise origin is unclear will be marked [Photocopy]. On the Japanese original see Sengo Okinawa keizaishi, 808-814.

[14] Okinawa was characterised as weak, partly because wage levels were higher than in competing Asian countries. Okinawa would have to develop high-tech industries, which in turn pay higher wages.

[15] For supplementary reading on market expansion see J. Walter Thompson Company, The Ryukyuan Market: An Introduction to Investment and Trade Opportunities (New York: McGraw-Hill, 1960). The report argued that Okinawa should adopt the same formula as Japan and Hong Kong. Rather than build a manufacturing industry based on indigenous materials Okinawa should import materials, machinery and equipment for the purpose of export production. Okinawa was behind its nearest competition. On a per capita basis, Taiwan's exports for 1958 stood at $158, Filipino exports at $205, and Okinawan exports at $17. It was concluded that the expansion of exports was possible and necessary. The report concluded that Okinawa could potentially become a “Far East Springboard.” 

[16] Arguing that large-scale manufacturing is capital-intensive whereas Okinawa is labour-rich.

[17] The post-reversion dependency on public works is arguably one of Okinawa’s biggest problems.

[18] The term Okinawa no tokusei is rendered in English literally as “Okinawa’s special qualities.” The preservation and utilisation of these tokusei was recognised as vitally important in the GOJ plan. See the excellent analysis of the plan in Sengo Okinawa keizaishi. Interestingly, it was not emphasised in the first Kokudocho National Development plan to include Okinawa in 1969. Yokkaichi Masatoshi, ‘Kokudo keikaku kara mita Okinawa: Kaihatsu no rekishi,’ NIRA Seisaku Kenkyu 4 (1997), 10-13.

[19] These three ideas would become a standard element in policy planning for Okinawa thereafter, but were not really heavily emphasised in GOJ plans until the 1980’s.

[20] Ryukyu University Economic Study Institute, Basics and Perspectives for Economic Development of Okinawa [sic],’ April 1968 [Photocopy]. Edited translation of the Japanese original: Ryudai Keizai Kenkyusho, Okinawa keizai kaihatsu no kihon to tenbo for ADCOM use.

[21] Ibid.

[22] Okinawa Keizai Kaihatsu Kenkyusho, Okinawa keizai no jiritsu ni mukatte: ashigatame no tame no kihon keikaku (Naha: Okinawa Keizai Kaihatsu Kenkyusho, 1969). Available in English as Okinawa Economic Development and Research Centre (OEDRC), Road Toward Self-Sustaining Economy for Okinawa: Basic Programming for Preparatory Period [sic] (Naha, OEDRC, 1969). 

[23] Although the US element of ADCOM regarded this as the first serious Okinawan contribution to the economy debate, agreeing with its main ideas and goals, it was still felt that it failed to address issues of technical, physical, or financial feasibility. ‘Memorandum to the Civil Administrator of the Ryukyu Islands from Eddie W. Schodt, US ADCOM Representative. Subject: Report on the Future of the Economy of Okinawa,’ 14th November 1969 [Photocopy], and ‘Summary of Report - Road Toward Self-Sustaining Economy for Okinawa: Basic Programming for Preparatory Period,’ submitted to the Civil Administrator of the Ryukyu Islands by John Gibson, Acting Director of the HiCOM Economic Committee on 19th February 1970 [Photocopy]. The opinions were from the Economic Committee’s ‘Analysis and Comments’ section, included as ‘Tab B’ with the covering letter.

[24] The plan is envisaged as covering the “preparatory period,” from 1970-72. Subsequent plans will be formulated to cover the “take-off stage” from 1973-75, and the “perfection period” after 1975.

[25] The small- and medium-sized industries scattered around Naha and its outskirts would be removed and regrouped to provide space for public use and urban development. It was hoped that an expanded metropolitan area could be created stretching as far north as present-day Okinawa City. A prerequisite of the plan was reclamation of land in south and west Okinawa Island.

[26] In creating an industrial estate for smaller enterprises, the plan recognises, it is essential to provide financial assistance and foster the creation of the estate and its member enterprises. Upon creation there should be cooperation and exchange between the members from production to sales. Furthermore, “The effort towards rationalisation and modernisation and the preparation of a sound basis for industrial conglomerations will help the member enterprises to prepare themselves to deal with the anticipated inroads by businesses from the homeland after reversion and to create a sound industrial basis by the time large-scale related industries enter Okinawa from the outside.” Presumably foreign competition. It stresses the advantages of trade associations and a centralised wholesale market. It envisages wood-working factories, machine and foodstuff processing plants as suitable within the structure outlined.

[27] While industry in Okinawa is relocated to specific areas, where transportation and other infrastructural improvements are carried out, urban redevelopment projects can be initiated in and around Naha. The plan talks of huge infrastructural projects, such as highways, perimeter roads, bus and truck terminals with the aim of dispersing the economic power then concentrated in Naha further afield. In addition, Naha Port must be modernised and supplemented by others in good locations. In essence, the plan calls for separation between industry and modern society. Whilst the former is vital for Okinawa, a citizen should not have to be subject to the negative impact of industrialisation. A less-tangible goal is cultivating the spiritual life of children and handing down “the spiritual traditions of which we are proud.” These developments need planning. It suggests three types: 1) a zoning plan; 2) a Naha redevelopment plan, and; 3) a plan for an expanded metropolitan sphere. Each plan should have an “organic inter-relationship.”

[28] Increasing vocational training schools and employment offices

[29] A first reason given for this is that “tourism can only succeed when natural beauty is combined with aesthetic features of the region, like tradition and culture.” Second, the success of tourism will be limited unless there is a consolidation of other conditions in addition to the general resources provided by climate. Since tourism is but another form of industry, it should be subject to sound planning and development as is any other industry.

[30] The report urged debate on whether to centralise enterprises within the compound of a specially designed area. Benefits could be gained by establishing a bonded area, or by special taxation. It may be necessary to confine some enterprises to a restricted area, even though it might endanger other related industries in Okinawa. A special zone in which tourists can shop for tax exempt goods is likely to be successful initially, but not long-term. When establishing a FTZ commodities should be restricted so as not in competition with local industries. New industries have to be encouraged. The FTZ idea is useful, but must be analysed within the overall goal of creating a self-reliant economy. Two studies on industrial estates and the FTZ idea (apparently overlooked by the above report) are Bartholomew, Harland & Associates International, Inc.; Donald Wolbrink & Associates, Inc.; Lyon Associates, Inc., Comprehensive Land Reclamation Feasibility Study Okinawa (Bartholomew, Harland & Associates International, Inc., March 1966), and Daniel, Mann, Johnson & Mendenhall, Industrial Estate and New Town Study Okinawa (Daniel, Mann, Johnson & Mendenhall, June 1969).

 

 



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