National Interest as a

Declining Industry
Pat Ray M Dagapioso
 What is this report all
about?
1. This report talks about ‘national
interest’.

2. How national interest is used.

3. And the relevance of national interest in

a highly globalized economy.
 Nation State and the Global
Economy
• The Modern State is an inadequate
mechanism for dealing with the
threats and opportunities.
• National Interests wall themselves
(countries) off from the most
powerful engines of growth (e.g. the
issue of using the natural resources).
 Keeping the Global Economy
Out: The Case of Australia
• Growth depends on inviting the global economy in,
not keeping it out.
• Australia suffers from Asiaphobia. Australia drives
itself off from a possible source of market, eg. Japan.
• Foreign Investment in Australia is less amusing. The
reason? Foreign investment in Australia is very
restricting.
• This results in low investments in Australia, that may
result in discouraging huge investments in the
future.
Closed Country Model v.
Region State Model
• Ohmae proposed a region
state model that is open to
the global economy rather
than the existing closed
country models that makes
cities and regions rival each
other.
 The Use of National
Interest
• National Interest is continually used
as a defense of special interests,
instead of people’s interests (e.g.,
whaling in Japan.)
• Whalers used national pride as a
defense for critics of the whaling
industry.
• Dr. Johnson remarks that waving
national interest is an effective
defense of a nonsense act. Further,
national interest is the mechanism
left to protect what has become
outdated industries.
 The Use of National
Interest Part 2
• National Interest also paves the
way to closing such important
benefits of efficiency and cost
cutting measures.
• Example, providing subsidies for
Russian fleets to fish for
Japanese consumption.
• This example is highly unlikely
for governments find it hard to
justify spending on anything that
is not ‘theirs’.
 Traditional National Interest
and the Borderless World
• Traditional national interest has no
meaningful place in a borderless world,
according to Ohmae.
• Hard pressed industries are being
responded by governments through
subsidies and protection.
• Yet, subsidies and protection don’t
create incentives for healthy change.
Instead it generates unemployment on
a wider scale.
 Nation v. Region
• According to M. Porter, in a global economy skilled
workers, extensive networks of supplier industries and so
on perform better when they exist in close geographical
proximity (nations).
• Ohmae’s reply: ‘It does not follow that to be effective
geogrtaphical groupings must co-exist within borders of a
nation state and thereby participate in the same national
interest.’
• A. Saxenian supports Ohmae: Silicon Valley prospers but
Boston’s Route 128 declines, yet both are in the same
country.
• Ohmae summarizes: ‘The success of an industry is not a
function of a nation’. Indeed, success lies in the
combination of individuals, institutions and culture of that
region.
 Nation v. Region: The Case of
Japan
• This section takes on the success of Japan in
the ’70s and in the ‘80s.
• Scholars attribute the success to the role of
the Ministry of Internaitonal Trade and
Industry (MITI), effectiveness of total quality
management programs, and the leverage of
zero-defects approach to manufacturing.
• Ohmae argues, it is not Japan as a nation
that did the talking, it was the industries,
handful of them, in Japan and companies led
by strong leaders that made Japan so
competitively successful in those years.
 An Argument Against a Nation:

The Case of Obamalandia

•A country does not prosper uniformly.
• In the United States the great mixture of people, loose
federalism on the economic front, and the good
capability to adapt changes bears weight on whether
regions will work their roads to prosperity or be
making their own road blocks to fell behind.
• Light manufacturing once flourished in New York City
and a booming textile industry in New England, both
are now gone. Detroit is the seat of the glory days of
US auto industry, yet crimes, homelessness now
plagued the region after GM shifted its manufacturing
plants to Mexico in the ’80s.
 Nation State and the Addiction
to Centrally Provided Supports
• Nation State provide the fuel for the
engine of nation interest.
• And National Interest drives the
Machinery of Industrial Decline.
• One of the greatest evidences that
nation states are incapable of
producing prosperity in a global
economy is the case of Japan.
 Nation State and the Addiction
to Centrally Provided Supports:
Part 2
• Ohmae predicted that as the production capacity of
3 million ‘Japanese’ cars migrated to America (as
one example), what’s left behind in Japan are fairly
uncompetitive industries that cannot survive w/o
subsidies--and that when their markets are finally
deregulated and opened will die even w/ subsidies.
• This indulgence over government subsidies in Japan
resulted in investments had becomes sour, people
inadequately skilled, and bank loans had become
delinquent, among others.
 National Interest and the
Quality of Life
• National interest, in earlier age, provided a clear and
unmistakable dividing line between what was theirs
and what was ours.
• Ohmae furthers the question of national interest in
terms of Japan, again (no offense meant there).
• Hokkaido is the recipient of a US$20 billion worth of
annual subsidies. Yet Hokkaido still is not self
supporting, nothing has worked from shipbuilding,
coal industry, to pulp and paper, and even steel
manufacturing.
• In the end, Ohmae presented the clear answers to
the question of validity of national interest in highly
globalized economy.
The End.