The political economy of Japanese military expenditure

Previous studies on Japanese military expenditure lacked a systematic view on this multi-faceted subject, and ended up with single-dimensional arguments such as free-riding, the so-called "one-percent rule," bureaucratic incrementalism, or budgetary balance. This study is an effort to reach a more comprehensive explanation of the Japanese defense spending of the last four decades. For that purpose, statistical analysis, game theoretic analysis, and a case study are each undertaken, following a rational choice approach.; Japanese resource allocation for military expenditure was influenced by domestic economic and political factors. Prominent among economic factors was the ratio of bond issue to GNP. The strength of opposition parties was the key political factor. Even in mid-1980s, when Japan made visible increase in military expenditure, the Japanese burden sharing effort never became commensurate with its economic strength. Despite the evidence suggesting that both U.S. and Japanese military expenditures benefited the Japanese economy, the one percent rule remained in force. As for the U.S., the limited effect of diplomatic pressure for burden sharing was partly due to the consensus in the U.S. foreign policy orientation which weakened U.S. bargaining power. While strictly military burden sharing was the main point of contention between Japan and the U.S. in the 1980s, the security relationship has changed considerably since the breakup of the Soviet Union. Recent changes in the relationship between the two countries and the latent problems in the U.S.-Japan security treaty are revealed in the case study of the FSX co-development project. The power sharing accompanying burden sharing is critical in deciding the future profile of the Japanese power.; The theoretical implication of this study extend beyond Japanese military expenditure. Instead of emphasizing the peculiarities in the Japanese social and political structure, the rational choice approach was fruitful in explaining the Japanese situation in a framework applicable to other countries. With regard to the principles of foreign policy substitution and supplementation, it is shown that Japanese foreign aid was substituted for its armaments in pursuing burden sharing and in pursuing other policy goals. From the analysis of the relationship between the two policy tools, it is further found that supplementation is an important part of the concept of foreign policy substitution.