Essays on How Governments Develop Industry Policy in a Manufacturing Industry - Australia and Japan Case Study

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The paper "How Governments Develop Industry Policy in the Manufacturing Industry - Australia and Japan " is a good example of a business case study.   The manufacturing industry is significant to the economy as it is a source of employment, it contributes to the growth of a country’ s GDP, it enhances a country’ s exports, and it is a source of innovation and competitiveness. This paper evaluates the manufacturing industry policies of two countries – Australia and Japan and especially looks at the trends in the automotive manufacturing industries in these countries. The paper also discusses how the governments of the two countries develop policy in the automotive manufacturing industry and present and compare the interest groups in the industry in both countries. The manufacturing industry policy in Australia has been based on the formation and consolidation of the industry through developmental, protective and redistributive national policies (Capling & Galligan, 1993, p.

3). Capling and Galligan (1993) argue that the Australian government has shifted its industrial policy from protection to correction. Before the 1980s, the manufacturing industrial policy focused on protecting the industry with very high tariffs and stiff import quotas.

The main policy instrument in the automotive sector during the 1980s was the Motor Vehicle Manufacturing Plan, which required vehicle manufacturing firms to maintain local content at 85 percent on a company-average basis (Anjaria et al, 1982, p. 17). This led to a situation in which internationally uncompetitive industries were created. But the presence of a protective market regime in Australia also attracted international players in the manufacturing industry – including Japanese multinational enterprises (such as Toyota and Nissan) which found it more profitable to manufacture and sell in the Australian market.

However, with the rise of neo-liberal market policy, the profitability was no longer guaranteed and foreign ventures in the Australian market started to decline (Bayari, 2008, p. 88). Further changes that were made to the Australian industrial policy include trade liberalisation and rationalisation of government assistance, industrial and workplace reform, infrastructure reform, and competition policy reforms (Clark, Geer & Underhill, 1996, p. 7). The manufacturing industry also witnessed a significant reduction in barrier protection for industries, whereby tariffs were reduced from 35 per cent to five percent between starting from 1999 (Emmery, 1999). Currently, the automotive industry in Australia has two major policies: the automotive tariff agreements and the Automotive Competitiveness and Investment Scheme (ACIS).

The industry is also shored up through policies such as draw-back arrangements, Tradex, government purchasing practices, specific company-level assistance, the LPG Vehicle Scheme, and the specific tariff agreements for second-hand vehicles (Commonwealth of Australia, 2008, p. 31). Australia’ s manufacturing policy for the automotive industry is developed through contributions from institutions and agencies such as the Federal Chamber of Automotive Industries, Parliament of Australia, local vehicle manufacturers, and vehicle importers.

The recommendations and views expressed by various parties are then presented to the Minister for Innovation, Industry, Science and Research for consideration and deliberation (Federal Chamber of Automotive Industries, 2008; Commonwealth of Australia, 2008). In Japan, government assistance for emerging manufacturing industries helped to transform the economy from low-tech to heavy industry and finally to high-tech. protection from imports, research and development subsidies and other incentives fostered the development of the Japanese economy. It is evident that the Japanese government offered assistance to steel and shipbuilding during the 1950s, and to the automotive and machine tools industries during the 1960s.

The Japanese industrial policy has had two distinctive phases: between the 1950s and early 1970s, the Japanese government had strong control over the country’ s resources as well as the directions of the economy’ s growth. Beginning mid-1970s, the government’ s industrial policy became more modest and subtle. Industrial policies in manufacturing are implemented through the Ministry of Economy, Trade and Industry (METI) (Carbaugh, 2010, p. 220).

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