COVER STORY • Pilots in the Chartless Sea of a Knowledge Economy • 10Potential Benefits of IntellectualCollaboration between Japan & Europe:

The Case of Fondation France-Japon de l’EHESS

By Sébastien LechevalierAuthorSébastien LechevalierIn the modern world, characterized by more and more global issues but also by more uncertainties in thewake of the global crisis, policymakers but also citizens need more than ever the help of think tanks, inorder to get better knowledge about their fast-evolving environment. This knowledge is not all abouttechnology: social, political and economic matters are also very important. It means that there is
obviously no one best way and that think tanks should help us in understanding the roots of diversity inthe world instead of providing normative solutions.
It is with this conviction that we created in 2009 an academic think thank, Fondation France-Japon del’EHESS (FFJ) (http://ffj.ehess.fr/), in order to welcome more ideas from Japan in Europe,
through the eyes of social sciences, and with collaboration of non-academic people. In
this article, I introduce one of our research programs, on“Deindustrialization and theFuture of Manufacturing in Japan, South Korea, Germany and France”and show thatdeindustrialization is not solely related to globalization and should not be confused withit. I also argue that manufacturing is still important and there is a future for it incountries such as Japan, South Korea, Germany and France. To understand this point,
we have to change the way this issue is addressed.
Photo: EHESS Paris 日仏財団
Why Create a French-Japanese Academic
Think Tank in Europe?
In 1924, after a Japanese initiative led by Shibusawa Eichi, Maison
Franco-Japonaise was created in Tokyo with the support of theFrench ambassador, Paul Claudel. As a businessman who can beconsidered the godfather of modern Japanese capitalism, Shibusawa
was convinced of the importance of ideas and intellectual exchanges.
In the context of the Taisho period, as Japan had succeeded in thefirst stage of its modernization but was still lagging behind European
countries in scientific fields (including engineering and businesssciences but also social sciences), the purpose of Maison FrancoJaponaise was to create a place to welcome French researchers andprofessors, and to promote the importation of fresh ideas. We willcelebrate soon the 90th anniversary of Maison Franco-Japonaise,
and we think that the initial goals have been more than achieved andthat Japan has clearly caught up not only with France but with allother European countries in these fields. An institution like Maison
Franco-Japonaise, among others, has contributed to this catching up
by welcoming and promoting in Japan new and sometimes
disturbing ideas and concepts. One may think, for example, of theinfluence of structuralist thinking from the 1950s.
Surprisingly enough, 90 years later, there is still no equivalent inFrance or in Europe of Maison Franco-Japonaise. It means that there
is no physical place where Japanese professors and researchers canbe welcomed, besides universities and schools that develop theirown exchange programs. The context may seem to be not sofavorable, as Japan has literally disappeared as a socio-economic
36 JAPAN SPOTLIGHT • January / February 2013

model (despite the increasing presence of Japanese culture all
around the world) after two decades of economic stagnation. People
tend to be interested in success stories, which is understandable.
However, we think that we can also learn a lot from crises. Crises are
the times when one should more than ever think about alternatives,
when one has to challenge the most accepted views, and when new
concepts and ways of thinking should be promoted. More generally,
we are convinced that we have to give up thinking in terms of“models” and adopt a more objective perspective on the diversity ofsocio-economic systems and their evolution.
In the case of Japan this should be even more so, as we argue it
should be considered a European country…located in Asia. Being a
European country implies the best (democracy, high standards ofliving, etc.) but also the worst (slow growth, ageing, public deficits,high unemployment, etc.): Japan and many Continental European
countries do indeed share many common points. At the same time,
there are obvious differences, mainly for geographical and historicalreasons. Our conviction is that both Japan and European countries
can learn from these differences. To put it differently, Japan helps us
to look at Europe with “new eyes”.
This is the main reason why we created the FFJ in 2009. Keeping
in mind the vision of Shibusawa and the goal to establish in Paris atrue equivalent of Maison Franco-Japonaise, we act as an academic
think tank that invites Japanese professors and researchers toFrance, organizes seminars and conferences with European
researchers and establishes research programs. Before giving an
example of a research program, let me explain why we believe social
sciences are so important and why we need academic think tanks.

Our conviction is based on the following paradox. We havenowadays more access than ever to various quantities of informationthat potentially increases our openness to the world. However, at thesame time, in this continuous flow of information, it is more andmore difficult to understand the surrounding world. Media alone
cannot help. In this context, we need the help of social sciences. Bysocial sciences, we here understand not only economics, politicalscience or international relations but also history, sociology,anthropology, psychology, law, and linguistics. Only social sciences
can help us adopt an interdisciplinary approach, which is necessary
in order to grasp complex issues, as emphasized by Naoyuki
Haraoka in his article in this issue. Only social sciences can provide a
coherent framework to understand the causalities, to put inperspective, to compare, to generalize beyond particular cases, toadopt a critical viewpoint on what is often only one side of amultifaceted reality (Faire des sciences sociales. Critiquer, comparer,généraliser, Editions de l’EHESS, Paris, 2012).
The next problem is that, even for social sciences, national
determinants are important: despite an apparently increasingly
globalized context, social scientists cannot escape from visions andconcepts that are influenced by their national or regional context.
Therefore, it is important to have views from the outside, which allow
us to go beyond narrow thinking and preconceived notions. From aEuropean viewpoint, it is important to look at Africa, America andAsia.
Let me be more specific in developing the example of our leading
research program on deindustrialization and the future of industry
and in showing the type of new knowledge that can be expected fromour activities.

Research Program on Deindustrialization in Japan,
South Korea, Germany & France
Deindustrialization, which is defined as the decrease in the shareof manufacturing industries in total employment and/or output, iscertainly one of the topics in which the gap between public opinion/perception and academic research is the largest. As for public
opinion, deindustrialization is mainly perceived as the result ofoffshore outsourcing (or offshoring) by domestic companies: this is,for example, the case when a company is closing its domestic
operations and opening a new plant abroad, in particular in countries
where labor costs are lower. However, academic research on theimpact of outward Foreign Direct Investment (FDI) on domestic
employment rather shows that it is positive, especially when it isdirected to countries with the same levels of development (“ItMatters Where You Go: Outward Foreign Direct Investment andMultinational Employment Growth at Home”, Peter Debare et al. in
Journal of Development Economics, Vol. 91, 2010). One has in fact

to distinguish two effects. One is a technology effect, which has anegative impact on the labor intensity of a given industry. The otherone is a scale effect, which implies a positive impact on the level ofoutput: after having relocated their activities, firms benefit fromincreasing efficiency through a better division of labor. Most
academic studies show that the second effect is greater than thefirst.
How to reconcile these two perceptions? Are experts right, against
public opinion? Things are more complicated and it may be difficult
to explain to workers who have lost their jobs after a plant has closedthat it will be beneficial to them in the long run. On one side, we haveto answer to populism that links globalization and deindustrializationand calls for more protectionism: the experience of Europe in the1930s tells us enough about how it may end. On the other side, wehave to reply to public concerns and provide an objective and criticalaccount of deindustrialization.
From this viewpoint, the most recent research on the impact ofoutward FDI on employment is particularly relevant, such as thearticle “Offshoring, Labour Market Institutions and the Elasticity ofLabour Demand” by Alexander Hijzen and Paul Swain in theEuropean Economic Review (Vol. 54, 2010). Such research showsthat, although the effect of the volume of domestic employment israther positive, there are also negative side-effects on various
indicators of job quality that should considered in public policies. For
example, various contributions show that FDIs modify the skill
structure of domestic labor demand and increase inequalities. Other
contributions show they increase the job insecurity of domesticworkers. Finally, recent research has found that outward FDIs havecontributed to the increase in non-regular workers and to their wage
gap with regular workers.
Moreover, contrary to what is often thought in Europe, whereindustrialization is often considered as a European problem, with theexception of Germany, this trend concerns in fact most of the OECDcountries, though to diverse degrees. What we observe is a change
in the international division of labor: while most OECD countries
experienced during the last decade a decrease in the share of their
manufacturing employment (Chart 1), the volume of manufacturing
employment has been booming in China since the early 2000s (Chart2). Japan and South Korea are no exception regarding this trend.
South Korea, impressively, has caught up with Japan in a few years
in regard to this trend of deindustrialization (Chart 3), while labor
conditions have deteriorated even faster, especially if one considers
the evolution of the share of non-regular workers. At the same time,
their experience is different from that of France or Germany, whichmakes the comparison interesting. The sectoral specialization, theindustrial dynamics, but also the degree of dependency oninternational trade indeed differ greatly among these four countries
and have to be examined carefully.
JAPAN SPOTLIGHT • January / February 201337

COVER STORY 10
CHART 1

Percentage change in manufacturing
employment in OECD countries, 2000-2008
105

Future of Manufacturing0-5-10-15-20

UK-30

UFr SanP o certug
Ire all
De andnmBe arklgium
Ne Japthe anrlan
Sw dsedCa enna
Hu dang
Slo aryv
Ge enia
rmaFin nylandKo
Au reastra
N lia
Sw orwitz ayerlandIta
Au ly
str
Gr ia
eece
NeSp
Cz w Ze ain
ecal
Slo h Re andvapk R ubli
ep cub
Es lictonia
Lu Polaxe
mb ndourg-25

Source: Author’s calculation based on STAN database (OECD)
CHART 2Growth of manufacturing employment in China(in millions)
130120110

1009008

07

2006

2005

2004

202002

03

2001

2000

2099

2098

1997

1996

1995

19

1993

94

1992

191991

19199080

Source: World BankCHART 3

Evolution of share of manufacturing in total employment
in Japan & South Korea, 1970-2007 (in %)30
28
JapanSouth Korea

26
24
22
20
18
16
1412

Source: Author’s calculation based on STAN database (OECD)

38 JAPAN SPOTLIGHT • January / February 2013

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

10The contribution of the academic research ondeindustrialisation does not lie only in theanalysis of its international dimension. It also
shows that some mechanisms at work are“purely” domestic: in fact, the decrease in theshare of manufacturing in the total economy
can be interpreted as the result of the very
success of development. It has been observed
that, as a country is becoming richer (i.e. as per
capita income is increasing), one observes adecrease in spending by households on
manufactured products, and a rise in spending
on services (such as health and education) after
a certain threshold is reached. This is in fact incontinuity with the first step in the developmentof economies that saw a decrease in the shareof total expenditures on agricultural products
and a concomitant rise in spending on
manufactured goods. This shift occurred at thetime of the (first/second) industrial revolution incountries like the United Kingdom, UnitedStates, Germany, France, and Japan.
Moreover, the impact of this demand-side
mechanism on employment is often reinforced
by a second mechanism on the supply side: thefact that productivity growth is higher inmanufacturing than in services, as it is in
general more affected by progress in thescientific organization of work and by theimpact of innovation.
To these two mechanisms – international anddomestic – it is important to add a third, which
concerns the changes in the organization ofwork: during the last decades, many
manufacturing companies have outsourced
some of their activities (e.g. security andcleaning) to other domestic companies. It
creates a statistical artefact that has led to an
overestimation of the decrease in manufacturing
activities. Even more importantly, it should lead
us to ask ourselves about the very nature ofmanufacturing itself. How to define it? The
contribution of Takahiro Fujimoto, professor at
the University of Tokyo, is here of special
interest as he invites us to reassess thedefinition of manufacturing that focuses onmonozukuri (literally, things that are made) and rather emphasizes
the importance of design (“Architecture-based Comparative
Advantage: A Design Information View of Manufacturing” in
Evolutionary and Institutional Economics Review, 4 (1), 2007).
As a result, deindustrialization is therefore the outcome of at least
three mechanisms and it is the duty of academic think tanks such as
FFJ to explain this, to measure the respective contributions of thesethree mechanisms and to conduct international comparisons. Forexample, Lilas Demmou has shown that in France, which has lost
more than 2 million jobs in manufacturing since 1980, the respective
contribution of each mechanism in this process is, roughly speaking,
30% (“Le recul de l’emploi industriel en France entre 1980 et 2007.
Ampleur et principaux déterminants: unétat des lieux” in Economie etstatistiques, No. 438-440, 2010). However, the international
mechanism seems to have become stronger in the more recentperiod. In the case of Japan, Florimond Bourdeaux, in a study
realized by the French Embassy in Japan and sponsored by FFJ titled
Désindustrialisation et délocalisations au Japon depuis 1970 (2012),
has shown that the international side of deindustrialization is muchless important in Japan than in France. This means that, contrary towhat is often heard in public debates, Japan is suffering much lesson competitiveness issues than France.
To summarize, our research leads us to take seriously the processof deindustrialization, which is a key phenomenon associated withthe evolving structure of the most advanced economies and thechanges in the international division of labor. If one recognizes thatdeindustrialization is inevitable, as shown by various historicalstudies and international comparisons, we also show that it takes
different forms, depending on the time and the country. Moreover,
we expect to discuss concerns about deindustrialization. In fact, it
fundamentally depends on the causes and consequences. Moreprecisely, deindustrialization is a positive outcome when it is theresult of development but negative when it is the consequence oflack of competitiveness. As for these consequences, policymakers
should not only focus on the volume of manufacturing employment
but also on indicators of job quality such as job status, employment
security, wage differentials, and skill structures. Finally, our purpose
is to help policymakers to be more pro-active in better taking into
account the innovation and international strategies of firms and theirimpact on industrial dynamics.

countries (Germany and France) and these two Asian countries(Japan and South Korea). This academic contribution will focus on
the international side of deindustrialization. It is the second step ofanother project we conducted together with Italian colleagues on theheterogeneity of firms’performance in 2010: for example, wequantitatively confirmed how innovation and internationalization
strategies not only matter but also interact (“Why Some Firms
Persistently Out-perform Others: Investigating the Interactions
between Innovation and Exporting Strategies” by Keiko Ito andSébastien Lechevalier in Industrial and Corporate Change, Vol. 19,
Issue 6, 2010). A third and forthcoming step will be an analysis of
the conditions of the emergence of new industries, in a projectcoordinated with Italian, German and French colleagues (“The Path­
Dependent Dynamics of Emergence and Evolution of New Industries”
in forthcoming special section of Research Policy, edited by J. Krafft,
S. Lechevalier, F. Quatraro, and C. Storz).
However, our contribution does not limit itself to academic
knowledge. We also wish to contribute to the public debate. This is
why we will co-organize with the National Graduate Institute forPolicy Studies (GRIPS) an international symposium in Tokyo on April
8 and 9 (before a final conference in Brussels in 2014) during whichscholars, business people and policymakers will gather and try toanswer the following questions (program is available at: http://ffj.
ehess.fr/):— How to define manufacturing nowadays, in a context of increasing
integration between manufacturing products and services? How caninnovation help companies to differentiate themselves from others?
How is it reshaping the industrial structures of economies?
— What strategies should multinational companies adopt in theevolving international division of labor? Is there a future for
manufacturing in countries such as Japan, South Korea, Germany,and France?
— What trade and industrial policies should governments implement
in a context characterized by increasing fragmentation of production,environmental concerns, and energy constraints?
Our expectation is that such research programs and conferences
could contribute to a better understanding of deindustrialization andbetter practices and policies in order to promote manufacturing inOECD countries.

What Knowledge to Expect?
More generally speaking, what kind of new knowledge may we
expect from a research program such as the one conducted by FFJ?
First, our expectation is to contribute to academic knowledge inpublishing a special issue of a journal on this topic, which
systematically compares, for the first time, these two European

Sébastien Lechevalier is associate professor at EHESS (Paris) and founding
director of EHESS Paris 日仏財団 , whose purpose is to strengthen intellectual
exchanges between Japan and France. He was formerly a researcher at Maison
Franco-Japonaise (Tokyo) and has conducted research and held seminars atTokyo University, Hitotsubashi University and Waseda University among others.

JAPAN SPOTLIGHT • January / February 201339