ISSN O075-6407

KOBE

ECONOMIC & BUSINESSREVIEW
44th

ANNUAL VOLUME,iafliilii&l,::..az,

RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATIONKOBE UNIVERSITY

1999

KOBE ECONOMIC & BUSINESS REVIEW
Editor in Chief
Shoj i Nishijima

Co-Editors
Komayuki Ito ; Masahiro Tomita; Ryuzo Miyao

ISSN O075-6407

KOBE
ECONOMIC & BUSINESSREVIEW
44th

ANNUAL VOLUME,lrafliiliiii12.,A

RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATIONKOBE UNIVERSITY
1999

CONTENTS
Page'
A Note on Possibilities about Japan-Korea Free Trade Area:

A Strategic Approach"""'""""""'""Kazuhiro Igawa/ Bonggil Kirn 1

Crise Cambial Brasileira- Fundamentos vs. Ataque auto-realizavel -" " ' 'Shoji Nishij ima 1 Eduardo Kiyoshi Tonooka 1 5

Japanese Supplier Relations:

A Comparative Perspective"""''""'"""""""'""""""'""Kenji Kojima 53

Development ofthe Forest Stewardship Council
Cenification Program' ''"'''"'"'"''""Akira Kajiwara1Todd Malinick 77

KOBE ECOIVOMIC & BUSINESS REVIEva, 44(l999), 1-13.

A NOTE ON POSSIBILITIES ABOUT JAPAN-•KOREA FREE
TRADE AREA: A STRATEGIC APPROACH

KAZUHIRO IGAWA Kobe University

BONGGILKIM KobeUniversity

1. lntroduction

In mis paper, we will emphasize the strategic importance of formation of Japan-Korea

Free Trade Area in two aspects. One is intemalizing dynamic advantage to enlarge apotential of endogenous growth and the other is strengthening competitiveness of Asianways oftransaction for a global standard.

After the burst ofbubble economy in Japan and the hit ofAsian currency crisis in Korea,
a govemment ofeach country is looking for new economic strategies for recovery. One of
the strategies is a formation of free trade area between Japan and Korea. It is interesting toevaluate effects of formation of FTA (free trade area) between Japan and Korea. This isbecause, economic structures of one country is very close to those of others, roles ofgovernment policies for economic developments are important in both countries, and amarket structure is also very close to each other. With these similarities in Japan and
Korea, a formation of Japan-Korea FTA will accompany 1arge industrial restructuring inboth counuies. The effects will not be just exports and imports restmcturing but will be big

adjustments ofre-al1ocation ofindustries and firms between the two countries.

Traditional theoretical arguments about a formation of FTA mostly depend on
assumptions of perfectly competitive markets with non-increasing returns. Trade creations
and trade diversions are familiar. In these cases a formation ofFTA between counnies withsimilar economic structures might not accompany big changes of industrial structures,
except the case that production technologies induce complete specialization of production.

'

tt
C6rTesporiding
address:' 'Kazuhiro Igawa
Research Institute for Economics and Business Administration (RIEB), Kobe University

2-1 Rokkodai-cho,Nada-ku, Kobe, 657-8501, Japan' E-mai1: igawa@rieb.kobe-u.ac.jp

PhonelFax: 81-78-803-7001
Bonggil Kim
Research Institute for Economics and Business Administration (RIEB), Kobe Uniyersity

2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan
E-mail: bgkim@rieb.kobe-u.ac.jp

PhoneMax: 81-78-803-7005

KOBE ECOIVOMIC & BUSINESS REVIEM, 44(1999), 1-13.

2

HoweVer with assumption of imperfect competitive market with increasing returns, aformation ofFTA between countries with similar economic structures will accompany big
change of industrial structures. The formation ofFTA between Japan and Korea has many
elements of this imperfect competition case.

Although the similarity between Japan and Korea might have some cost of adjustments ofindustrial restructuring, the formation ofFTA could give both countries many benefits, andboth countries could enjoy dynamic effects of endogenous growth. The Asian currency
crisis has make explicit the difference of transaction or contract behaviors in Asian
countries from those in Westem (Europeaii and American) countries. If firms in Japan or in

Korea are push to follow the way of Western countries, the firms might reduce theirefficiency. This situation will be unsatisfactory not only for firms but also for govemment,

which has taken leadership of economic development in each country. The cooperation
between fimis of Japan and ofKorea may reduce those inefficiencies and dissatisfactions,and forrnation ofJapan-Korea FTA could be one ofthe ways ofcooperation.
In the following section, we show similarities of industrial structures and trade structures

between Japan and Korea. In section 3, we will discuss theoretically about effects of aformation ofFTA in tlie case ofimperfect competition with increasing returns. Section 4

discusses about trends of globalization of economic activities of firms and about
competition in forming a global standard for transactions. Final section will be used forstrategic aspects ofJapan-Korea cooperation in foming FTA.

2. Economic similarity between Japan and Korea(1) Indusuial structures

Let us briefly check world bank data (World Bank World Development Indicators,1997)
to see economic stmctures in Japan and Korea, stmctures in manufacturing industry. We

will find similarity of economic stmctures in both countries. Production and demand
stmQ.tures are also similar in both countries.

[Structure ofmanufacturing]

Value
added

Manufacturing

CounfYear

1980 1995 1980

Jaan

307.7 1146.2

Korea
World

472.4 5012.4

18.3

102.0

Food
se,r6%g.e.s6.

b..'

9
17

Textilesand
clothing

Machineryand,transporteurment

1995 1980 1995 1980
4
10
33
7
10

19

Unit : Billion $, O/o ofManufacturing's value added

Manufacturing : ISIC major division 3

Food, beverages, and tobacco comprise 31
Textiles and clothing : ISIC division 32

12

17

Chemicals

Other
manufacturing

1995 1980 1995 1980
43'
10
9
38
34
10
9
36

1995
38
36

3
IGA WA AAJD KIM : A NOTE ON POSSIBILITIES ABOUT JAPAN-KOREA FREE TRADE ,4REA

Machinery and transport equipment comprise groups 382-84

Chemicals comprise groups 351-352
Other manufacturing : wood and related products (division 33), paper and paper related
products (34), petroleum and related products (353-56), basic metals and mineral products(36,37), fabricated metal products and professional goods (381,385), other industries (390)(2) Trade structures

Trade between Japan and Korea is one ofthe basic data in assessing FTA between Japanand Korea. Here it will help to show data of trade structures of Japan and Korea. Using

World Bank data, we show structures of merchandise exports (World Bank World
Development Indicators, 1997). We will find similarity of trade structures in bothcountries. Import structures of commodities and the structures of exports and imports inservices are also similar in both countries.

[Structure of merchandise exports]

Value
added

Merchandi

World

O04.0 5144,O

Fuels,rnmerals,and

Other

gsi.ma7dit,esMachineryand.transport

Other

Textilefibers

t.fi:tthi,e..s,andmanufacturing
seexports
metalseulment
CounIYear 1980 1995 1980 1995 1980 1995 1980 1995 1980 199S 19801995
1
130.0 443.1
2
2
2
68
58
37
29
Jaan
1
17.5
3
125.1
9
4
43
70
51
20
Korea

52

3019

Unit: Billion $, O/o ofmerchandise exports

Textile fibers are part ofother primary commodities; textiles and clothing are part ofother manufactures
The f.o.b. value ofgoods, classified using the Standard international Trade Classification(SITC), series M, no.34, revision 2
Fuels, minerals, and metals : commodities in SITC section 3 (mineral fuels, lubricants, andrelated materials), divisions 27 and 28 (crude fenilizers and crude minerals, excluding coal,petroleum, precious stones, metalliferous ores, and metal scrap), and division 68 (nonferrous metals)

Other primary commodities: SITC sections, O,1,2,4(food and live animals, beverages andtobacco, inedible crude materials except fuels, and animal and yegetable oils and fats),

excluding division 27 and 28
Machinery and transport equipment : SITC section 7
Other manufactures : SITC section 5-9, excluding section 7 and division 68
Textile fibers, textiles, and clothing: SITC divisions 26,65, and 84 (textiles, textile fibers,yarn, fabrics, and clothing and accessories), are a subgroup of other primary conmiodities

and of other manufactures

KOBE ECONOMIC & BUSINESS RE]VIEM, 44(1999), 1-13.

4(3) Trade structures ofcommodities between Japan and Korea
It is interesting to see details of trade of goods between Japan and Korea. The data
depending on statistical books, Annual Report 1996 Customs and Tariff Bureau (Fifth) by

Mmistiy of Finance, and Annual report on Customs and Tariff (1999) by Japan Tariff
Association. We can find characteristic features of intra-industry trade in manufacturingindustries.

Japanese Exports and Imports with Korea

Year

Commodity
Total
Foodstuffs

1995
Imports

Experts
2927.821.3

Fish&shellfish
Fruit&vegetables

Rawmaterials

16222
173.1

108.9
37.1

41.0
82.0

22.7
80.0

Petroleum&products

8LO

Chemicalproducts

391.1
87.4

78.4
90.8
23.1

Mineralfuels

Plasticmetals
Textiles562

615

Non-metallicmineralproducts
Iron&steel
Non-ferrousmetals
Metalproducts
Machinery&transportationequipment

67.3

24.1
171.5

221.7
60.0
42.0
1624.642.0
550.3

OLt7}cemachinery

49.1
66.5

47.4

Metalworin'ngmachineiv

108.6

Heatingorcoolingeguipment
Pumpcentrifuges
MechanicalhandlingequimentElectricpowermachinety
AudioandVisualapparatus(parts)

73.5

Powergeneratingmachinety

40.2
54.9

3L2

Electronicintegratedcircuits

309.9

6L7

--.Preclslonmstruments

155.8

Travelgoods,handbags&similararticles

14.6

56.2
17.7
i6.7

346.7
75.9
37.1
35.7
152.7
57.3

25.7
1036.0
40.0
33.9
34.6

25.3

1415
138.6
115.7
37.5
44.4
18.3

148.7
18.3

46.6
480.6
62.9

19.4

3LO

64.9

Motorvehiclesarts
Clothin&clothinaccessories

1998
Imports
Exports
1577.3
2004.5
224.8
102
111.8
34.8

47.4
82.5
14.0
21.4
173.3
32.7

12.1

18.7

40.5
40.5

ILI

2842

263.4

39.3
81.6

Unit: Billion Yen(parts): In case ofexports to Korea
Italic: Subdivision

The value ofexports: F.O.B.
The Value of imports: C.I.F.

Classification ofgoods: "The Basic Classification lndex for The Suminaiy Report on TradeofJapan", based upon "Commodity Classification for Foreign Trade Statistics"

74.3

29.5
118.4
15.6

5
IGA MA ,4ND KIM : A NOTE O?V POSSIBILITIES ABOUT JAP,4N-KOREA FREE TRADE ,4REA(4) Korean tariffs and Korean trade deficits for Japan

Korea has reduced tariffs in these ten years. Trade imbalance between Korea and Japan is

one offactors to discourage formation ofJapan-Korea FTA.

f

ITariffs in Korea]

1988

Totalaverage

18.1

Industrialproducts
Agriculturalproducts

16.9

1990

25.2

1996

1992

11.4
9,7
19.9

10.1

7.9

8.4

6.2

18.5

16.6

Unit: O/o

Data source: Korea Customs Service[Korean trade deficits to Japan]

Year

1996

1997

1998

1999.111-7120

Billion$

15.7

13.1

4.6

425

Data source: Ministry ofCommerce, Industry and Energy and newspaper(5) Removal oflaw ofthe diversification in partners ofimport

Korean import restrictions to Japan are introduced in 1978 to increase imports from EU
and US to mitigate trade conflicts and re(hice deficits for Japan. The number of assigned

commodities had increased maximum to 924 but reduced to 344 by 1988, but it had been
gradually reduced from 1997112 and became zero in199916. However very rapid increasein import of the former restricted commodities from Japan has become serious problem for
Korea. This shows possible directions oftrade after Japan-Korea FTA.

[Removal of import resnictions from Japan]

1997112
199816
1998/12
19991625commodities:CDlaer,smal1car,motorccle
40commodities:small-colorTVmicro-bus'

32commodities:video-cameraanalo-watch,forklift
16commodities:middle&larecarlareTVelectric-rice-cooker,mobile-telehoneTable source: Newspaper (Nippon Economic)

Depending on KOTRA data, Korean newspaper (Korean Economic) has opened data as
foJlows. For the 48 commoditjes (removal from 199811 and 199917), the value ofimports
for July & August in 1999 was 8.23 mi11ion $, 1800/o increase relative to the value in thesame period of previous year (video camera is 146 times, and camera is 23 times). Smalland medium enterprises are seriously damaged by the removal ofthe restrictions.

3. Increasing returns and formation ofFTA
It is well known that an opening of international trade changes production structures incases of imperfect competition with increasing retums in production. In the industry where6

KOBE ECONOMIC di BUSINESS REVJErv, 44(1999?, 1-13.

increasing return works, an integration of firms into one firm will be efficient. Firms will

perfectly specialize their productions into one commodity, but pattems of specialization

after forming FTA are difficult to predict. The assumption of monopolistic competition
partly helps to predict the industrial structure after trade. Evaluation of effects in forming

FTA has similar difficulties in cases ofimperfect competition with increasing returns. Thatis, it is difficult to predict industrial stmctures after tariff reduction between the member
countries. This is because specialization patterns might change drastically between the twosituations with tariffs and without tariffs. Again, the assumption of monopolisticcompetition may help to predict industrial stmctures after formation ofFTA. However, theassumption is not satisfied in real world.

In the case of Japan, several groups of firms coexist and sharing their markets. Thissituation sometimes comes from govemment policies to avoid excess competition among
Japanese fimis. Similar situation prevails in Korea, where industrial stmcture with groupsof fimis (organizations ofZaibatu) is dominant. Therefore, once more strong competition

is introduced by combining markets of Japan and Korea, there will be big waves ofrestructuring of industrial organizations in both countries, Government policies for
economic development in both countries are similar and biased to protect manufacturingindustries. Starting from textile and steei industries, government policies have assisted

industries of shipbuilding, electric machinery, automobile, and semiconductor.
Govemment policies for protecting agricultural producers and fisheries have remained

inefficient and small farmers and fisherrnen. Many govemniental regulations reduced
international competitiveness in service industries. By and large, these effects ofgovemment policies are same for Korea. Korean structures ofindustry and ofmarket are
similar to those in Japan.

Once markets are combined by formation ofFTA, imperfect competition with increasing

returns produces many different outcomes of industrial structures, depending oncommodities and technologies and other elements.

If levels of production technology in both countries are same, a market size in eachcountry will be a dominant factor to determine competitiveness of firms. Even if the firrns

in each country are doing business in large international markets, the size of domestic

market is still an important factor to determine their production size and thus
competitiveness. Therefore, a formation of FTA gives advantages for firms with 1arger
domestic market. However, the firms in 1arger country cannot take all indusnies, becauseof 1imitations in endowment of production factors. Larger country will specialize in theindustries, where a degree ofincreasing retum is larger, and smaller country will specializein the industries ofless increasing returns.

However, division oflabor among differentiated products, different processes, or different
intermediary products will mitigate above specialization.

IGA PVA AAID KIM : A NOTE ON POSSI[BILITIES ,4BOUT JAPAN-KOREIA FREE TR,tlDE ,4REA 7

Ifmarket sizes are same in both countries, the rnain elements of firms' competitivenesswill be technology levels or levels of factor prices. Technology levels will determine acompetitiveness of capital-technology intensive industry and the one of labor intensive

industry will depend on labor costs. After a formation of FTA, firms of technology
advanced country will dominate a technology intensive industry, and firms of lower wage

country will dominate a labor-intensive industry. However, imperfect competition will
mitigate above dominance.
Comparing Japan and Korea, country size is bigger and technology level is higher inJapan and wage level is Iower in Korea. Therefor in the case ofa forrnation ofJapan -Korea FTA, Japan will expand production of high-tech and higher increasing returnindustries and Korea will expand production ofmore labor intensive and lower increasing

retum industries, on average Japanese firms will dominate high-tech andlor increasing
retum section of manufacturing industry, and Korean firms will dominate labor intensive
section of manufacturing industry and primary industry on average. International divisionof service industry depends on regulations and restriction of direct foreign investment(DFI) in both countries. Although there will exist rnany local firrns in each country because

ofpropenies ofservice industry, Japanese firms will expand business in Korea in high-tech
and network section of service industry. if DFI is deregulated. If above arguments are tme,

Korea has less incentive for the Japan-Korea FTA formation.
There wi}1 be industrial adjustments within primary industry, manufacturing industry, andservice industry. Japanese firms or Korean firrns will take some sections of each industry,and some other section will be shared with firms ofboth countries. Each country has many
protective regulations for primary industry and also for service industry, and competition inthese industries will be regulated also after formation ofFTA. The people in each country
have different tastes and preferences for local products and local service network. Thesemight protect 1arge industrial adjustment in priniary and service industries. Both Japaneseand Korean firms are interested in dominating or surviving in manufacturing industry,
especially in high-tech and increasing return sectors. If peoples enjoy varieties of same

product and products can be differentiated, both Japanese firms and Korean firms cansurvive by differentiating their products. This might be the case in automobile and electricmachinery indusnies. However there wM be a competition for taking products of more
profitable in this case.

As volumes ofproduction increased, a possibility of specialization in a differentiatedproduct will increase. A specialization in a different process of a commodity will also
become possible with increase ofproduction size ofintermediary products. Thus a 1arger
market will enforce specialization of intermediary products and international division oflabor in production processes. Depending on characteristics of production processes, theprocesses will be shared in an efficient way.

8

KOBE ECOArOMIC & BUSINESS RE VIE VV, 44(1999), 1-13.

This type of division of labor is most important for less capital or technology intensive

country. However, on average, the firm with advanced capital and technology will makeuse of its advantages by specializing in capital-technology intensive processes. Ftms oflower wage country will share labor-intensive processes. ln the case of forrnation ofJapan-

Korea FTA, international division of labor of production processes will have a pattem ofJapan's specialization in capital-technology intensive processes and of Korea's
specialization ofmore labor-intensive processes, on averege. Again, Korean firms will noteasily accept this.

4. International standard for transaction and management
Technological developments in transportation and telecommunication have increased
globalization ofbusiness activities. Multinational enterprises and DFI of firms has become
typical patterns ofinternational activities offirms. Firms have their ways oftransaction andmanagement depending on systems or habits of their home countries. The habits or
systems of transaction and management are constructed with long term history, and thus
well taken for insiders of the habits or systems. But it takes costs to change habits or
systems. With globalization of international activities of firms, a competition in choosing

habits or systems of transaction and managernent has become issue for global firms. They
are interested in using their own habits or systems as a global standard.

rlhere are tree main areas in the world economy, European area, American area, andAsian area. Gerrnany, USA, and Japan are centers ofthe three areas, respectively. It is said

that US system or habit of transaction and management is more market oriented, Asiansystem or habit uses more organizational relations, and EU system or habit is in between

the two. Although US system and EU system may not be far different, EU and US arecompeting each other to make its own system to be a global standard. Not only Asiansystem is different from those systems, but also Asian system is diversified among
members in Asia. Even if Asian system cannot be a global standard, Asian countries will
have casting board for establishing a global standard for international transactions. After

Asian currency crisis, Asian transaction ruIe is criticized as crony capitalism and moretransparency and accountability should be introduced in Asian markets.

Asian transaction system depends more on social or human relations between actors in amarket and less on prices ofitems in contracts, relative to US system. Asian management

system put more weight on consensus among members in an organization and less on topdowri relation depending on positions in the organization. Asian transaction system andAsian management system aiso depend on active roles ofgovernment for economic
development. To catch up to the more developed countries, a govemment in Asian country
has played active roles by directly or indirectly eontrolling private firms. Specific firms of

the basic industry for a couritry are directly protected, and firms of related industries are

9
IGA PVA AND KIM : A NOTE ON POSSIBILITIES ABOUT JAPAN-KOREA EREE TRADE ,4REA

also selectively supported for economic development. A govemment could use tax andsubsidy policies and financial controls through fiscal decision processes and throughbanking systems under control ofthe government.
Although big groups of firms, Zaibatsu, are divided after the World War Second in Japan,

former groups have reformed new industrial organization of new groups, called Keiretsu.

Japanese firms have developed a Japanese style oftransaction among group members andhave developed Japanese management style inside the firms. In forming Keiretsu, selectiye

supports by the government of basically important and prospective firms to reconstruct,

after war economy, have played rolls. The govemment also controlled banking system tofinance projects of those selected firms. Each Keiretsu group has one main bank and themain bank became a core the group. Firms and banks have employed retired govemment
workers to make strong connections with the government and have exchanged managers
with each other in the group. The Japanese style ofnetwork system ofthe connection has
reduced transaction costs and partly substituted market mechanisms. The group-oriented

behavior has formed environments to exchange information within the group and thisfacilitates attainments of group objectives. In Korea, by and 1arge, strong connection

between Zaibatsu-Keiretsu groups and the government are similar (may be more close)than the case in Japan.

The strong leadership of government and the profit seeking of firms as a group has
developed unique market mechanisms in Japan. Keiretsu transactions of internalization byusing organization instead of market and complicated regulations by government are
typical in Japan. There are so many unwritten contracts for internal transactions ofa group

and also the way of unwritten contracts is often extended to transactions with outsiders oftlie group in Japan. These have become habits or systems in Japanese market. For national

priority of catching up policy, firms have accepted and have depended on leadership ofbureaucrats. The bureaucrats have controlled industrial organization by making complex ofregulations. Rules are far from simple and thus accountability of fums and market
transparency has not been established in Japan.

Dictatorship ofgovemment for economic developments can be found in many countries
and the •success story of East Asian development has supported active interventions ofgovemment into market. However after Asian currency crisis, a strong connection between
govemment and firms has been criticized as crony capitalism. It is sti11 tme or partly tmethat active roles of government are efficient for catching up economy to grow. Althoughmore transparency of market should be introduced in Asian market, too much dependence
on market mechanism invites dictators of markets, who know better about specific market

mechanisms and who have strong market powers.
Formation of group of firms has developed in many countries and strong competitivenessof Japanese fimis in manufacturing industry has taken attentions of Japanese style of10

KOBE ECONOMJC & BUSI?VESS REVIEPV, 44(1999?, 1-13.

management and internalization mechanism of transactions within a group. However,
economic depression in Japan after burst ofbubble in 1990s, especially slow restructuring
in banking system, has called for criticisms of lack of accountability and transparency intransactions of Japanese firms, including financial firms. Intemalization of transactions

using a group organization is one ofways to save transaction costs of using market, andwas efficient when Japan was in high growth economy and communication costs waslarge. Therefore, the efficiency might be reduced in future with reduction ofcommunication costs by technological development. However, for Japanese firms, it willcontinuously be necessary to take the adyantages of the internalization. This will also be
tme in Korea.

Asian markets are in the process of development and thus govemment regulations andorganizational transactions are still working as visible hands. This may be called as crony

capitalism but it has been chosen with historical background. Japan has invested in Asian
countries as DFI and has forrned international network of firms in Japanese ways. Japanese

government has made ODA and constructed inter govemniental relations among Asian
countries in Japanese ways. Korean way was taken for Korean DFI and ODA. IfJapanesefirms and Korean firms change their traditional ways to US or EU ways, they might losecompetitiveness in the global markets. There is a competition for selecting a global

standard of transaction and management, through market mechanisms andlor politicalprocesses.

Asian market is important for Japanese and Korean firms and they prefer to use theirways of transactions as a global standard, at least as a standard in Asia. If the ways are

efficient, they should not change the ways. Even if the ways are not efficient, gradualadjustments to EU way or US way might be better processes of adjustments. If this is thecase, the forrnation ofFTA between Japan and Korea will be beneficial to both countries.

Japanese and Korean ways could be a typical Asian way, at least in East Asia, and firrns
will be able to enjoy the advantages.

5. Strategic importance of Japan-Korea FTA
EU and NAFTA are regional integration systems and have discriminatory elements tooutsiders but Asia do not has such institutional systems. Once EAEG for block of East
Asia was proposed, but it has changed to empty EAEC. Big firrns ofEU and US are aiming
at growing Asian market and fomiing their network organizations to include Asian market.
Before Asian currency crisis, Asian countries have shared 1arger parts ofbenefits oftheir

growth, but EU and US firms or capitals will increase tlieir share after crisis. •The formation ofJapan-Korea FTA could be a start of core of East Asian block. With theFTA, Japanese and Korean firms will restructure and specialize into industries,
commodities, or parts, depending on their competitiveness. Japanese firms and Korean

IGA WA A?VD KIM : A NOTE ON POSSIBILITIES ABOUT JAPAN-KOREA FREE TRADE 11
AREA

fimis may join by M&A or cooperate in.many ways' oftheir intemational strategies, using

Asian Standard oftransaction and management. However, without the FTA, both Japanesefirms and Korean fimis willjoin to EU or US firms, and will be controlled by them in EU

or US standard oftransaction and management.
Although there will be 1arge adjustment costs of restructuring after formation of FTA,
Japanese firms and Korean firms will get 1arger benefits ofbigger home market. Japanesefirms now conducting big restructuring to maintain competitiveness in the global market.

M&A and take over has become issue for firms, after the convoys way of protection has

become inefficient. A big firm wants to keep ownership and to take leadership ofmanagement, after M&A and take over. And thus wants to choose appropriate partners. If
the partner is EU firrn or US firm, the way ofmanagement and decision making is different
and adjustment costs for cooperation will be 1arge, However such costs will be less in casethe partner is Korean firm, because of similarities in many aspects. As a global strategy,
Japanese firms will find benefits ofJapan-Korea FTA.

Korean firms are more serious for restmcturing afier Asian currency crisis. The Korean

way of convoys canhot be continued any more and Zaibatsu started to be broken up.
Korean fimis must find partners to survive in the global market. EU firms or US firms are
more aggressive to be partner ofKorean firms, as their strategies for Asia. Ifthe partner is

EU firms or US firms, Korean firm will be more difficult to have ovvnership and to takeleadership than the case with Japanese firms, In this case with Japanese firms, division of' will not only be differentiated products but also 'be intermediate products of different
labor'
processes. This
intemational division oflabor in prbduction processes is only possible in ageographically close area. Korean fimis could be competitive in the global market oflesscapital and less technology intgnsive products and processes, with the Japan- Korea FTA.

, intensive products and processes will be shared in othet Asian countries.
Labor
Specializatio'n and keeping global competition will increase growth potentials oftechnology innovation and imitation. The firrns both in Japan and Korea can climb up
ladders to higher technology levels together. This is the most important dynamic benefit of

FTA formation.
Avoiding dominance of US firms or EU firms in Asian market, cooperation of JapaheSe
firms and Koreali firms will be necessary. With Japan-Korea FTA, both Japanese firms andtt ttt t

Korean firms will become cOmpetitive in global market and will have power to organize'
their industrial stmcture in Asia. So far Jqpanese firms
and Korean firms are competitive inmany aspects in other Asian markets. Although the competition helps to improve
efficiency, cooperation also has many advantages. Overlapping investments will be
avoided and complementing investments will be facilitated, and most importantly 1arger
scale projects will become possible by cooperative actions of Japanese and Korean; firms.

Cooperation ofJapan and Korea could be a core ofAsian cooperation.

KOBE ECONOMIC & BUSINESS REUIErv, 44(i999), 1-13.

12

China market is expected to grow rapidly and DFI to China is an important strategy forfirms in all over the world. Japanese firms and Korean firms are active to extend theirbusiness activities in China. Chinese business people have their own style of transaction

and management, and have net work of over sea Chinese. They feel uneasy to be
dominated by outsiders. Cooperative business with Japanese and Korean will be lessuneasy for them than with American or European. Transaction habits and meaning ofcontracts are similar to those ofJapan or Korea, and negotiations among Asian peoples will
be easier.

Chna is a socialist country and a role ofgovernment is more important than the one incapitalist countries, especially than in US and in EU. Japan or Korea has an active
government to intervene into market transactions, and has advantage to promote projects

with govemmental supports. China market is so big and no firm can monopolize themarket and cooperation with Chnese local firms will be necessary. Competition between
Japanese fimis and Korean firms to enter the Chinese market will reduce gains for bothcountries. Chinese side will take advantage of the competition and the competition might
result in smaller transaction. Cooperation ofJapanese firms and Korean firms will be more
beneficial to themselves. A negotiation power of China side will be relatively reduced andthus transaction size might become 1arger.

As an activity of firm becomes global, a global standafd of transactions becomes
important, and EU standard and US standard is competing each other to be the global
standard. Asia is a big and growing market but do not has the Asian standard. Each country

in Asia has its own standard ofAsian culture. IfUS standard becomes global standard, US
firms will have advantage for global strategy, and the same will be tue for EU standard.
Even ifAsian standard cannot be global standard, it will be benefici•al for Asian countries

not to be dominated by other standard. Cooperation by forrning Japan-Korea FTA, JapanKorea standard will be a core ofthe Asian standard and Asian countries could take castingboard of forming the global standard. Strategically, it will be beneficial for both Japan and

Korea to form FTA and be a core area in East Asia.

References
J. De Melo & A. Panagaria eds., New dimensions in regional integration, Cambridge University

Press 1993'

World Bank, MorldDevelopmentlndicators i997, The World Bank, 1997
K, Aoki & K, Umata, Economics ofregional integration, Keiso-shobou 1999 (in Japanese)

Korea Institute for Industrial Economics & Trade, "Korea-Japan Free Trade Agreement
Corresponding strategies and Effects on Industries", 1999.8 (in Korean)

Inkyu Cheong, "Economic Integration in Northeast Asia: Search for a Feasibie Apprpach"Conference paper 1999 Oct. 24

IGA MA AIVD KIM : A NOTE ON POSSIBILITIES ABOUT JAPAN-KOREA FREE TRADE AREA
13

H. Asakura & A. Matsumura, "A Note on the forrnation ofJapan-Korea Free Trade Area", Trade andCustoms 1999.10 and 1999.11'
Ministry ofFinance, AnnualReport I996 Customs and TanlffBureau (Fifth), 1996 (in Japanese)
Japan TariffAssociation, Annual report on Customs and Tan:ff(1999), 1999 (in Japanese)

Japan TariffAssociation, 7he Summary ofReport oii Trade ofJapan, monthly, (various issues)

Statistics Bureau, Monthly Statistics ofJapan, Management and Coordination Agency, GovernmentofJapan (various issues)

KOBE ECONOMIC & BUSINESS RE VIE W, 44(1 999), 15-51.

CRISE CAMBIAL BRASILEIRA•- FUNDAMENTOS VS.r ATAQUE AUTO-REALIZAVEL -SHOJI NISHIJIMA Kobe University
EDUARDO KIYOSHI TONOOKA Kobe University and S5o Paulo University

Abstract
This paper claims that the Brazilian currency crisis can be better understood within aframework which encompasses economic fundamentals analysis and self-fu1fi11ing
expectations. Insufficient fiscal adjustment and political uncertainties have caused asudden shift in private expectations which lead to a run on the Brazilian real. Following
Sachs, Tornell & Velasco (1996b), it is shown that the Brazilian economy was trapped in a

multiple equilibria environment so that the crisis has just reflected the jump from anequilibrium without exchange devaluation to another equilibrium with devaluation.
JEL classipication: E52, F3 1, F32, F41, 054
Keywords: Brazi1; Real Plan; currency crisis; exchange-rate policy; self-fu1fi11ing attack

Introdugio
A economia brasileira, de meados da decada de 80 ate os primeiros anos da d6cada de 90,

apresentou indices de inflagao bastante elevados que a colocaram muito pr6xima de um

processo hiperinflacionario aberto, Em julho de 1994, as taxas inflacionarias foram
sjgnificativamente reduzidas atrav6s da jmplementagao de um programa de estabilizagfio

monet:iria (Plano Real) fundamentado em uma ancora cambial. Paralelamente, desde oinicio da d6cada de 90, as autoridades econ6micas governamentais brasileiras haviam
Corresponding addressi

ShojiNishijima.
' ' lnstitute for Economics and Business Administration (RIEB), Kobe University
Research
2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan
E-mail: nisijima@rieb.kobe-u.ac.jp

PhonelFax: 81-78-8Q3-7013
Eduardo Kiyoshi Tonooka (Bolsista da JSPS-Sociedade Japonesa para Promogao da Ciencia)
Research Institute for Economics and Business Administration (RIEB), Kobe UniVersity

2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan
E-mail: tonooka@rieb.kobe-u.ac.jp

PhonefF ax: 81-78-803-7038

16

15-51.
KOBE ECONOMIC & BUSINESS RE VIE M, 44(I999?,

mudado radicalmente de orientagao, passando de um modelo de desenvolvimento centrado
na atuagfio do Estado para um rnodelo centrado nos mecanismos de mercado. Desta forma,a partir desta epoca, foram iniciados os processos de liberalizagao comercial e financeira,de privatizagao e de desregulamentag5o, dentre outros. Como consequencia das politicas
liberalizantes e do controle da inflagao, o pais alcangou grande destaque entre os chamados

mercados emergentes, passando a receber grandes volumes de capital estrangeiro, seja sob
a forma de investimento direto ou de investimento de carteira. A maciga entrada de capitais

externos mais a ocorrencia de uma inflagao residual nos primeiros meses do plano deestabilizagao provocaram uma valorizagao expressiva da taxa de cambio real, que se
traduziu em d6ficits crescentes na balanga de transag6es correntes e em uma dependencia

cada vez maior de capitais estrangeiros para o fechamento das contas do balango depagamentos.
A estrat6gia de adogao de uma politica cambial rigida num contexto de liberdade demovimentos de capitais nao era isenta de riscos, sendo o maior deles a possibilidade de um

ataque especulativo contra as reservas internacionais do pais. As crises cambiais
experimentadas por alguns paises do sudeste asiatico, em meados de 1997, e pela RUssia,
um ano ap6s, tomaram o financiamento do deficit em transag6es correntes do pais cada vez

mais dificil e caro, o que acabou levando o governo brasileiro a assinar um acordo deemprestimo com o FMI no valor de US$ 41,5 bilh6es no segundo semestre de 1998.
Entretanto, em janeiro de 1999, em meio a um forte movimento de saida de capitais dopais, o governo brasileiro decidiu abandonar a ancora cambial, correspondendo, em certa

medida, as expectativas do rnercado. Naquele momento, conhecidas as consequencias dacrise asiatica, temia-se pelos efeitos recessivos e inflacionarios da desvalorizagao, bemcomo pela possibilidade de contagio para outras economias latino-americanas. No entanto,

comparado ao caso asiatico, a desvalorizagao da moeda brasileira apresentou efeitos
bastante limitados.

Este trabalho tem como objetivo analisar as causas da crise brasileira a 1uz de duas das

principais linhas de pesquisa sobre crises cambiais: uma, centrada no estado dos
fundamentos da economia, e outra, centrada no estado das expectativas dos investidores(crises auto-realizaveis). O trabalho esta dividido em tres partes. Na primeira parte, sao

apresentados dois modelos simples com o intuito de expor a argumentag5o b6sica de cadauma das linhas de pesquisa citadas. A segunda parte e destinada a mostrar a evolugao dapolitica cambial brasileira antes e depois da desvalorizagao, incluindo os principais pontos

do acordo com o FMI, o estado dos fundamentos da economia brasileira antes dadesvalorizagfio e os possiveis determinantes da mudanga no estado das expectativas dos

investidores ds vesperas da desvalorizagao. Nesta parte, tambem sfio analisados os
impactos da desvalorizagio sobre as principais variaveis macroecon6micas da economia
brasileira, incluindo-se as taxas de inflag5o e a situagao das contas pfiblicas. Contrapondo

NISHIJJMA AND TONOOM : CRISE CA?LdlBIAL BR,4SILIIIRA

as duas abordagens te6ricas apresentadas na primeira parte com os fatos apresentados na
segunda parte, a terceira parte oferece uma explicagao te6rica para a ocorrencia da crise
carnbial no Brasil atraves de um pequeno exercicio que relaciona o nivel da divida ptiblica(fundamento) com a possibilidade de equilibrios mUltiplos na economia, que pode gerar
uma crise auto-realizavel. Como principal conclus5o, nota-se que o caso brasileiro somente

pode ser melhor compreendido quando se analisam conjuntamente o estado dos
fundamentos e o estado das expectativas dos investidores.

Parte I - Modelos te6ricos'(1) Modelos de "primeira gerag5o"

Muito embora a ocorrencia de crises no Balango de Pagamentos de paises que por
qualquer motivo adotavam regimes nao-fiexiveis de taxas de cambioja fosse observada ha

muito tempo, a construgao de modelos te6ricos formais para a analise desse fen6meno e
um fato relativamente recente.

Krugman (1979) mostra que a tentativa do governo de manter a estabilidade da taxa decambio (nominal ou real) atraves da utilizagao de suas reservas internacionais pode
eventualmente terminar em um ataque especulativo por parte dos agentes privados.2 A

panir de um modelo simples para uma economia pequena, Krugman mostra que ocomportamento dos agentes privados e uma decisao racional baseada na constatag5o de um

comportamento inconsistente por parte do governo, que nio compatibiliza sua politica
fiscal com o objetivo de estabilidade cambial. Em seu modelo, o equilibrio no mercado
monetdno domestico e dado por:

M1P= exp (-ct . i)(1)

onde M representa a oferta de moeda, P representa o nivel de pregos domesticos e i e ataxa de juros domestica. A oferta de moeda e suposta de responsabilidade exclusiva daautoridade monetaria domestica, consistindo-se na soma do credito domestico, D, e das
reservas internacionais, R:

M=D+R

(2)

1. Excelentes resenhas te6ricas sobre a ocorrencia de crises cambiais podem ser encontradas em Flood & Marion(1998) e Ito (1999), dentre outros.

2. 0utro artigo comurnente citado como precursor na analise de crises cambiais, ao lado de Krugman (1979), e ode Flood & Garber (1984).

17

l8

'KOBE ECONOMIC & BUSINESS REvaEM, 44(1999), 15-51.

Tanto o nivel de pregos quanto o nivel da taxa de juros sao sujeitos as condig6es dearbitragem internacional. Portanto, para o nivel de pregos vale o principio da paridade dopoder de compra:

P=E. P*(3)

onde E representa a taxa de cambio nominal (unidades de moeda domestica por unidadede moeda estrangeira) e P* representa o nivel de pregos intemacionais. Para o nivel da taxa

dejuros vale a condigao de paridade descoberta (uncoveredparity condition):

i == i* +E(4)onde i* representa o nivel da taxa de juros internacional e E representa a variagao
esperada e efetiva ipeij7ectforesight) na taxa de cambio nominal.

Supondo uma taxa de cambio nominal fixa, E =E, tem-se que E = O e i = i". A partir das

equag6es (1) a (4) e com um pouco de simplificagSo matematica, chega-se ao seguinte
resultado:

d+r-e-p* = -a.i'(5)onde as letras minUsculas, com excegao da taxa de juros i*, representam os logs dasvariaveis ja descritas anteriomiente com letras maiUsculas. Considerando o niyel da taxa dejuros intemacional e o nivel de pregos internacionais fixos, alem da taxa de cambio, se ocredito domestico se expande a uma taxa constante, p, as reservas internacionais devem
diminuir a mesma taxa, -p. Nestas condig6es, as reservas intemacionais devem se exaurir

ap6s um determinado periodo de tempo.
O Grafico 1 mostra a evolugao da oferta de moeda, das reservas internacionais e da taxa decambio sob o regime de taxa 'de cambio fixa (E =E). Caso as reservas diminuissem
passivamente ao longo do tempo, elas se esgotariam na data t, quando o regime de taxa decambio fixa seria finalmente abandonado, A partir deste momento a taxa de cambio seria
constantemente desvalorizada assim como a oferta de moeda passaria a aumentar, ambos ataxa p. Desta forma, estaria aberta a possibilidade da obtengao de ganhos de capital com aaquisigao de moeda estrangeira momentos antes da data t, ou seja, as reservas nao caem azero passivamente, mas sao rapidamente consumidas em algum instante anterior a data t,

por exemplo, na data t*. O ataque as reservas nao aconteceria antes da data t*, por
exemplo, na data t', pois, nesse caso, a redugio na oferta de moeda seria tao grande que apartir do momento em que fosse permitida a taxa de cambio flutuar ocorreria uma
valorizagao da moeda domestica que impingiria perdas de capital aqueles que compraram

NISHIJIMA AND TONOOKL4 : CRISE CAMBIAL BR,4SJL,E IR,4

19

Grifico 1
Ofertade Moedae Reservas

M

"..

ii''

''

R

Taxa
de

cambi

E

t'

t*

Fonte: Kenen (1996)t

20

KOBE ECOIVOMIC & BUSINESS REVIEPV, 44(1999), 15-51.

moeda estrangeira.3

Desta forma, a taxa de cambio passaria a ser desvalorizada a partir da data t*, sem
movimentos discretos que permitissem ganhos ou perdas de capital. De fato, na data t*, aoferta de moeda cai em um montante equivalente ao ataque especulativo e a demanda demoeda cai devido a elevagao na taxa de juros domestica resultante da iminente perspectiva

de desvalorizagio cambial, garantindo-se assim o equilibrio no mercado monetario. A
partir das equag6es (1) a (5) e alguma algebra e possivel determinar com precisfio a data t*

em que ocorre o ataque contra as reservas, que estara mais distante quanto maior for oestoque inicial de reservas internacionais e menor a taxa de crescimento do credito
domestico.4

O modelo revela claramente que o colapso do regime cambial fixo 6 decorrente damanutengao de deficits fiscais prolongados que, no caso acima, sao financiados atraves deemissao monetdna. Este resultado, entretanto, nao se altera mesmo se forem consideradas
as possibiljdades de esterilizagSo (Flood, Garber & Kramer, 1996) ou de o governo tomar
recursos no mercado (Buiter, 1987).S(2) Modelos de "segunda geragio"
Modelos "bem-comportados", como o acima exposto, em que existe apenas um innicoequilibrio decorrem das hip6teses de linearidade no comportamento dos agentes privados(demanda por moeda) e do governo (expansao do credito domestico). A hip6tese deprevisfio perfeita (perfect foresight) por sua vez permite estabelecer com precisao omomento do ataque contra as reservas.

Os modelos de segunda geragao trabalham fundamentalmente com a hip6tese decomportamento nao-linear do governo, que proporciona a ocorrencia de mthltiplos

equilibrios. Neste sentido, a mudanga no comportamento do governo pode ser uma
resposta a mudangas no comportamento dos agentes privados (mudangas nas expectativas

do mercado, por exemplo) ou a conflitos entre objetivos de politica econ6mica(estabilidade cambial versus nivel de emprego, por exemplo). No primeiro caso, uma crise

cambial poderia ser "auto-realiz6vel" na medida em que uma mudanga no comportamento

do govemo no sentido da desvalorizagao poderia ser induzida pelos agentes priyados
atraves de uma agao coordenada de ataque as reservas. Crises auto-realiziveis poderiam,
3. Por hip6tese, a autoridade monetaria n5o pode expandir a oferta de moeda para evitar sua valorizagao.

4. A determinagfio da data exata do colapso do regime cambial fixo pode ser encontrada, dentre outros artigos, em

Flood & Marion (1998).
5. Talvi (1997) apresenta um modelo em que a erise cambial e precedida por ausencia de defieits fiscais e deperda de reservas, situagio presente em vhrios programas de estabilizagfio monetaria aplicados em paises daAmerica Latina na decada de 90. Entretanto, o autormostra que quando esses prograrnas nao contemplam um
ajuste fiscal perm anente, o colapso do regirne cambial e s6 uma quest5o de tempo.

NISHIJIMA AND TONOOI<,4 : CRISE CA?LfBIAL BRASILEIR,4

portanto, ocorrer independentemente da consistencia das politicas econ6micas (aocontrario dos modelos de primeira-geragao em que a crise e resultado de politicas
econ6micas insustentaveis).

Obstfeld (1996)6 apresenta um esquema simplificado de jogo entre o governo e dois
agentes privados para demonstrar a possibilidade de mtiltiplos equilibrios e crises auto•-

realizaveis. Cada agente privado detem n unidades de moeda domestica, enquanto ogovemo detem R unidades de moeda estrangeira que podem ser vendidas para garantir aestabilidade da taxa de cfimbio. Essas informag6es sfio de conhecimento comum e os
agentes privados creem que um ataque especulativo efetivo provocar6 uma desvalorizagao

da moeda domestica.
A primeira situagao, descrita no diagrama 2A, retrata um estado de reservas elevadas (R >2n). Supondo que a compra de moeda estrangeira por parte dos agentes privados incorra

em um custo de transagao igual a 1 (O, no caso de retengao de moeda domestica),
isoladamente ou em conjunto, os agentes privados nao obterao sucesso em um ataqueespeculativo, pois a quantidade de reservas em poder do governo e mais do que suficientepara defender a paridade cambial, O imico equiiibrio existente, portanto, e' o do primeiro

quadrante, no qual ambos os agentes retem moeda domestica e a taxa de cambio e
preservada.

A situagao do diagrama 2B retrata um estado de reservas baixas (R S n). Neste caso,

qualquer agente isoladamente pode atacar as reservas com sucesso. Evidentemente, os
payoffs dependem dos valores assumidos para o nivel de reservas em poder do govemo ede moeda domestica em poder dos agentes 'privados. Utilizando os mesmos valores deObstfeld, supondo R =n = 6e que o governo desvalorize o cambio em 500/o ap6s oesgotamento das suas reservas, se um agente vender toda a sua disponibilidade de moeda
domestica tera um ganho liquido de capital, em termos de moeda domestica, de 2, Caso osdois agentes vendam moeda domestica, cada um obtera 3 unidades de moeda estrangeira e
um ganho liquido de lf2. 0 Unico equilibrio sera o do quarto quadrante, no qual ambos os
agentes vendem moeda dom6stica e a taxa de cambio e desvalorizada.'
A ultima situagao, descrita no diagrama 2C, retrata reservas em um estado intermedidno(2n > R > n). Nenhum agente privado isoladamente pode atacar as reservas com sucesso,mas se ambos assim fizerem a taxa de cambio e desvalorizada. Supondo R = 1O, se apenas
um agente busca o ataque contra as reservas, a iniciativa e fracassada, implicando uma

perda equivalente ao custo da transagSo. Se ambos os agentes atacam, cada um obt6m um
6. 0bstfeld (1986) apresenta um modelo de crise cambial desencadeada por expectativas `"auto-realizaveis" dosagentes privados quanto ao compprtamento do govemo inspirado em modelos de corrida contra bancos (bankrun) do••tipo Diarnond-Dybvig (1983). A panir de entao, uma serie de modelos "auto-realithveis" podem serencontrados na literatur•a sobre o tema como, por exemplo, Obstfeld (l994) e Sachs, Tornell & Velasco(1996a), dentre outros.

21

22

KOBE ECONOMIC di BUSINLE SS RIi varEW, 44(1999), 15-51.

ganho liquido de 312. Neste caso, ha dois equilibrios, representados pelos primeiro e quarto

quadrantes. Apenas no segundo ha crise cambial. O carater auto-realiz6vel da crise esta no

fato de a paridade cambial ruir se houver ataque, mas permanecer intacta caso nao houver
ataque.

Na terceira situagao, portanto, a ocorrencia de um ataque especulativo e uma
possibilidade, que se transforma em realidade no caso de os agentes privados atuarem
coordenadamente contra a autoridade monetaria. Sao os mecanismos de "coordenagao" dosintmeros agentes privados que distinguem os modelos de segunda geragfio.
Obstfeld (1994, 1997), Sachs, Tornell & Velasco (1996a, 1996b) relacionam a ocorrencia

de um ataque auto-realizavel a determinados estados da economia. Alem da estabilidade
cambial, o governo se defronta com outros objetivos (nivel de atividade econ6mica saade
do sistema banc:irio domestico, administragfio da divida pthblica, nivel "6timo" de reservas

internacionais, etc), que para serem atingidos podem exigir o abandono da politica decfimbio fixo. Assim, quando os custos para se manter o regime cambial sao vistos como
muito elevados para serem suportados pelo governo (em termos dos prejuizos impostos aconsecugfio dos demais objetivos de politica econ6mica), um ataque especulativo tende a

ser bem sucedido, pois a desvalorizagao cambial tambem e vista como favoravel para ogoverno. A suposigao de que os agentes privados sao capazes de avaliar esses custos
garante a coordenagao das suas ag6es.

Sachs, Tornell & Velasco (1996a) condicionam a desvalorizagao cambial a situagao dosistema bar}cario, alem do nivel das reservas internacionais (fundamentos). No caso dosistema bancdno encontrar-se fragilizado (maus fundamentos) - devido a um elevado grau
de inadimplencia, por exemplo - a autoridade monetada nfio apresentaria muita disposigao
em manter as taxas de juros elevadas para defender a paridade cambial, dados os prejuizos
que este tipo de medida acarretaria para o sistema bancaio, preferindo a desvalorizag5o.
No caso do nivel das reservas ser superior ao montante miiximo que poderia ser mobilizado

em um ataque especulativo, este nao aconteceria e a taxa de cambio seria mantida,
independentemente da condigao dos fimdamentos (estado de reservas elevadas). No'caso

oposto, a desvalorizagao poderia ou nSo acontecer, dependendo das expectativas dos
agentes quanto a pr6pria desvalorizagao que, por sua vez, dependeriam da condigao dos
fundamentos. Os niveis das taxas de juros domestica e internacional determinariam um

limite para a desvalorizagao esperada, acima do qual um ataque contra as reservas
acarretaria no abandono do regime cambial. Se as expectativas de desvalorizagao ficassem

abaixo desse limite, nio haveria ataque especulativo e muito menos a necessidade de
7. Corno o pr6prio Obstfeld adverte o fato de o niyel de reservas ser superior ao valor da base monetdria nfio

garante a sustentabilidade de um regime cambial fixo. Obstfeld (1994) e Sachs, Tornell & Velasco (1996b)
desenvolvem .modelos de equilibrios m"ltiplos nos quais o estoque da divida p"blica exeree um importante
papel para o desencadeamento de ataques especulatiyos.

NISHIJJMA AND TONOOK,4 .• CRISE CA?LtfBIAL BR,ilSILEIR,4

GrAfieo 2

2A-ReservasElevadas ,Agente 2

Retem Vende
Ret6m

o,o

O,-1

Vende

-l,O

-1,-1

Agente 1

2B - Reservas Baixas

Agente 2

Ret6m Vende.Retem

o,o

O,2

Vende

2,O

1/2p112Agente 1

2C - Reservas Intermediarias

Agente 2

Retem Vende
Ret6m

o
'

o

o

-1
,

Agente 1

Vende

-1
,

'
Fonte: Obstfeld (l996)

o

312
)

312

23

24

KOBE ECONOMIC & BUSINESS RE ZIE M, 44(1 9997, I5-51.

desvalorizagao.8 Neste ultimo caso, haveria dois equilibrios possiveis: (a) sem ataque e sem

desvalorizagSo e (b) com ataque e desvalorizagao. O segundo equilibrio configuraria uma

crise cambial auto-realizivel na medida em que a desvalorizagao seria resultado daselevadas expectativas de desvalorizagao por parte dos agentes.

(3)t E possivel uma "sintese" dos modelos?

De fato, conforme salientarn Flood & Marion (1998, p,31), a principal contribuigao dos

modelos de segunda-geragao esta em explicitar o compromisso com o regime cambial
como dependente do estado da economia. Esses estados podem estar associados a eventos
externos (elevagao nas taxas de juros internacionais, desvalorizag6es cambiais em outros

paises, queda nos pregos de commodities, etc) ou internos (nivel das reservas, deficit
pUblico, tamanho da divida pUblica, fragilidade do sistema financeiro domestico, etc).9

Nos modeios de primeira geragfio o estado da economia e invarjante, notadamente,

caracterizado pelo desrespeito a restrigio orgamentaria governamental (mausfimdamentos), e a crise cambial e apenas uma quesdio de tempo. Os modelos de segunda

geragao preveem crises cambiais auto-realizaveis decorrentes de mudangas nas
expectativas dos agentes quanto ao estado da economia, que n5o necessariamente teria deapresentar maus fundamentos (desequilibrio orgamentado, por exemplo).

Observando o estado da economia, os agentes privados formam suas expectativas quantoa possibilidade de ocorrencia de uma mudanga no regime cambial. Dados o estado daeconomia e as expectativas dos agentes privados, o governo toma sua decisao de manter ou

abandonar o regime cambial. Maus fundamentos devem em algum momento originar um
ataque especulativo, enquanto que bons fimdamentos o dificultam. Entretanto, a avaliagao
do que e "bom" e "mau" e feita pelos agentes privados na fomiagao das suas expectativas,

as quais podem ou nao desencadear um ataque especulativo que resulte na desvalorizagao
cambial.

A incorporagao de variaveis de estado que retratam os fundamentos econ6micos
domesticos aos modelos de segunda-geragao constitui, portanto, uma forma relativamente
simples, adequada e viavel de compatibilizar esses modelos com os de primeira-geragio ede nao se atribuir ao destino (choques externos, alterag6es ad-hoc nas expectativas dos
agentes) o fracasso da politica cambial quando, na verdade, este fracasso e resultado da ma
8. Supondo investidores neutros para o risco,o limite ee dado pore = (r - r*)1(l + r), onde: r= taxa de juros
domestica e r* = taxa de juros internacional. Em outras palavras, um investidor s6 se disporia a manter titulos

denominados em moeda dom6stica em seu portf61io caso a desvalorizagao cambial esperada fosse menor que odiferencial entre as taxas dejuros.
9. Uma analise das mudangas no estado da economia decorrentes de alterac6es no arnbiente externo e seus efeitos

sobre o cfimbio de equilibrio pode ser encontrada em Masson (1998).

NISHUIMA AND TONOOK)4 : CRISE CAM/BIAL BR,4SIL,EIRA

25

condugao das politicas monetatia e!ou fiscal.

Sachs, Tornell & Velasco (1996b) apresentam um modelo que compatibiliza os principais

elementos dos modelos de primeira e de segunda geragao. Os autores sup6em um govemo
que procura mmimizar a seguinte fungao utilidade:

L= O,5 (ctz,2 +x ,2) , or >O (1)sujeito a restrigao orgamentaria, que representa o estado da economia:

rB,= x, +e(rc, -x,e) (2)onde: r e a taxa de juros internacional, B e o passivo liquido consolidado do governo, x e a

arrecadagao fiscal, n, e a taxa de desvalorizagao cambial e rt,c e a taxa esperada dedesvalorizagao. Sob a hip6tese de paridade do poder de compra, o segundo termo do lado
direito da equagao 2 pode ser interpretado como sendo o imposto inflacionario.
A solugfio deste problema e dada por:x, = A.(r B, +ex,c)ex, -(1 -X) (rB, +ex,e) (3)Dado que X! ct 1 (a + e2), segue-se:

Ld(B,) = O,5X(r B, +en,e)2 (4)No caso de os agentes apresentarem previsao perfeita (peij7ectforesight), T,e = z, , tem-se:'tt

ert,"- [(1 -X) IX)] rB, (5)Solucionando o problema para o caso de o governo adotar uma taxa de cambio fixa, x, =O, teM-se:x,=rB, +en,c (6)'Lf(B,) == O,5 (r B, +en,c)2 (7)Supondo que a adogSo de uma desvalorizagao acarrete um custo fixo, c > Oie, para o
IO.Custo decorrente da perda de relSUtagao ou de credibilidade do governo devido a mudanga nao esperada na
politica cambial (SaChs, Tornell & Velasco, 1996a, p,270).

26

KOBE ECONOMIC & BUSINESS REVIEM, 44(1999), 15-51.

governo, dadas as expectativas de desvalorizagao, z,e, o governo considerara uma
desvalorizagao se

Ld(B,, K,e) + c < Lf(B,, n,`)que e equivalente a condigio:rB +ezc>ktt(8)

onde: k = (1 -X)-O•" (2c)O•S > oAssim, supondo que os agentes estabelegam suas expectativas de desvalorizagao como
sendo iguais a zero, rt,e = O, elas serao racionais apenas no caso de r B, $ k. Se r B, > k, ogoverno devera optar pela desvalorizagao, independentemente das expectativas dos
agentes. Em outras palavras, se r B, S k, ou seja, se o estado da economia, avaliado pelo

tamanho dos compromissos do govemo com o mercado, for positivo, a manutengao da taxa

de cambio nao s6 e factivel mas tambem esperada pelos agentes, os quais nao veem
condig6es para um ataque especulativo bem sucedido.
Supondo que os agentes esperem uma desvalorizagao, ez,e = [(1-bX)IX] r B, (equagao 5),
ela ocorrera apenas no caso de r B, >X k. Prevalecendo a condigao inversa, r B, SX k, ogoverno nao desvalorizara, independentemente das expectativas dos agentes. Este caso

tambem configura uma situagio em que o estado da economia e positivo, o que
inviabilizaria o sucesso de um ataque especulativo.

Em resumo, se r B, $X k (estado da economia positivo), ha um imico equilibrio, sem
desvalorizagao, e se r B, > k (estado da economia negativo), o imico equilibrio sera com

desvalorizagao. Um estado intermediiirio, X k < Rb, S k, caracteriza uma situagao com
dois equilibrios possiveis (sem desvalorizagao ou com desvalorizagao), que dependem das

expectativas dos agentes quanto a ocorrencia ou nao de uma desvalorizagao cambial. O
governo nio desvalorizara o cfunbio no caso de os agentes nao esperarem por ela; mas, se

as expectativas dos agentes forem no sentido da desvalorizagao, para o govern, o sera
melhor que ela acontega. A possibilidade de dois equilibrios decorre do fato de o governo
nao possuir o controle absoluto da taxa de ciimbio no estado intemiedi;1rio, X k < Rb, S k.

O governo pode comprometer-se a manter o regime cambial fixo ex ante (mantendo-o expost se nao existirem expectativas de desvalorizagao), mas ser obrigado a abandona-lo expost (no caso de prevalecerem expectativas de desvalorizagao).

O modelo acima possui a virtude dos modelos de segunda geracao ,de se subordinar ocompromisso com o regime cambial ao estado da economia, peirnitindo a ocorrencia demUltiplos equilibrios e crises auto-realizaveis. Adicionalmente, associa o estado daNISHVIMA A?VD TONOOIkZ4 : CRISE CAM/BIAL BR,4SILEIR,4

economia com seus fundamentos internos (no caso, o tamanho da divida pUblica),
destacando a importancia de politicas econ6micas consistentes para a manutengao
duradoura da estabilidade de pregos. Com algumas adaptag6es, o modelo pode descrever opapel do deficit em transag6es correntes ou do nivel das reservas internacionais (variaveis

de estado) no equilibrio. Por outro lado, o modelo nao se preocupa com o processo de'formagao das expectativas, fundamental para se compreendera dindniica do equilibrio. E
nesta diregao que devem caminhar os trabalhos te6ricos sobre crises cambiais.

Parte II -Os caminhos da crise Åëambial brasileira(1) Antecedentes

Desde a crise cambial mexicana no final de 1994, o governo brasileiro passou por alguns

momentos de tensao com sua politica cambial. No auge da crise asiatica, em 1997, as
reservas internacionais do pais reduziram-se em cerca de US$ 10 bilh6es. No ano seguinte,a crise russa provocou uma perda de reservas da ordem de US$ 25 bilh6es apenas nos
meses de agosto e setembro. Nos periodos de crise, al6m de capitais de curto prazo
aplicados pelos investidores estrangeiros em ag6es, titulos ptiblicos e pap6is de renda fixa,

tambem foram registradas saidas expressivas de caphais sob a forma de remessas de lucros

e dividendos por empresas multinacionais e de pagamentos de dividas contraidas noexterior por empresas e bancos brasileiros, A redugao no grau de confianga do investidor
no pais refietiu-se principalmente na bolsa de valores paulista, que despencou de onze mi1
pontos, as vesperas da crise na Rtissia em julho, para oinco mil pontos, em setembro. Jfi onivel das reservas internacionais que, em abril de 1998, estava em US$ 74,7 bilh6es,
reduziu-se para cerca de US$ 45,8 bilh6es no final de setembro. Em janeiro de 1999, em
meio as incertezas provocadas pela desvalorizagfio do real, as reservas internacionais

liquidas, isto 6, desconsiderando-se os recursos do FMI, fecharam o mes em US$ 27
bilh6es.

Com o objetivo de diminuir as chances de uma crise cambial no pais ap6s o colapso
russo, o governo brasileiro langou mio de uma serie de medidas destinadas a acalmar as
expectativas dos investidores internacionais. No dia 8 de setembro de 1998, o Ministerio daFazenda divulgou cortes de despesas no valor de US$ 4 bilh6es no orgamento de 1998 e,
no dia 10, o Banco Central elevou a taxa basica de juros para 49,750/o ao ano. Entretanto,

muito embora o aumento na taxa de juros fosse um instrurnento necesshrio para tentar
estancar a saida de capitais, seu efeito colateral sobre a divida pUblica nao pedia serignorado.

Assim sendo, ap6s as eleig6es gerais em 3 de outubro, que resultaram na reeleigao do
Presidente Fernando Henrique Cardoso, o governo apresentou o "Programa de Estabilidade

27

KOBE ECONOMIIC & BUSIIVESS REVIEPV, 44(l999), 15-51.

28

Fiscal" para o periodo 1999-2001, envolvendo propostas de cortes de despesas e aumentos

de arrecadagio imediatos, aiem de reformas nos sistemas de previdencia social e deadministragao pfiblica. Para o ano de 1999, o esforgo fiscal total estimado representava
algo como 3,080/o do PIB.

Conv6m destacar que essas medidas eram nao apenas necessdnas para melhorar o estado
dos fundamentos fiscais e externos da economia brasileira e com isso recuperar a confianga

do mercado, mas tambem pre-condig6es para a liberagao do emprestimo acertado corn o

FMI. .
(2) O acordo com o FMI
Sob os efeitos da crise russa, o governo brasileiro iniciou conversag6es com o FMI para aaprovagio de uma linha de credito especialmente destinada a viabilizar o programa deajuste econ6mico brasileiro. Diferentemente das negociag6es durante a crise da divida
externa dos paises latino-americanos na decada de 80, quando o ajuste fiscal era uma
proposta do FMI que nfio encontrava respaldo nos paises devedores (no caso brasileiro, as

divergencias entre governo e FMI culminaram com a declaragao de morat6ria da divida

externa em 1987), desta vez a iniciativa do ajuste fiscal partia das autoridades
govemamentais brasileiras. Outra caracteristica particular desta negociagao foi o fato de o
FMI ter aceitado a continuidade da polnica cambjal brasileira, contrariando seu receituario

classico de ajuste econ6mico com desvalorizagio da taxa de cambio. Com efeito, alem dos
riscos inflaciontirios da medida, a desvalorizagao cambial impingiria um elevado 6nus paraas empresas e bancos brasileiros endividados em moeda estrangeira com impactos diretos
sobre o nivel de atividade domestica, que, certamente, provocaria violentas manifestag6es
politicas contr:uias as negociag6es com o FMI.

Uma crise cambial no Brasil e seu possivel contagio para outros paises da regiao tambem

eram uma preocupagao dos bancos privados internacionais, os quais tinham grandeinteresse num acordo rapido entre o pais e o FMIja que, segundo dados do BIS, em junho

de 1998, os emprestimos dos bancos norte-americanos e europeus (Alemanha, Franga,lnglaterra e Espanha, apenas) a America Latina totalizavam US$ 64,1 bilh6es e US$ 120
bilh6es, respectivamente.

No dia 13 de novembro, govemo brasileiro e FMI anunciaram oficialmente os termos do
acordo, cujas principais caracteristicas eram as seguintes:"e Do valor total do emprestimo de US$ 41,5 bilh6es, o FMI contribuiria com aliberagao
de creditos no valor aproximado de US$ 18 bilh6es, ou seis vezes o valor da cota aque o pais teria direito junto a instituigfio, sendo 700/o disponiveis atraves de uma linha

de credito denominada SRF (Supplementa1 Reserve Facility), criada em dezembro de
1 1. Ministerio da Fazenda do Brasil, Memorando Tecnico de Entendimentos, 8 de novembre de 1998.

NISHllIMA AND TONOOK4 ; CRISE CAMIBIAL BRASILEIR,4

1997, e o restante, atraves de linhas regulares de cr6dito do FMI. Banco Mundial e

Banco lnteramericano de Desenvolvimento contribuiriarn com US$ 4,5 bilh6es cada.
E os cerca de US$ 14,5 bilh6es restantes viriam de Bancos Centrais de diversos paises

desenvolvidos atraves do BIS.

e Do valor total do empr6stimo, US$ 37 bilh6es estariam disponiveis ao longo doprimeiro ano de vigencia do acordo, sendo US$ 9 bilh6es imediatamente ap6s aaprovagao do programa econ6mico brasileiro por parte da diretoria-executiva do FMI,e outros US$ 9 bilh6es ate fevereiro de 1999 (que poderiam ser antecipados, desdeque requisitados pelo governo brasileiro).

e O principal compromisso do governo brasileiro com o FMI para a concessao dos
cr6ditos foi a fixagio de metas de superavit fiscal primario para os anos de 1999, 2000

e 2001, respectivamente, em 2,60/o, 2,80/o e 30/o do PIB, alem do avango das reformas

previdenci:iria, administrativa e tributaria, incluidos no "Programa de Estabilidade
Fiscal".

(3)Ae ficicia do acordo com o FMI
Ate a conclusio deste acordo, a receita de ajustamento econ6mico recomendada pelo FMI

incluia dois ingredientes basicos: desvalorizagao cambial e aperto fiscal. Desta vez,reconhecendo a importancia da politica cambial para o controle da inflagao no pais, o FMI
abria mao da desvalorizagao, concentrando suas exigencias no ambito das contas pUblicas.

Nao se podendo ajustar o desequilibrio externo por meio da desvalorizagao da taxa decambio e necessitando corrigir urgentemente o crescente desequilibrio fiscal, nio seapresentava outra alternativa que nio fosse um forte encolhimento do nivel de atividades

em 1999.
A perspectiva de recessao embutida no acordo com o FMI provocou reag6es no interiorda ala desenvolvimentista do pr6prio governo, alem de manifestag6es de repfidio por partede lideres empresariais e trabalhistas, repercutindo no Congresso Nacional, local onde

teriam de ser aprovadas as principais medidas de ajuste incluidas no "Programa deEstabilidade Fiscal" anunciado em outubro. A necessidade de reformas constitucionais era
um entrave a rapida implementagao do ajuste, assirn como a exigencia de 315 de aprovagao

do Congresso. Muito embora os partidos de sustentagao do governo somassem mais de 2!3
do total de congressistas, a aprovagao das medidas nao era uma tarefa facil. Uma vez que

os novos parlamentares eleitos em 3 de outubro somente tomariam posse no inicio dejaneiro, era necessaiio convencer os parlamentares n5o-reeleitos da base de partidos aliados

a votar favoravelmente por medidas impopulares, tais como aumento de impostos e corte
de beneficios previdenci:irios. Assim, havia uma probabilidade nao desprezivel de que as
medidas de ajuste fiscal exigidas pelo FMI nao fossem aprovadas pelo Congresso.

29

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KOBE ECONOMIC & BUSINESS RIiV7EM, 44(1999), 15-51.

E, de fato, em dezembro, a legislagfio que instituia reforrnas no sistema de aposentadoria

dos funcioniirios pUblicos federais acabou sendo rejeitada pela Camara dos Deputados. E

ate o inicio do mes de janeiro, as medidas vinculadas a prorrogagao e alteragao das
aliquotas da CPMF nao haviam sido votadas. A lentidfio no ritmo de votagao das medidas

de ajuste colocaya dUvidas, principalmente nos investidores estrangeiros, quanto a

capacidade politica do governo para implementar os termos do acordo com o FMI,
adicionando um grau de incerteza nos mercados que, assim, tornavam-se mais sensiveis aum ataque especulativo.

Um novo fator de incerteza politica foi acrescentado em 6 de janeiro, quando ogovernador do estado de Minas Gerais, Itamar Franco, ex-Presidente da RepUblica e
potencial candidato ao cargo nas eleig6es de 2002, anunciou uma morat6ria de 90 diassobre a divida do Estado junto a Uniao. Durante o primeiro mandato do Presidente
Fernando Hendque Cardoso, 24 de um total de 27 estados haviam negociado suas dividas

com a Uniao. Dividas que totalizavam mais de R$ 100 bilh6es tiveram seu prazo depagamento estendido para 30 anos e juros subsidiados a 60/o ao ano mais corregao pelo

indice geral de pregos (IGP-FGV). Mesmo com condig6es de pagamento muito maisfavoraveis que as existentes antes da negociagao, alguns governadores pressionavam por

uma nova negociagio. Ap6s a iniciativa do governador de Minas Gerais, abriu-se apossibilidade para outros governadores, eleitos por partidos de oposigao, de seguir ocaminho da morat6ria, levantando novas dtividas sobre a capacidade politica do governo
federal para realizar o ajuste fiscal.

Muito embora o acordo entre o governo brasileiro e o FMI ja estivesse assinado e ocapital disponibilizado somasse a vultosa quantia de US$ 41,5 bilh6es, a liberagao desses
recursos estaya condicionada ao cumprimento das metas de superavit fiscal. Entretanto, os

eventos politicos sinalizavam ao mercado que a consecugao das metas acordadas com o
FMI estava em risco e que, portanto, os recursos poderiam nao estar a disposigao dogoverno brasileiro. De fato, a insuficiencia de reservas intemacionais para defender apolitica cambial de um possivei ataque especuiativo era motivo de nervosismo nos
mercados em geral, principalmente depois do epis6dio da morat6ria.

O acordo era uma condigfio necessdria para tranquilizar os mercados ap6s a maciga saida
de capitais que se seguiu a crise russa, mas nao suficiente, pois faltava credibilidade ao

governo brasileiro quanto a realizagio de sua parte no acordo. O simples anUncio doprograma econ6mico sob supervisao do FMI nao reverteu as expectativas negativas do
mercado quanto a desvalorizagao e, neste sentido, poder-se-ia afirmar que o acordo foi

inefetivo. Entretanto, nao se pode descartar a possibilidade de que ambos, governo

brasileiro e FMI, tinham em consideragao que a passagem para o regime de cambio
flexivel era apenas uma questfio de tempo e que, portanto, o acordo tinha o objetivo de
11, Ministerio da Fazenda do Brasil, Memorando Tecnico de Entendimentos, 8 de noyembro de i998.

NISHVIMA AND TONOOIkZ4 : CRISE CAMBIAL BRASILEIR,4

garantir uma transigao de regime cambial sem grandes sobressaltos. De qualquer modo, ocaso brasileiro, juntamente com a experiencia dos paises asiaticos, sugerem que o papel do

FMI como emprestador de tiltima instancia para os paises em dificuldades com suas
politicas econ6micas necessita ser repensado, bem como todo o aparato institucional
relacionado aos mercados internacionais de capitais.

Ironicarnente, somente ap6s a liberagfio da taxa de cambio e a acentuada desvalorizag5oque se sucedeu, as medidas de ajuste econ6mico passaram a ser aprovadas pelo Congresso
Nacional. No dia 19, o Senado aprovou as medidas relativas a CPMF e, no dia seguinte, aCamara de Deputados aprovou as medidas concernentes a aposentadoria dos fimcionhrios
pablicos federais.i2

Em resumo, o acordo com o FMI foi discutido e concluido sob o regime cambial fixo,
visando a um reforgo nas reservas internacionais do pais (na epoca ao redor de US$ 40

bilh6es) suficiente para diminuir o risco de um ataque especulativo bem-sucedido.
Diferentemente da pratica usual do Fundo, nSo foi exigido que o governo brasileiro

efetuasse a desvalorizag5o do real, significando que era um acordo que visava amanutengao do regime cambial vigente. A16m do efeito pratico sobre as reservas, o acordo
teria a fungao de acalmar as expectativas do mercado, que, ap6s as crises no Mexico, nosudeste asiatico e na R"ssia, especulava fortemente sobre a possibilidade de o Brasil ser a"bola da vez", ou seja, o pais seguinte a sofrer uma crise cambial.

Apesar de as reservas liquidas apresentarem uma tendencia de queda desde a crise russa, adiminuigio no nivel das reservas no mes de dezembro e a ocorrencia de pequenos fluxos

cambiais negativos nos primeiros dias de janeiro (cerca de US$ 100 milh6es diarios)
podiam ser explicadas muito mais como sendo o resultado de saidas sazonais relacionadas
as remessas de lucros, dividendos e juros por parte de filiais de empresas estrangeiras

instaladas no pais, comuns nessa epoca do ano, do que uma indicagao de que o regime
cambial estava sendo colocado em d6vida. De fato, as saidas cambiais liquidas explodiram
apenas a partir do dia 12, quando os rumores de que o entao Presidente do Banco Central,

Gustavo Franco, estaria demissiondno prevaleciam no mercado.

A existencia do acordo com o FMI e a possibilidade de serem sacados ate US$ 41,5
bilh6es nfio foram suficientes para evitar a desvalorizagao do real. Permitindo que ocambio flutuasse, a Autoridade Monet6ria brasileira deixou de precisar de d61ares para

defender o'valor da moeda nacional e, portanto, as raz6es originais para o acordo(implementagao de um programa de ajuste econ6mico sem 'desvalorizagao da taxa decdrnbio) deixaram de existir a partir do momento em que o real foi desvalorizado. Entao,
12. A CPMF foi aprovada definitivamente em segunda votagao pelo Senado no dia 18 de margo, entrando em
vigor a partir de 17 de junho. A reforma no sistema de aposentadoria dos funcionarios p"blicos federais foi

finalmente aprovada pelo Congresso em 26 de janeiro, mas acabou nfio sendo implementada por ter sido
considerada inconstitucional pelo Poder Judicihrio no final de setembro. Em seu lugar, foram propostos noyos

cortes no orgamento.

31

32

KOBE ECONOMIC & BUSINESS REVIEPV, 44(1999), 15;51.

no ceniirio p6s-desvalorizagio, a manutengao do acordo visaria, sobretudo, a administragao
das expectativas dos investidores internacionais quanto a realizagao do programa de ajuste
econ6mico, o qual e realmente necessario para que o pais retome a diregao do crescimento
econ6mico financeiramente sustentavel, sob um regime de taxa de ciirnbio flutuante.

(4) A mudanga nas expectativas e a desvalorizagio

Ap6s a morat6ria declarada pelo governador do estado de Minas Gerais em 6 de janeiro

de 1999, os mercados financeiros comegaram a demonstrar seus primeiros sinais depreocupagao com relagio a sustentabilidade da politica cambial. Em meio a boatos sobre as

demiss6es do Ministro da Fazenda, Pedro Malan, e do Presidente do Banco Central,
Gustavo Franco, a saida liquida de capitais totalizou cerca US$ 1,2 bilhao no dia 12. Nestedia, conforrne a expectativa do mercado e com a taxa de cAmbio fechando em R$ 1,2114,
tambem foi decidida a mudanga no intervalo da banda cambial larga, cujo limite superior

estava fixado em R$ 1,22 desde janeiro do ano anterior. No dia 13, confirmando
parcialmente as especulag6es do mercado, foi anunciado o nome do novo Presidente do
Banco Central, Francisco Lopes, que ate endio ocupava uma das diretorias da instituigao. A
troca no comando do Banco Central era o sinal de que a politica de bandas 1argas e mini-

bandas cambiais, desenvolvida por Gustavo Franco e vigente desde margo de 1995, estava
chegando ao fim e, consequentemente, de que a taxa de cambio nao mais fimcionaria como
Ancora nominal para a estabilidade monetaria. Com efeito, neste dia, o governo inaugurou

uma nova politica cambial baseada apenas em urna banda larga com limites fixados
micialmente em R$ 1,21 e R$ 1,32. As mini-bandas foram abandonadas e a revisio dos
valores-limites da banda larga, que antes eram feitas praticamente uma yez ao ano,passariam a ser realizadas a cada tres dias titeis. Entretanto, a demanda por d61ares

ultrapassou em muito a oferta e a taxa de cambio imediatamente encostou no limite

superior da banda (implicando uma desvalorizagao de 100/o em um tinico dia). A
capacidade de o governo defender a nova politica cambial estava sendo colocada em
dtivida pelo mercado, provocando uma saida liquida de capitais da ordem de US$ 3 bilh6es

nos dois primeiros dias de vigencia da nova politica. Entre os dias 12 e 14, o indice
Bovespa recuou 240/o e os C-Bond, titulos da divida externa brasileira de maior liquidez no

mercado internacional, tiveram uma queda de 160/o. No dia 15, o Banco Central deixou deintervir no mercado de d61ares e a taxa de cfunbio chegou a ser cotada em R$ 1,55 duranteo dieg fechando em R$ 1,47. Ao mesmo tempo em que o real era fortemente desvalorizado,o indice Bovespa subia 330/o e os C-Bond, 150/o em relagao ao dia anterior. Em resumo,
entre os dias 6 e 15, cerca de US$ S bilh6es haviam deixado o pais.

NISHUIMA AND TONOOKL4 ; CRISE CAMIBIAL BRASILEIR,4(5) O guardi5o do valor do real

A crise cambial mexicana em dezembro de 1994 gerou impactos negativos sobre a
economia brasileira, particularmente, sobre os movimentos de capitais estrangeiros para opais, que por sua vez colocaram pressao sobre a politica cambial vigente. Naquele mes, as
reservas internacionais brasileiras situavam-se no patamar de US$ 38,8 bilh6es (Grafico 3)e a taxa de cambio em torno de R$ O,85 por d61ar. Entretanto, sob forte tensao do mercado,a Autoridade Monetaria alterou a estrategia de administragao da taxa de cambio,
introduzindo o sistema de bandas e mini-bandas de flutuagao cambial no inicio de margo

de 1995. Atuando ativamente na defesa dos limites estipulados para a taxa de cambio,
atraves da elevagfio da taxa de juros (Grafico 4) e da utilizagao de cerca de US$ 4,3 bilh6es

das reservas internacionais, o Banco Central promoveu uma desvalorizagao controlada de

50/o ao longo do mes, conseguindo administrar as expectativas do mercado e manter oregime cambial (([irafico 5).

O principal mentor do sistema de bandas e mini-bandas cambiais e executor da politica
cambial era o entao Diretor de Assuntos Internacionais do Banco Central, Gustavo Franco,

no cargo desde a implantagao do Plano Real em julho de 1994. Indicado para a Presidencia

do Banco Central em julho de 1997, Gustavo Franco mostrou inequivoca determinagao na
manutengao do regime cambial durante as sucessivas crises financeiras internacionais,
tornando-se o maior defensor da politica de taxa de cambio controlada.i3

A crise asiatica atingiu a economia brasileira em outubro de l997. Novamente, utilizando

US$ 8 bilh6es das reservas internacionais em outubro e duplicando a taxa de juros, quesaltou do patamar de 200/o para 400/o, em novembro, o governo demonstrou sua firme
intengao de manter o regime cambial.
No entanto, o grande teste de resistencia da politica cambial brasileira foi realizado ap6s a

desvalorizagao do rublo e a declaragao de morat6ria pelo govemo russo em meados deagosto de 1998. Durante os meses de agosto e setembro, as reservas brasileiras diminuiramem US$ 25 bilh6es (900/o deste valor apenas em setembro), enquanto a taxa de juros passou
mais uma vez do patamar de 200/o em agosto para 350/o em setembro e, 400/o em outubro.

13. 0 regime cambial brasileiro pressupunha desvalorizag6es "controladas" da taxa de cfunbio nominal com oobjetivo de manter uma relatiya constdncia da taxa de carnbio real. Com o passar do tempo e com a redugEo
dos indices de inflagfio no Brasil, as desvalorizag5es nominais tarribem passaram a significar desvalorizeq6es
reais. Em 1998, enquanto a desvalorizagao nominal alcangou 8,30/o, a inflag5o ao consumidor ficou em 3,60/o.

33

KOBE ECONOMIC & BUSINESS REV7EPV, 44(1999), i5-51.

34

Grifico 3.

Reservas Internacienais (US$ Milh6es)

Fonte: Banco Central

Taxas de Juros (O/o

Grifico 4 -ab ano)70
Mexicmn crisis

60
50
Asian crisis

Russian crisis

40

30
20
10

o

Dec-94,hn-9S

Dec-9S

Jan-96 Dec-96 Jun-97 Dec-97.1un-98

Dec-98hm-99

Fonte: Banco Central

No final de novembro, as reservas internacionais atingiram seu menor nivel desde a crise

mexicana, cerca de US$ 41 bilh6es. Com a incorporagSo da primeira parcela do
empr6stimo do FMI, as reservas fecharam o mes de dezembro no patamar de US$ 44,5
bilh6es. Nos primeiros onze dias de janeiro, as saidas cambiais liquidas situaram-se entre

US$ 900 milh6es e US$ 1 bilhao, enquanto que apenas .no dia 12, quando o mercado ja
dava como certa a saida de Gustavo FrancQ da Presidencia do Banco Central, as saidas
cambiais liquidas superaram US$ 1 bilhfio.

NISHVIMA AND TONOOKA : CLRISE CmaIAL BRASILIIILR,4

Grifico 5 - Taxa de Cambio Nominal (R$ / US$)
.2,2e

2,ee

1,BO

1.60

1.4e

1.20

1,OO

o,go

Dec-94 Jun•9S Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-9g Jun-99

Fonte: Banco Central

No dia 16, o Banco Central anunciou o abandono da politica de bandas cambiais e,
poucos dias ap6s, determinou novos limites para a banda das taxas de juros, com o piso
(TBC) passando de 290/o para 250/" e o teto (TBAN), de 36e/e para 41O/e.

Apesar da redugao no valor do piso da taxa de juros, a Autoridade Monetiiria continuou a

trabalhar com a taxa de 290/o, inicialmente, elevando-a progressivamente para 390/o no
inicio de fevereiro. A politica de juros elevados, defendida pelo FMI, era vista como um
mal necessario durante o periodo de maior volatilidade da taxa de cambio, mas sua duragfio

nfio encontrava consenso dentro do governo, Para o Presidente do Banco Central,
Francisco Lopes, redug6es nas taxas de juros deviam ser implementadas logo, enquantoque para o Mmistro da Fazenda, Pedro Malan, redug6es nas taxas de juros eram temer:irias- At A- -na sltuagao economlca vlgente.
A incompatibilidade entre as principais autoridades econ6micas do pais foi resolvida com

a demissao do Presidente do Banco Central, menos de um mes ap6s sua indicagao. Em 2 defevereiro, foi anunciado o nome de Arminio Fraga - ex-diretor do Banco Central em 1991 e

1992 e, ate pouco tempo antes, admmistrador de carteiras dos Fundos de Investimentos
Soros - como sendo o novo presidente da instituigao. Oficialmente, a razao apresentada

para a troca de presidente foi a necessidade de um individuo com experiencia nos
mercados internacionais de cambio para comandar as operag6es do Banco Central sob onovo regime de cfimbio flexivel. Entretanto, a indicagEo de Lopes, academico e sem
experiencia no mercado financeiro, para a presidencia do Banco Central havia sido uma

decisao pessoal do Presidente da Repablica, Femando Henrique Cardoso, mas vista com
desconfianga pelo FMI, pela comunidade financeira intemacional e pelo pr6prio Ministroda Fazenda, Pedro Malan. De fato, com a saida de Lopes e o ingresso de Fraga, reforgava-

35

36

KOBE ECONOMIC & BUSI7VESS RE VTEM, 44(1999?, 15-51.

se a lideranga do Ministro Malan na condugao da politica econ6mica ja que a equipe
econ6mica voltaria a falar em um imico tom.

Durante o mes de fevereiro, a taxa de cambio oscilou entre a minima de R$ 1,77 e am6xima de R$ 2,06, ate atingir seu ponto mais elevado no dia 3 de margo, quando foi'
cotada em R$ 2,16 (Grafico 6). Press6es
no cambio fizeram com que a Autoridade
Monetaria alterasse sua politica de 'juros, extinguindo o sistema de bandas e substituindo-o

por uma imca taxa de referencia (overnight). No dia 5, os juros foram elevados para 450/o,com impacto imediato sobre a taxa de carnbio, que recuou para R$ 1,99 no dia e passou acair persistentemente a panir de entEo. Em 8 de margo, o governo brasileiro e o FMI

anunciaram um novo Memorando de Politica Econ6mica com a revisfio das metas
definidas antes da desvalorizagio cambial (Anexo 2). No inicio de abri1, o pais retirou a

segunda parcela do emprestimo acordado com o FMI (US$ 4,9 bilh6es do FMI, US$ 4,5

bilh6es do BIS e US$ 400 milh6es do Banco do Japao), elevando suas reservas
internacionais para cerca de US$ 44 bilh6es.

Com o avango das votag6es no Congresso Nacional para a aprovagao das medidas do
pacote fiscal e com uma ampla oferta de titulos pUblicos indexados b variagao cambial, ataxa de cfunbio estabilizou-se no patamar de R$ 1,65 - R$ 1,70 a partir da segunda metadede abri1, permanecendo neste nivel ate o final de maio. A partir de abri1, tambem, os juros
comegaram sua trajet6ria descendente, situando-se em 23,50/Q no final de maio.

A tranquilidade nos cenarios interno e externo permitiu ao governo pagar parte daprimeira parcela do emprestimo externo (US$ 1,4 bilhao) em meados de junho. Neste mes,o Banco Central instituiu o regime de metas, de inflagao (inL17ation targeting), defmindo 80/o

como meta para 1999, com uma margem de 2 pontos percentuais (indice de pregos ao
consumidor).
Emjulho, a autoridade monetaria reduziu osjuros para 19,50/o, valor que perrnaneceu ate
a segunda quinzena de setembro. Com as reservas internacionais estabilizadas em torno de

US$ 42 bilh6es, o govemo brasileiro nao sacou a 3a. parcela de US$ 4,3 bilh6es do

emprestimo com o FMI.
Em novembro, a taxa de juros estava em 190/o e o governo brasileiro ainda avaliava anecessidade de sacar novas parcelas do emprestimo com o FMI.

NJSHUIMA AND TONOOIkZxl : CRi[SE CAA4BIAL BRASILEIR,4

Grifico 6 - Taxa de Cambio Nominal (R$ / US$)

220

2,OO

1,80

1.60

1.40

1.20

31-Dec 30-Jan

1-Mar 31-Mar 30-Apr 30:May 29-Jun

29-Jul 28-Aug

Fonte: Banco Central(6) Evolug2o dos fundamentos ap6s a desvalorizagaoa) Inflaggo

O principal temor em relacao a desvalorizagfio do real era, sem dUvida, o ressurgimento
da inflag5o. O PIano Real, concebido para eliminar uma inflagao de quatro digitos e traze-

la em um curto espago de tempo para o nivel de um digito, necessitava da dncora cambial

para manter o nivel de pregos estabilizado.i` Os indices de pregos recuaram
significativamente a partir de 1994, ano da introdugfio do plano, alcangando o patamar deum digito em seu terceiro ano de implementagao (Quadro 1).

A desvalorizagao do real miciou-se em meados de janeiro. No mes, a moeda brasileiraperdeu 390/o do seu valor. No final de fevereiro, aperda acumulada foi de 420/o. Em quepese uma pequena recuperagao nos meses seguintes, no fmal de maio, a perda mantinha-sesignificativa, na casa dos 300/o. Esse overshooting na taxa de cdrnbio, sem dbvida, refietiu aexpectativa dos agentes quanto ao novo patarnar infiacionario p6s-desvalorizagao.
Entretanto, o impacto da desvalorizag5o sobre a inflagao acabou sendo bem menor do que
14. Alem da ancora cambial, havia as ancoras fiscal e da liberalizagao dos fluxos de bens e capitais. A primeira
exigia o ajuste das contas p"blicas para se eliminar a necessidade do financiamento inflacioniirio do deficit

pfiblico. A segunda exigia a abertura do mercado intemo para as importag6es, que exerceria uma pressfio
competitiva sobre os produtos domesticos, dificultando reajustes internos de pregos, e facilidades para aentrada de capitais externos, necessaios para compensar a esperada deterioragSo do balango de transag6es
correntes no inicio do programa de estabilizagfio.

37

38

KOBE ECONOMIC & BUSINESS RE V7EM, 44(1999), • l5-51. 'Quadro' 1. Indices de' Precos

Geral

Consumidor

AtacadoIGP-DI

IPCA

IPA-DI1993

2.103,4540,82.065,41994

2.406,92.076,1

2.279,O

1995

67,5

64,6

58,8

1996

111'

16,7

6,3

1997

7,9

69'

8,1

3,9

3,2

3,6

1998
1999101

02

L15'

O,70

1,58
699'

4,44

1,05

03

1,98

1IO,

2,84

04

O03'

O,56

-O,34

05

-O,34

O,30

-O,82

06

1,02

Q,19

135'

07

1,59

1,09

203'

08

1,45

O,56

2,15

09

1,47

Acum.1999

13,46

O,31

2,30

6Ol'

l9,68

Fontes: FGV, IBGE
as expectativas iniciais, diluindo-se nos indices de fevereiro e margo, sobretudo nos pregos

no atacado. Em abri1, os indicesja passavam a mostrar estabilidade, tornando-se negativos
no mes seguinte.

Contribuiram para esse comportamento da inflagao, o estado recessivo da economia, com

os niveis de consumo muito deprimidos por conta de uma massa de saldnos nominais em
declinio, uma taxa de desemprego aberto ao redor de 80/o e uma atuagao jncisjva daAutoridade Monetaria, que manteve as taxas de juros em patamares bastante elevados(390/o em fevereiro e 450/o em margo). Fatores circunstanciais como mudangas estacionais e

uma excelente safra agricola tambem acabaram contribuindo favoravelmente para o bomdesempenho dos indices infiacionarios nos primeiros meses ap6s a desvalorizagao.

Assim, a meta de ate 100/o de infiagao ao consumidor deye ser alcangada com, relativa
folga em 1999. 0s reajustes nas tarifas pUblicas e nos pregos dos derivados de petr61eo'
provocaram um pequeno repiqueinflacionaio em julho, mas a expectativa 6 de que os
indices mensais se estabilizem ao longo do segundo semestre. Para 2000, a meta
inflacionaria esta estipulada em at6 80/o (60/oÅ}20/o), e para 2001, em ate 60/o (40/oÅ}20/o).

NISHIJIMA AIVD 70NOOK4 : CRISE CAMBIAL BRASILEIRAb) D6ficit e divi'da pfiblica

Dado o regime cambial adotado a partir do inicio do Plano Real, as taxas de juros
necessitaram pemianecer em patamares elevados a fim de atrair capital externo suficientepara equilibrar o balango de pagamentos. O comportamento debil das exportag6es durante

todo o periodo nio contribuiu para a formagao de um fluxo positivo de divisas no ladocomercial, enquanto que as crises nas economias asiaticas, em 1997, e russa, em 1998, nao
pemitiram que o juro fosse reduzido na proporgao desejada. Com isso, a politica de juros
altos fez com que os encargos financeiros da divida ptiblica aumentassem, correspondendo
a 60/o a 8e/o do PIB nos anos de 1995 a 1998 (Grafico 7).

Ja o relativo equilibrio verificado entre receitas e despesas nao-financeiras (custeio,
previdencia social e investimentos), indicado pelos resultados do deficit prim6rio, mostra
que o ajuste fiscal (a segunda dncora do Plano Real) nio foi sufioientemente implementado

no periodo, fazendo com que o estoque da divida se elevasse consistentemente ano ap6s
ano (Grafico 8).

Com a desvalorizagao do real, o deficit pUblico como proporgao do PIB saltou do patamar
de 80/o, em dezembro de 1998, para 140/o, em feyereirQ de 1999, ou seja, um impacto de 60/o

do PIB (aproximadamente US$ 28 bilh6es). Ja o estoque da divida como proporggo do PIB
saltou de 430/o para 520/o no mesmo periodo, aumentando em cerca de US$ 54 bilh6es.i5
A razao para a desvalorizagao ter impactado tSo severamente sobre os indicadores fiscais

estava no fato de parte da divida pUblica emitida pelo Tesouro Nacional e pelo Banco
Central estar indexada ao d61ar. Em dezembro de 1998, 114 dos titulos pablicos federais
pagava, alem de juros, uma taxa adicional equivalente a variagao cambial (cerca de US$ 49
bilh6es ao cambio da epoca).
O estoque da divida liquida total do setor pUblico e um dos indicadores monitorados pelo

FMI, cujo limite foi fixado em R$504,5 bilh6es ao fina1 de 1999.'6 Emjunho, o estoque da
divida correspondia a R$ 491 bilh6es (49,80/o do PIB), ficando abaixo do limite de R$ 514

bilh6es definido pelo FMI. Outra meta fiscal estabelecida pelo FMI e a magnitude dosuperavit primario, R$30,2 bilh6es (ou 3,10/e do PIB) no final de '1999. No primeiro
semestre, o superavit acumulado alcangou R$ 13,6 bilh6es, bem acima dos R$ 12,9 bilh6es

exigidos pelo FMI para o periodo. Com a CPMF sendo recolhida durante todo o segundo
semestre (R$ 8,5 bilh6es a R$ 9 bilh6es de receita adicional), ha condig6es de o governo
brasileiro satisfazer as metas fiscais acordadas coni o FMI para 1999.

IS, Esses dados correspondem a divida liquida total consolidada do governo (Uniao, Estados, Municipios e
empresas estatais), incluindo a divida externa. A divida liquida p"blica interna total passou de 360/o para
39,50/o do PIB, com uma elevagao de R$ 52 bilh6es (cerca de US$ 27 bilh6es).

16. Considerando uma inflagio de 80/o e uma• taxa de crescimento real da economia de -O,50/o, o limite do
endividamento pUblico equivaleria a cerca de 520/o do PIB em 1999.

39

I5-5I.
KOBE ECONOMIC & BUSINE SS RErrEM, 44(1999),

40

Gri fico 7.

os tltimos 12 meses em O/o do PIB)

D6ficit Ptiblico (Fluxo d14lt.

n•.•SE•I
l,,/A•lj,--•l:ll.-.....'}l.i

tt

't"'
.lt::.xt

lt•l•

+:"

.'

:;:

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t.tt

L'.'

.-s

tttt

N

s-:•

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ll•il•l/l,.it•,•ll•i•lu.sL.

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:.s

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E:i

;t

tt tt

,,1.:.

tttt
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t.,,L

tttt-t;,lt:,-t-

:\:

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tny"

p:c
e•lt

6

'IEII."'h"{il[i--,"t:•'"'

tt
tttttt:.kt

Y,l.ii':{r,i•2ts..{""....sSi}ilÅÄ:is

...

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v','.tt-

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l•I•

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--

.L',

tttttttttt-t-tt,II.T,}.

tL•t•:,:t.L.Å}:::i'.

-tt-

.

•:V•l
::;i-,•;•l'li'.s-,,.

"-

l{'uisin's"'

-

--

g:-

ifll,l•"--."..•}}}•

ttttttttt

st,t,
):•:,

tttttttttt'Ell--:t/l

:s::

):..

ttt

tttttttttt.;;,e•ltL'S[t{filii"A:,".tc

;.Tt

-2

1997 19SS 1anl19SS Fcb

i9gS 19S6

1 Primar.y

MtV

Apr

Mrr

Jlm

ta Neminal

1. Primary - Nao inclui gastos com o pagamento dejuros.

Notas:

Nominal - lnclui os gastos com o pagarnento de juros.
2. Valores negativos indicam superavit.

Fonte: Mmisterio da Fazenda

Divi'da Ptiblica Total

Grifico 8.

x

RS Billiott

60

600
soo

tttt

t-ttt.-tt..

ttttttt

t--tttttt

tttt-ttt

tttt

tttttttttttt

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400

-tr
"'ff

---ttttttttt

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t-tttttt-tt-t-'tif-'':t'---ttt-tt"-}//i'':.tti,•l..[•.?lx,•I•g:ttttt--

ttttttt

1if.l-1;;.}/g'}

Lt/"e.......

},//•il;sl"

,.-/s

:,

glli- /•

Jt...•,)lt:r'i;//ttt/ttt

•{ss

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ttT-t--

ittt-t/'T-'-/••'"ttt

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t----t-tt'ili'/tt,igil

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tttttttt

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ttt -.:/./t,x.,,..'-ttt-t-

S.;

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'"/ll

tttttt-ttt-ttgi,-e•Ek/{•ctill,•l•V--

tt.

ttttttt1'i)'i'-tt-t-tt•i•11"

ttt

tttttttin-•//1+"•

t''i'11'I.:•(l•'1"t.11t••-•ttttttt

tttt

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t../.1Kt•I'••/xW•,7L•

tttttttt

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20

:•,•//.t1.

10t/...,•{.

tt.t.ttt

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11-l•,/•i,/.•l'3,l.1'p",•f•1"",•'t'/''//'

Tts/,}-tttttt.s,/•.

,L.

;"'f'-'`s"'..t't'.L':I.i.."-.t200:"••/i/tl''"

lt.•/.

l•/"ele'E•/,l'{'i',.l':'.--.tos's''.f/L'

tt.

11/1",/•1-t./ts.

-.

t)ss/...t.p.-

leY6

tgg7

36

t't'

l'i":'--ttt-t40't"111"li;,$.
;•i••,$gt•?•

tt
.t.t

•>l',tlil/•i;',;';.i-•,9,/-:•

t:/;•}/

Msr

Apr

tV./A,

leSS hal]YYe Ftb
EEIgstgAmount

.•

t..t

Mty

:t..lt.

o

ht:

S GDP

Fonte: rvlinisterio da Fazendac) Comircio internacional

Um dos efeitos positivos esperados da desvalorizagio cambial era a melhora dos
resultados da balanga comercial, principalmente a partir do crescimento das exportag6es.

Evidenternente, havia a expectativa tambem de redugao das importag6es, bem como do

; CRISE CA?LfBIAL BR,4SILEIIMNJSHIJIMA AND TONOOIkL4

deficit na balanga de servigos, especialmente nos itens relativos as viagens internacionais(de brasileiros para o exterior).

Entretanto, o desempenho das exportag6es vem se apresentando aquem do imaginado(Grafico 9). Seis meses ap6s a desvalorizagao, o fiuxo dos Ultimos 12 meses ate julho das

exportag6es alcangou seu nivel mais baixo em dois anos, demonstrando a lenta reag5o dos
volumes exportados. O resultado ligeiramente superior em agosto pode ser uma indicagaode que os valores exportados cresgam a panir de entfio. Entretanto, a tendencia de queda

das importag6es tambem foi interrompida em agosto, devido a elevagao dos pregos
internacionais do petr61eo, impedindo, por enquanto, uma melhoria mais significativa no
saldo comercial.

Grhfico 9 -- Balanga Comercial (Fluxo dos Oltimos 12 Meses em US$ Milh6es)

6SOOO
i
:

60OOO

1
/

l

ssooo
i

:•

l
:

soooe

i

4sooe
Jan

9SAtr

Jul

ou

Jan99

Ahr

tu

Exports-Irnports

Fonte: Banco Central

A desvalorizag5o da moeda brasileira tarnbem produziu consequencias importantes em
paises vizinhos, especialmente na Argentina, cujo regime de currency board estabeleceuma paridade fixa de 1:1 entre o peso e o d61ar.i' Com cerca de 113 das exportag6es
direcionadas para o Brasil, com o qual obtinha um superavit comercial anual entre US$ 1
bilhao e US$ 1,5 bilhio desde 1995, o pais viu este valor diminuir para US$ 300 milh6es
no primeiro semestre de 1999 e a participagao do Brasil nas exportag6es totais cair paramenos de 250/o.'8 Por outro lado, os produtores argentinos tem pressionado seu governo arespeito dos impactos do barateamento dos produtos brasileiros sobre o nivel de emprego
na indUstria argentina e da necessidade de medidas protecionistas. Quest6es comerciais de
17. Ap6s a desvalorizagao cambial no Brasil, leyantou-se a possibilidade de dolarizagao completa da economia

aTgentina. Ver Nishijima (1999a).
18, Para o primeiro semestre de 1999, o governo argentino estirnou uma queda de 4,90/o do PIB em relagao ao

mesmo periodo do ano anterior.

41

42

KOBE ECONiOMIC & BUSINESS RE vaEM, 44(1999?, 15-51.

varias ordens ja foram levantadas pelo governo argentino, gerando certQ impasse nas
relag6es diplomaticas bilaterais e colocando em xeque a viabilidade do Mercosul.i9d) Sistema bancirio
Um dos principais efeitos da queda da inflagio ap6s a introdug5o do Plano Real para osistema bancario foi a correspondente redugao dos lucros associados a ela (f7oating).
Durante o periodo de inflagao alta, a maior parte das instituig6es bancarias deixou as

operag6es de empr6stimo em segundo plano, dando preferencia as operag6es defloating.
Com a estabilizagao monetaria,' muitas dessas instituig6es tiveram dificuldade para se
adaptar a nova situagio. Acirramento da concorrencia e despreparo na analise de risco decredito provocaram a falEncia de alguns bancos ou a reestmturagao de outros, resultando
em uma redugfio no nimero de instituig6es no pais. A reorganizagao do sistema banc:irio
brasileiro, realizada entre 1995 e l996, contou com uma quantia expressiva de recursos
p6blicos disponibilizados atraves de programas especificamente desenvolvidos para estefim (PROER, PROES).20 Desta forma, o sistema bancaiio brasileiro apresentava um grau
de robustez muito maior do que o dos paises do sudeste asiatico as vesperas da crise
cambial, de tal forma que sua eventual fragilidade nao poderia ser apontada como uma dascausas do ataque especulativo contra o real. Entretanto, o cenario recessivo delineado pelo

acordo com o FMI indicava uma situag5o de deterioragao da situagao financeira das
empresas do setor produtivo da economia com efeitos sobre a qualidade dos ativos dos

bancos. A desvalorizagao do real gerou temores quanto ao endividamento em moeda
estrangeira de firmas e bancos brasileiros, mas como a maior parte das operag6es externas

dessas empresas haviam sido realizadas com cobertura contra o risco de desvalorizagao(hedge cambial) os impactos foram bastante limitados.

Parte III - A desyalorizagio do real e os modelos te6ricos de crises cambiais

A revisao te6rica apresentada na primeira parte do texto procurou mostrar que crises
cambiais nao sao o resultado de apenas maus fundamentos ou de apenas expectativas autorealizaveis. As expectativas de desvalorizagao dos agentes privados sao formadas com baseno estado dos fundamentos, bem como no compQrtamento esperado das au-toridades
govemamentais; o qual, por sua vez, depende dos fundamentos e das expectativas privadas.

Conforme salientam Obstfeld (1994) e Sachs, Tornell & Velasco (1996a), esse elemento decircularidade propicia a ocorrencia de mUltiplos equilibrios. Neste sentido, a analise do
caso brasileiro revela-se bastante ntil para demonstrar essas interrelag6es.
19. Ver Nishijima (1999b).
20. Sobre o saneamento do sistemabanchrio brasileiro, ver Nishijima (1998).

NISHIJIMA AND TONOOIk ,4 : CRISE CAMBIAL BRASILEIR,4

A politica cambial introduzida com o Plano Real, em julho de 1994, incluindo a adogfio
do sistema de bandas a partir de margo de 1995, visava ao controle da infiagSo atraves dautilizagao da taxa de cfunbio como "dncora" nominal para os pregos domesticos. Desde oinicio, sabia-se dos riscos desta politica para o macro-equilibrio geral, principalmente, parao equilibrio das contas extemas. Entretanto, havia o pressuposto de que a economia senacapaz de gerar ganhos de produtividade e de que o governo implementaria reformas fiscais
adequadas para enquadra-lo em sua restrigao orgament:iria. Ate que esses dois objetivos
fossem atingidos, o pais continuaria a depender de um fluxo liquido positivo de capitais

externos para fechar o balango de pagamentos. Naturalmente, ndo eram esperadas crises
financeiras internacionais profundas, mas a ma evolugao dos fatores domesticos mostrouse tio ou mais importante que os eventos externos para a explicagio do colapso da politica
cambial brasileira emjaneiro de 1999.

Sachs, Tomell & Velasco (1996a), ao analisarem os efeitos da crise financeira no Mexico

sobre outras economias emergentes, destacam que os paises com um nivel elevado dereservas internacionais (em relagao a oferta de moeda, M2) foram os menos afetados.2i
Com efeito, no momento dos ataques especulativos que se seguiram as crises asiatica erussa, o Brasil contava com mais de US$ 60 bilh6es em reservas. No final de dezembro de1998, as reservas internacionais liquidas do pais (nao incluindo a primeira parcela doemprestimo do FMI) totalizavam US$ 34 bilh6es, ligeiramente mais baixas que as vesperas
da crise mexicana.

No inicio de 1999, os principais indicadores econ6micos nao mostravam que a economia

brasileira encontrava-se em uma situagfio de descontrole: (a) deficit em transag6es
correntes ao redor de 4,50/o do PIB (inferior aos valores observados na maioria dos paises
envolvidos na crise asiatica), sendo 750/o financiados atraves de investimentos diretos; (b)esteque da divida pfiblica equivalente a 400/o do PIB (menor do que na maioria dos paises

da OCDE, muito embora com prazos mais curtos); (c) deficit pfiblico em torno de 80/o do

PIB, mas com uma serie de medidas fiscais para seu ajuste em processo de votagio no
Poder Legislativo; (d) taxa de juros em declinio depois da acentuada elevagao oconida
ap6s a crise asiatica, porem ainda alta no patamar de 300/o; (e) taxa de cambio realvalorizada entre 150/o a 250/o, mas gradualmente corrigida atrayes de desvalorizag6es
nominais da ordem de 750/o a80/o ao ano. Adicionalmente o fechamento do acordo com o))

FMI representou um aporte de recursos de US$ 9,3 bilh6es as reservas intemacionais e oaval daquela instituigio a politica cambial implementada pelo governo brasileiro.

Assim, muito embora pudesse se afirmar que alguns fundarnentos da economia brasileiracarninhavam para uma situagao de insustentabilidade (particularmente, os indicadores
fiscais), no inicio de janeiro, o estado desses fundamentos por si s6 nao era suficientemente
21. 0s efeitos da crise mexicana foram medidos em termos da desvalorizag5o cambial e da perda de reservas
internacionais em 20 paises emergentes entre novembro de 1994 e abril de 199S.

43

44

KrOBE ECONOMIC & BUSI]VESS REvarEW, 44(I999), 15-5I.

severo para que as expectativas dos agentes privados convergissem no sentido dadesvalorizagao.

Na primeira parte do trabalho foi apresentado o modelo de Sachs, Tornell & Velasco(1996b), no qual a existencia de dois equilibrios possiveis conferia um carater deindeterminagao ao modelo, dependente do estado das expectativas dos agentes priyados.
Conforrne os pr6prios autores enfatizarn, "... in situations with indeterminacy, rumors

become all-important and events can become focal points for drastic shifts in
expectations " (p.266).

Para os autores, a decisdo do governo do Mexico de implementar uma desvalorizagao"administrada" (managed devaluation) de 150/o teria precipitado a reversao das
expectativas e a conida contra as reservas, que culminaram no colapso do regime cambial

me-cano.
No caso brasileiro, as expectativas de desvalorizagao convergiram no dia 12, quando os

rumores quanto a demissao do Presidente do Banco Central, Gustavo Franco, tornaram-se

um consenso entre os agentes. Seu afastamento do governo era um sinal inequivoco ao
mercado de que a politica cambial seria alterada, o que realmente acabou acontecendo.

Mas por que optou-se pelo abandono da politica cambial?

Basicamente, porque os custos de sua manutengio foram avaliados como sendo muito
altos pelo governo. Para cobrir o deficit em transag6es correntes e manter um nivel elevadode reservas internacionais para combater movimentos especulativos no mercado de cambio
era necessaio atrair capitais externos, bem como incentiva-los a permanecer no pais, o que
era alcangado atrav6s de juros altos. Entretanto, com as sucessivas crises intemacionais, apercepgao de risco dos investidores estiangeiros em relagao ao pais foi aumentando e ogoverno brasileiro ja nSo encontrava espago para reduzir os juros. A consequencia, no

plano domestico, era uma economia em recessao e com uma taxa de desemprego ao redorde 80/o. Alem disso, os desembolsos com o pagarnento dos juros sobre a divida ptiblicaeram cada vez maiores, totalizando 8e/o do PIB em 1998. Ainda, no plano politico, janeiro

de 1999 representava o inicio do segundo mandato do Presidente da Repablica, Femando
Hemique Cardoso, que desejava conferir um carater desenvolvimentista a seu governo, em
contraposig5o ao cariter estabilizador que marcara o mandato anterior.

Em outras palavras, os custos da manutengfio da politica cambial passaram a ser vistos

pelo governo como maiores do que os custos de uma desvalorizagSo22. Esta avaliagio
acabou sendo compreendida pelo mercado com a demissao bo principal mentor e executorda politica de bandas e mmi-bandas cambiais, Gustavo Franco. O panico nos mercados e as
grandes saidas de capitais que se viram nos dias seguintes refletiram a passagem para anova situagfio de equilibrio com desvalorizagao. O ataque especulativo que desencadeou a
22. Segundo o modelo de Sachs, Tornell & Velasco (1996b), Lf(B,, rt,C) > L"(B,, sc,e) + c (Ver Parte I).

NJSHIJIMA AND TONOOKL4 : CRISE CAMBIAL BRASILEIR,4

desvalorizagio da moeda brasileira teve, portanto, um carater eminentemente autorealizavel.

Outra indicagao de que o governo tinha desistido de defender a taxa de ciimbio foi o fatode a taxa de juros ter se mantido inalterada durante o ataque, sendo elevada posteriormentea adogao do regime cambiaj flexiyel com o objetivo de conter press6es inflacionarias(Grafico 10).

Grifico 10 - Taxa de Juros Interbancarios (O/o ao ano)
46

"
42
40
3S
36
34
32
30
2g

14-Dcc 24-Dec 3-Jan 13-ran 23-Jan' 2•Feb t2-Feb 22-Feb 4-Mat 14-Mar

Fonte: Banco Central

Sachs, Tomell & Velasco (1996b) destacam o fato de multiplos equilibrios ocorrerem
apenas para determinados niveis de endividamento pUblico. Recapitulando, os limites desteendividamento sao dados pela express5o:k = (1 -X) -o•5 (2 . c) o•s

onde: X i ct / (ct + e2), ct representa o peso atribuido a desvalorizagao da taxa de cdnibio

na fungao utilidade do governo,e representa a capacidade de recolhimento do imposto
inflacionado, e c representa o custo da desvalorizagao.

Para um dado valor de e, quanto maior for o valor de k, maior sera o valor de a,
indicando um maior peso associado a desvalorizagao da taxa de cfimbio. Assim, supondo e= 1, para X igual a O.5, ct sera igual a 1, significando que ambas as variaveis na fimgio
utilidade tem a mesma importdncia para o governo. Para X igual a O.6, ct sera igual a 1.5 e
assim por diante.

Em seguida, sao apresentados os limites inferior e superior para o nivel de endividamento
pUblico que coloca a economia sob a perspectiva de mUltiplos equilibrios para X variando
de O.5 a' O.65 e para vatios custos da desvalorizagao, c. Os valores para c, X k e k podem ser

45

KIOBE ECONOMIC & BUSLI?VESS RE VIEW, 44(1999), 15-51.

46

interpretados como porcentagem do PIB.
X == O.5
c

O.02

O.04

O.05

O.06

O.07

O.10

Xk

O.14

O,20

022

O.24

O.26

O.32

k

028

O,40

O,45

O.49

O.53

O.63

O.02

O.04

O.05

O.06

O.07

O.10

X == O.55

c

Xk

O.16

O,23

026

O.28

O.31

O.37

k

O.30

O.42

O.47

O.52

O.56

O.67

c

O.02

O,04

O.05

O.06

O.07

O.10

Xk

O.19

O.27

O.30

O.33

O.35

O.42

k

O.32

O.45

O.50

O.55

O.59

O.71

c

O.02

O,04

o.os

O.06

O.07

O.10

Xk

O.22

O.31

O.35

O.38

O.41

O.4

k

O.34

O,48

O.53

O.59

O.63

O.76

X-O.6

X-O.65

Em dezembro de 1998, a divida pnblica total liquida do governo equivalia a 42,60/o do
PIB. Nao considerando a divida externa liquida de medio e longo prazos, cerca de 310/o,
Em margo de 1999, esses valores equivaliarn a 48,20/o e 38,50/o do PIB, respectivamente.

Considerando que o governo de mais importAncia para a desvalorizagao da taxa decambio do que para a arrecadagao,X > O.5, e que o custo c reflita o impacto esperado dadesvalorizagfio sobre o estoque da divida, por exemplo, entre 40/o e 70/o do PIB, conclui-seque o estoque da divida as vesperas da crise cambial situava-se dentro do intervalo deocorrencia de multiplos equilibrios para os varios valores de X considerados.

Considerag6es finais

Tendo em vista a evolugao dos acontecimentos, uma crise cambial no Brasil era uma
questao de tempo. Para que o programa de estabilizagao monetaria baseado na ancora

cambial implementado pelo govemo brasileiro em meados de 1994 tivesse um sucesso
completo eram tambem necessarios um ajuste definitivo das contas pUblicqs e a ampliagao

NJSHIJIMA AiVD TONOOIIC4 : CRISE CAMIBIAL BRASILEIR,4

dos gatihos de produtividade na economia.23 Na falta desses componentes, o desequilibrio

externo decorrente teria de ser basicamente compensado com medidas para estimular aentrada de capitars externos no pais. Entretanto, com as sucessivas cnses mtemacionars, a
opgao de se cobrir os deficits na balanga em transag6es correntes por meio da Captagfio decapitais estrangeiros foi se tornando crescentemente mais cara e dificil. Dado que osdemais elementos do programa de estabilizagao (ajuste fiscal e ganhos de produtividade)nao evoluiarn favoravelmente, aumentava a possibilidade de uma desvalorizagao da taxa dechrnbio. Neste sentido, o ataque especulativo contra o real poderia ser interpretado comouma especie de "gatilho" que, ao ser acionado, detonou o processo de implementagio dos
ajustes necessarios na economia brasileira.

Muito embora nfio se pudesse dizer que os fundamentos da economia brasileira eram
excelentes, tambem n5o eram mins. As crises asiatica e russa certamente fizeram com que

os investidores se tomassem mais prudentes em relagfio aos mercados emergentes de um
modo geral e mais suscetiveis a rumores. Neste sentido, a situagfio do pais antes dadesvalorizagao da taxa de cfunbio podia ser bem representada como sendo uma situagao deequilibrios m"ltiplos (decorrente do nivel relativamente elevado do estoque da divida
ptiblica, como no modelo apresentado na Parte III, ou do nivel relativamente baixo das
reservas internacionais), na qual uma s"bita mudanga de expectativas poderia provocar omovimento da economia de um equilibrio para outro (no caso, de uma simagao sem
desvalorizagio para outra, com desvalorizagao).

Dados o estado dos fundamentos econ6micos e as incertezas quanto a capacidade dogovemo brasileiro cumprir as metas acordadas com o FMI provocadas pela dificuldade em
se aprovar as medidas do ajuste fiscal no Congresso Nacional e pelo animcio da morat6ria
do estado de Minas Gerais, a troca do Presidente do Banco Central foi o sihal que faltava

ao mercado de que o governo havia desistido de sua politica cambial. A abrupta mudanga

nas expectativas do mercado (equivalente ao deslocamento de uma posigao de equilibrio
para a outra posigio de equilibrio) refletiu-se irnediatamente 'nas grandes saidas de capitais

do pais, tornando ineficaz qualquer tentativa de se defender a taxa de cAmbio. Era ochamado "ataque auto-realizavel".

Ap6s a desvalorizagao, as ateng6eS voltafam-se para seus efeitos sobre a atividade
econ6mica, a inflagao, o sistema financeiro e para o possivel contagio para outros paises daregiao. Entretanto, diferenternente das crises anteriores em outros paises emergentes, nocaso do Brasil, as implicag6es foram pequenas, pois, dentre outros fatores, adesvalorizagao cambial fora realizada bem antes de seretn esgotadas as reServas
internacidnais, o sistema financeiroja se encontrava saneado e pouco exposto aos riscos dadesvalorizagao, os pregos dos ativos (ag6es, im6veis) nao se encontravam em niveis muito

elevados e o paisja'havia fechado o acordo com o'FMI. A evolugtio da economia brasileira
SOb O23. VerNishijima(1996).

47

KOBE ECONOMIC & BUSINESS REnEM, 44(1999), 15-51.

48

regime de taxa de cfimbio flexivel e a transigao para um sistema cambial que

admita aplena conversibilidade do real sao agora as pr6ximas quest6es a merecer atengio.

Referencias Bibliogrificas

Banco Central do Brasil, Boletim do Banco Central, vaios ntmeros.
Banco Central do Brasil, Notas para Imprensa, viirios nimeros.

Buiter, Willem, "Borrowing to Defend the Exchange Rate and the Timing and MagnitudeofSpeculative Attacks," Journal oflnternational Economics, 23(314):221-239, 1987.

Devenow, Andrea and Ivo Welch, "Rational Herding in Financial Economics," European
Economic Review, 40(3-5): 603-15, 1996.

Diamond, Douglas and Philip Dybvig, "Bank Runs, Deposit Insurance, and Liquidity,"
Journal ofPolitical Economy, 91:401-419, 1983.

Flood, Robert and Peter Garber, "Collapsing Exchange Rate Regimes: Some Linear
Examples," Jouixal oflntemational Economics, 17(1):1-13, 1984.

Flood, Robert, Peter Garber and Charles Kramer, "Collapsing Exchange Rate Regimes:

Another Linear Example," lournal oflnternational Economics, 41(314):223-234,
1996.
Flood, Robert and Nancy Marion, "Perspectives on the Recent Currency Crises Literature,"

NBER Morking Paper, 6380, Cambridge, National Bureau of Economic Research,
1998.
Fundagao Getulio Vargas, Conjuntura Econ6mica, vaiios ntmeros.
Ito, Takatoshi, "Asian Economic Crisis: It's Origin and Backgrounds," Kaihatu Enjo
Kenkyu, 5(4): 102-129, 1999 (in Japanese).

Kenen, Peter, "Analyzing and Managing Exchange-Rate Crises," Open Economies Review,
7:469-492, supplemeng 1996.
Krugman, Paul, "A Model ofBalance-of-Payments Crises," lournal ofMoney, Credit, andBanking, 11(3):311- 325, 1979.

Masson, Paul, "Contagion: Monsoonal Effects, Spillovers, and Jumps between Multiple
Equilibria," IMF Morin'ng Paper, 98/142, lnternational Monetary Fund, 1998.
Nishijima, Sheji, "Stabilization, Exchange Rate Anchor, and Credibility," Kokumin Keizai

Zasshi, 173(3), 65-79, 1996 (in Japanese). :'Nishijima, Shoij, "Banking Restucturing in Latin Americeg" Annual Report on Economics
and Business Administration, RIEB, Kobe University, 1998 (in Japanese).

Nishijima, Shoji, "Dollarization in Argentina," Sekai Syuhou, July 27, (1999a) (inJapanese).
Nishijima, Shoji, "Latin Arrzerica at a Crossroad," Sekai Syuhou, October 26, (l999b) (inJapanese).

NISHllIMA AND TONOOIC4 .• CRISE CAMIBIAL BR,4SIL,Ei IRA

Obstfeld, Maurice, "Rational and Self-fulfi11ing Balance-of-Payments Crises," American

Economic Review, 76(1):72-81, 1986.
Obstfeld, Maurice, "The Logic of Currency Crises," in Barry Eichengreen et al(eds),
Monetaty and Fiscal Policy in an Integrated Europe, London, Springer, 1995 (firstpublished in Cahiers Economigues et Monetaires, Bank ofFrance, 43:189-213, 1994).
Obstfeld, Maurice, "Models of Currency Crises with Self-fu1fi11ing Features," European

Economic Review, 40(3-5):1037-1047, 1996.
Obstfeld, Maurice, "Destabilizing Effects of Exchange-Rate Escape Clauses," Journal ofInternational Economics, 43(1-2):61-77, 1997.
OESP, O Estado de Sa'"o Paulo, SSo Paulo, vdnas edig6es.

Sachs, Jeffrey, Aaron Tomell and Andres Velasco, "Financial Crises in Emerging Markets:

the Lessons from 1995," Brooking Papers on Economic Activity, 1:147-215, 1996a.

Sachs, Jethey, Aaron Tornell and Andres Velasco, "The Mexican Peso Crisis: Sudden
Death or Death Foretold?," Journal oflnternational Economics, 41(3-4):265-283,
1996b.
Talvi, Ernesto, "Exchange Rate-based Stabilization wnh Endogenous Fiscal Response,"
Journal ofDevelopment Economics, 54(1):59-75, 1997.

49

KOBE ECONOMIC & BUSINESS REvaEM, 44(1999), 15-51.

50

Anexo 1 - Principais metas quantitativas do acordo''''

1. Metas fiscais (Resultado primhrio do setor pfiblico consolidado em O/o do PIB)

1999

2000

2001

GovernoCentral

1.8

2.0

2.3

EstadoseMuniciios
EmresasEstatais

O.4

O.5

O.5

O.4

O.3

O.2

Consolidado

2.6

2.8

3.0

2. Metas monetaias (Credito domestico, teto, em R$ milh6es)

Dezembro1998()-9,506

Margo1999)-7,376

Junho1999
Setembro1999i
Dezembro1999(i)-12,644-19,070-6,1303. Metas externas (Divida externa do setor ptiblico nao-financeiro, teto, em R$

milh6es)Dezembro1998()

87765,

Maro1999(

91,215Junho1999()

93235'

Setembro1999(i)9461O'

Dezembro1999(i)97,675

4. 0utros indicadoreseReservas intemacionais liquidas estimadas em US$ 20 bilh6es em dezembro de

1999.
eTaxa de cambio esperada de R$ 1,295 por d61ar ao final de 1999 (desvalorizagao de
7,50/o no ano).

5. Notas explicativas

eResultado primario positivo significa superavit fiscal, sem levar-se em consideragao
despesas financeiras quros da divida).

eCredito domestico definido como a diferenga entre a base monet6ria e o valor das
reservas internacionais liquidas expressos em reais.

eDivida externa nao inclui valores liberados pelo acordo.
e(p) Criterio de performance a ser considerado pelo FMI para a liberagio de novas
parcelas do emprestimo; (i) Meta indicativa.

NISHJJIMA AND TONOOK,4 : CRISE CAMIBIAL BRASILEIR,4

Anexo 2 - Revisio das principais metas quantitativas do acordo (margo 1999)
1. Metas fiscais (Resultado prim:irio do setor pUblico consolidado em O/o do PIB)

1999

2000

2001

GovemoCentral
EstadoseMuniciios

2.3

2.65

2.60

O.4

O.50

O.65

EmresasEstatais

O.4

O.10

O.10

Consolidado

3.1

325

3.35

'Resultado Consolidado observado emjunho = 2.90/o do PIB (R$ 13,9 bilh6es).
2. Metas monetarias (Cr6dito domestico, teto, em R$ milh6es)

Abril1999()
Junho1999()-7,152

Setembro1999(i)-176

Dezembro1999i

766

-42

' Credito domestico estimado emjunho = -1,999.
3. Metas externas (Divida extema do setor pablico nao-financeiro, teto, em US$

milh6es)Margo1999()
Junho1999()
Setembro1999(i)Dezembro1999(i87966'

91,82392,48293821,' Valor estimado da divida emjunho = US$ 83 bilh6es.
4. 0utros indicadoreseReservas intemacionais liquidas estimadas em US$ 24,7 bilh6es em dezembro de

1999.
eTaxa de cdrnbio esperada de R$ 1,70 por d61ar ao final de dezembro de 1999
(revista emjulho para R$ 1,75),
elnflagfio ao consumidor esperada de 16,80/o (revista em julho para 80/o).

eQueda do PIB esperada de -3,50/o a 40/o (revista emjulho para -1O/o).

eBalanga comercial com superavit de US$ 1 1 bilh6es (reyista emjulho para US$ 4

bilh6es). .

eReceita com privatizagao de R$ 27,8 bilh6e.s (revista emjulho para R$ 13,2
bilh6es).

eDivida liquida do setor pbblico consolidado equivalente a 49,30/o do PIB em 1999, e
46,50/o, em 2001.

51

KOBE ECONOMIC & BUSINESS REIVIEM, 44(1999), 53- 76.

JAPANESE SUPPLIER RELATIONS:A COMPARATIVE PERSPECTIVEt

KENJIKOJIMA KobeUniversity

Abstract
This paper describes major characteristics of Japanese supplier relations in a comparative
perspective. The supplier relations in Japan, particularly automobile industry, are examined incomparison with those in the United States. The primary purpose of the study is to characterizesignificant features of Japanese supplier relations and to provide economic rationale for thoserelationships. In addition, comparing supplier relations in Japan and the U.S., convergence in thenature of those are discussed. Significant features of Japanese supplier relations are characterized:

long-term relationships and commitments; forced competition among few suppliers; transactionspecific investments in plant, equipment and human capital; significant involvement of suppliers in
product development with sharing of inforrnation. Supplier relations in the U.S. are changing andmoving close to the Japanese counterpart, There has been a limited, yet noticeable, convergence inthe nature of U.S. and Japanese supplier relations.

Keywords: Long-term relationships; Procurement; Supplier relations; Transaction-specificmvestments;
JEL CItzssil17cation.' L1 4; L62

1 introduction

Supplier relations are important areas for any firm that subcontracts portions ofcomponents and production because this creates the opportunity to enhance values of
products and efficiency ofproduction. There have been significant differences in supplier

relations between Japan and the United States. U.S. automakers are more venicallyCorrcsponding address:

Kenji Kojima
Research Institute for Economics and Business Administration (RIEB), Kobe Universitv

2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan
E-mail:kojima@rieb.kobe-u.ac.jp

Phone/Fax:81-78-S03-7018

tThis paper is completely revised version ofthe paper which title is "Supplier Relations in Japan:An International

Perspective."tFinancial supports from Ministry of Education in Japan are gratefullv acknowledged.

54

KOBE ECONOmaC &•BUSINESS REVIEM, 44(1999), 53-76.

integrated than their Japanese counterparts (Dyer, 1996a).i Even though U.S. automakers
are more venically integrated, they contract directly with more than one thousand suppliers

for the parts they do not make, Product development process is heavily influenced by the
traditional system in which suppliers produce parts under short-term, arm's-length contracts

and have little role in design and engineering. Most high value-added component
development and production are done by U.S. automakers in-house using 1arge in-housesupply capability. Outside suppliers are used predominately as low-cost manufacturing
platforms that are handed blueprints. Vertical integration might enable companies to enjoy

all of the benefits of fewer direct suppliers and specific investments. But vertical
integration removes suppliers from the discipline of the market and essentially eliminatescompetition because suppliers have a captive customer base. Incentives that keep bothautomakers and suppliers eficient and focused on continuous improvement are weak in theU,S. supplier relations.

Japanese automakers, by contrast, work with approximately one-tenth that number,purchasing more entire subsystems from each supplier.2 Japanese supplier network i.g
organized into clearly defined, hierarchical tiers with relatively large first-tier suppliers a,.

the top taking most of the responsibility for design of subsystems and delegating
responsibiiities for simple parts to second and lower-tier suppliers that generally build parts

according to blueprints provided to them. In Japanese supplier relations, suppliers,

particularly primary ones are an integral part of the product development andmanufacturing processes: they are heavily involved, assume significant responsibility, andcommunicate extensively and directly with product and process engineers. Japanesesuppliers frequently play a significant role in designing, prototyping, and testing complex

parts and subsystems than U.S. suppliers do. Suppliers in Japan are given great autonomy

in designing, prototyping, and testing their components or subsystems. Both automakers

and suppliers have recognized the need to be interdependent and have responded bydeveloping mechanisms to cooperate under the discipline of the market.

Supplier relations in Japan can be characterized to have distinctive characteristics inseveral aspects compared with the U,S, counterpart. It is important to understand how
effriciently Japanese supplier relations work, and whether the Japanese practices are uniqueto the peculiar circumstances ofthe Japanese social and cultural system or. whether it canbe applied in other countries, Funhermore, it is also important to understand the economic
I Dyer (1996a) examines the relationship betwreen inter-firm asset specificity and pqrformanc,e in Jqpanese andthe U.S. automobile industry. The unit of analysis is the supplier-automaker relationship, The sainple consistsof two Japanese, three U.S. automakers. A half of sample is from partner relations, -the other is from armslength relations in supplier-automaker relations. The survey was conducted with rnailed, self-administeredquestionnaire. The survey also shows significant differences between two countries with regard to verticallntegratlon,
2 Cusumano and Takeishi (1995) review the literature in empirical studies on supplier relations in Japan and the

u.s.

55
KOJJMA : JAPA?VESE SUPPLIER RELA TIONS: A COMPARA TJVE PERSPECTIVE

rationale of supplier relations in Japan. Yet many aspects are still left unknown about theprocess that unfolds between buyers and suppliers in Japan or the U.S.

This paper describes major characteristics of Japanese supplier relations in acomparative perspective. The supplier relations in Japan, particularly in automobile
industry, are examined in comparison with those in the U.S. The primary purpose of thestudy is to characterize significant features ofJapanese supplier relations and to provide
economic rationale for those relationships. In addition, comparing supplier relations inJapan and the U.S., convergence in the nature ofthose are discussed.
In this paper, significant features of Japanese supplier relations are characterized. First,

long-term relationships and commitments with close communication reduce transaction
costs and eliminate inefficiencies between automaker and supplier. The practices ofbuilding trust like supplier-assistance programs, cross-share holdings, and interfirm
employee transfer and having guest engineers can work effectively to create a high degree

ofmutual tmst.
Second, forced competition among few suppliers is effective in focusing on costs, quality,

and technological development. Using few suppliers can create value by providing
economies of scale and benefits of experience curve that reduce both transaction andproduction costs. Moreover, the contest among few suppliers serves to make the supplier's
reward dependent on his rivals' efforts as well as his own, while the reward is actuallyindependent ofthe supplier's cost. Japanese automakers can increase incentive of suppliers
for enhancing efficiency ofproduction through contests.

Third, willingness to make significant transaction-specific investments in plant,
equipment, and human capita1 as well as to share valuable technical information is moresignificant in Japanese supplier relations than the U.S. Automakers and suppliers may
choose to seek efficiency advantages by investing in transaction-specific assets. Thesetransaction-specific assets as the vehicle through which trading partners are able togenerate relational quasi rents when trade partners have developed safeguards which cancontrol opportunism at relatively low cost and task activities are characterized by a highly

degree ofinterdependence. In Japanese supplier relations, mutual investment in specificassets creates incentives to cooperate, and the reduction in cost and improvements inquality that are gained through the cooperation outweigh the risks of opportunistic
behavior from the parties involved.

Fourth, significant involvement of suppliers in product development with intensive andregular sharing of technical and cost information improves performance and reduces costs.

Japanese supplier relations involve intense and frequent sharing information during the
product development stage. The intense and regular sharing oftechnical information can beeffective to improve performance and reduce cost. The long-term automaker-supplier
relationships can facilitate tlie quality and efficiency of information exchange, Aggressiye

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KOBE ECONOA• tlC & B USJNESS RE VIE PV, 44(1 999?, 53- 76.

target prices are a major factor in dnving supplier to reduce cost so they can make a profit

at the price dictated by the customer. Since Japanese automakers also know the cost
structure of their suppliers, they generally set the target price very aggressively under theassumption that suppliers will continually reduce costs over experiences of the previous
model. The supplier has a great incentive to design the part so it can meet that price andsti11 make a profit in the long run.

Supplier relations in the U.S. are changing rapidly and are moving close to those,in Japan,

There has been a limited, yet noticeable, convergence in the nature ofU.S, and Japanesesupplier relations. In the U,S., suppliers are significantly more likely than they were in
1980s to provide detailed inforrnation to their customers, have long-term contracts, and get

involved in product development and manufacturing processes. These results indicate
progress toward collaborative relationships, in which suppliers play an important role insolving problems and developing ideas about products and manufacturing processes.
This paper is organized as follows. Major characteristics ofJapanese supplier relations are

discussed in order. The next section presents transaction relationships with few direct

suppliers. Section 3 discusses forced competition among limited suppliers. Section 4
describes transaction-specific investments. Section 5 discusses supplier involvement inproduct development. Section 6 discusses the convergence in the nature of supplier
relations in Japan and the U.S. Finally, concluding remarks are presented.

2 Fewer Direct Suppliers

2.1 Long-term Commitments
U.S. automakers are more vertically integrated than their Japanese counterparts. Even
though U.S. automakers are more venically integrated, they contract directly with 1,500 to

3,OOO parts suppliers for the parts they do not make. Toyota, by contrast, works withapproximately one-tenth that number, buying more entire subsystems from each supplier,
Reducing the total number of direct suppliers can lower costs while increasing quality,
Using fewer suppliers can create value by providing economies of scale and benefits ofexperience curve that reduce both transaction and production costs. Transaction costs, as
defined here, are all the costs associated with effecting an exchange, that is, information
gathering and analysis, negotiation, contacting, physical distribution costs, and so on.

Within most industries, as cumulative production experience in producing a product orservice increases, quality is improved and costs are reduced. Japanese automakers haveconsolidated their business with a few highly efficient suppliers and created conditions thatfacilitate the suppliers to make the investments necessary to accelerate down theexperience curve and to share the fu11 advantage ofthis volume with the automakers. wnen

a Japanese supplier wins a contract with a Japanese major automaker, it is essentiallyguaranteed four years of business or the life of the model. Moreover, if the supplier57 VE
KOJIMA: JAPANESE SUPPLIER REZA 770NS:A COMPARA TIVE PERSPECTI

performs up to expectations, it can usually renew the contract for the next model as well.

Naturally, these practices encourage long-term and transaction-specific investments.
Suppliers can invest in developing ideas and plans for the next model well in advance.

Engineers from the limited suppliers have long-term experiences in working together,making it easier to efficiently develop designs for the next model, When the model change
occurs, suppliers continue to move down the experience curve (Dyer and Ouchi, 1993).
In contrast, U.S. automakers have attempted to keep input prices low by maintaining sizeand bargaining power over suppliers. By splitting their business among many suppliers androtating them frequently, U.S. automakers have repeatedly destroyed the experience curvesof suppliers by ensuring that no one supplier could enjoy the experience curve effects toaccumulate decisive cost advantage. Thus, the U,S. suppliers have not developed long-term

relationships and experiences with automakers, Moreover, they are unable to effectively

plan long-term production and investments, which is refiected in lower average plant

capacity utilization. Without long-term commitment, U.S. suppliers can not have
incentives enough to make long-term investments in capital equipment, particularlytransaction-specific assets. Moreover, without the ability to make long-term forecasts, it isvery difficult to make maximum use of capacity and capital equipment. For example,
automakers may involve suppliers to a greater degree in the product design process toutilize fu11y the value of present tools and equipment. In this way, the risk of tool

obsolescence due to unilateral design changes is lowered. Naturally, the longer the
automaker and the supplier work together under these circumstances, the more likely it isfor mutual trust to be developed, Trust in this case comes from reliability demonstrated

over repcated interactions, as well as the shared knowledge that the panies need one
another.

2.2 Building Trust
Trust is an expectation held by an agent that its trading partner would behave in a mutuallyacceptable manner including an expectation that neither party will exploit the other'svulnerabilities. Ms expectation calibrates the set of possible actions, thus reducing theuncertainty surroundmg the partner's actions. The Japanese companies have recognized theneed to be interdependent and have responded by developing facilitating mechanisms tobuild mutual trust. The Japanese do not rely on legal contracts heavily to protect theirinterests in trading relationships. Sako (1991) and Smitka (1991) argue that developing

mechanisms to build trust between suppliers and customers have been critical in
3 Sako and Helper (1998) collected data by questionnaire survey during 1993 from 675 first-tier automobile
component suppliers in the U.S. and 472 first-tier suppliers in Japan. Respondents were asked to answer thequestionnaire for their most important customer regarding one product which was typically of their company's
output and with they were familiar.

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KOBE ECONO?varC & BUSINESS REVIEor, 44(1999], 53-76.

attenuating the hazards of opportunism in Japan.
Sako and Helper (1998) define trust as goodwill trust, that is, suppliers can rely on theirautomakers to help them in ways not required by their agreement with customers.Then,they find that Japanese suppliers were more trusting their customers than U.S. suppliers.3
Japanese suppliers tend to entertain a higher level of trust and a lower level of opportunism

than U.S. suppliers do.` Helps and technical assistance of automakers are significant inenhancing trust in Japan but not by in the U,S. Major Japanese automakers help their
supplier match competitors'efforts if one ofcompetitive suppliers offered a lower price fora product of same quality, Furthermore, the automakers provide significant helps for
suppliers to reduce costs iftheir material costs raised. Japanese suppliers receive technicalassistance from their automakers. Automaker engineers visit supplier site to aid in
implementing improved procedures and processes ofproduct development and production,
Automakers provide opportunities to train personnel ofsupplier at automakers'sites.

Major Japanese automakers have 1arge supplier-assistance management consulting groups
with specialized expertise that work fu11 time with suppliers to help them improve theirproduction techniques and achieve total quality, cost, and delivery. They have engaged indisseminating technical and management techniques such as TQC (total quality control),VA (value analysis), VE (value engineering), JIT ijust-in-time) production method, and soon. Providing assistance to suppliers is a highly effective method for both helping andforcing suppliers to continuously innovate and improve to stay ahead ofthe competition.S

The practice of long-term employment within one firm is important in developing tmst
arnong individuals both within the firm as well as across firms. There is real personal

contract between the purchasing managers ofmanufactures and the managers or owner ofa
supplying firm. Because people can develop long-term relationships witli their counterpartsat the supplier or buyer, it is natural that the Japanese have developed significantly greater

tmst across firms,

The way that Japanese firms build tmst is by requiring career paths in which employeestransfer from firm to firm, Employee transfers, both temporary and permanent, arecommon among business partners, particularly between large manufacturers and theirsubcontractors. In addition to perrnanent and temporary employee exchanges, suppliers
4 Dyer (1996a) shows that Japanese supplier were more likely to trust Japanese automakers to treat them fairly

and more willing to make dedicated investments based on oral agreements.
5 Suppliers often feel indebted or obligated to the automakers, but they also have mixed feelings about thesystem. On the one hand, they sometimes feel that sharing the business with another supplier is inappropriate
when they are clearly ahead in both cost and quality. Moreoyer, they have to share not only the business but
also information or technology in order to help their competitor improve. On the other hand, since they realizethat someday they may need such assistance, they yiew the system as insurance. Toyota suppliers rarely gobankrupt because they receive helps from Toyota if they are in financial distress. Only suppliers that are
unwilling or unable to improve continuously are cut off completely, and suppliers will do almost anything to
avoid such dani age to their reputations.

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KOJIMA: JAPANESE SUPPLIIIR RELMONS: A COMPARA TIVE PERSPECTIVE

often send guest engineers to work at their customer technical centers on an ongoing basiS.

Supplier and automaker engineers work jointly designing the components for a new car
model.6 Not only do these career-path help build trust between firms, but also transferredand guest employees are better able to understand how to enhance the efficiency of thedevelopment and production processes because they know both buyer and supplier
operations. Direct contact is much more important than other forms of contact indeveloping ways for employees to know and trust each other. Both of automakers andsuppliers encourage a considerable amount of face-to-face contact between suppliersalespeople and automaker engineers and between automaker purchasing agents andsupplier engineers. Japanese suppliers engage in more face-to-face contact and utilize more

guest engineers than do U.S. automaker parts divisions and assembly divisions (Dyer,
1996a).

Companies need credible commitments if they are going to be willing to makecustomized investments. Cross-share holding in Japanese trading relationships represents

commitments that firms have made to each other, and in many ways, it is an arrangementthat is akin to an exchange of hostages (Williamson, 1983). Japanese automakers own
significant ponions of shares oftheir major suppliers. This ownership stake builds trust andgoal congruence between automakers and their suppliers. Interlocking stock ownershiprepresents a commitment to the supplier that needs an incentive to make the customized
investment automakers requires. Those suppliers can be called as subsidiaries or affiliatedcompanies of automakers depending on the proportion of share-ownership.7

3 Forced Competition
3.1 Three Types of Supp)iers
A supplier typically has contracts witli an automaker both for a variety of components in asingle model and for similar components in different models. There are usually several

companies within the automaker's supplier group qualified to manufacture a component.
The other qualified suppliers may be currently producing similar components for othermodels, Within an assembler's hierarchical structure of suppliers, there are two basic types- design approved (DA) suppliers and design supplied (DS) ones (Asanuma, 1985a). DA
suppliers provide both design and production services to the automaker's specifications

while DS suppliers produce a component from drawings provided by the automaker. DA
parts usually include air conditioners, body and instrumental panels, engines, andtransmissions. The survey indicates that DA parts account for 620/o oftotal components of
6 Dyer and Ouchi (1993) find that suppliers send guest engineers to work at their customer technical centers on

an ongoing basis. Toyota had about 350 guest engineers at its main technical center in 1992. These engineers
become a part of the design team and are given desks to the Toyota engineers.

7 Toyota and Nissan own an average of 23 percent of the stock of subsidiaries or affiliated companies, whereas
U.S. automakers do not osvn stock in their suppliers in the samplingdsurvey done by Dyer (1996a).

60

KOBE ECONOMIC & B USINESS RE VIE M, 44(1999?, 53- 76.

Japanese automakers in the late 1980s. On the other hand, DS parts account for 810/o in the

U.S. automakers in that period. The U.S. automakers have recently changed to relying
more on DA parts (Clark andFujimoto, 1991).
The DA suppliers are usually those with the close and long-term relationships with theautomaker. Most of them are subsidiaries or aenliated companies of the automaker. First-

tier and the DA suppliers have a greater number and more profitable contracts with theautomaker. The automaker usually has less detailed knowledge of the DA supplier's
production costs that give the supplier an advantage in price negotiation, There are many
thousands of suppliers in the automaker's supplier hierarchy and only a few hundred at thefirst-tier.

Third type of supplier is commodity supplier who simply manufactures parts designed by
the automaker, usually standardized parts such as batteries, glasses, and tires. Since suchparts are not customized to a particular automaker, it can be thought close coordination forthat parts may be less important than for other parts. Commodity supp!iers may have longterm relationships with their automakers ifthe suppliers' unique manufacturing capabilities

make them necessary.

3.2 Supplier Competition for Design and Manufacturing
Cusmano and Takeishi (1991) survey purchasing agents and product planners ofthe largest

Japanese automakers, US automakers, and the U.S. operations ofJapanese automakers.
'Ihey find sole sourcing is not uncommon among the U.S. automakers, nor is multiple
sourcing uncommon among the Japanese automakers, though on average the Japanese use
fewer suppliers per part.8 They also find that suppliers to U.S. firrns play a 1arge role froman apparently early stage in development, though Japanese suppliers stM play a greater rolein design. Japanese firms usually employ a multiple sourcing policy to force suppliers into

intense competition, even though they forgo economies of scale (Asanuma, 1985b).
Japanese automakers are less 1ikely to rely on one supplier than the U.S. automakers are.

On average, each Japanese automaker purchases each part from approximately three
suppliers, and each supplier sells the same part to approximately three automakers(Cusumano and Takeishi, 1995). They maintain competition so that one supplier's ability togenerate cost or quality improvements provides an incentive for the other supplier to keepup.

The typical production cycle for a car model begins with a lengthy design anddevelopment stage followed by a 4-year production stage. The automaker usually invites

several qualified firms in the supplier group to compete for a contract to design andproduce a component for a new model cycle. A DA supplier will undertake the design and
8 Dyer, Cho, and Chu (1998) fmd exclusive relationships between automakers and suppliers with high level ofinteraction in Korean automobile industry.

61
KOJIMA: JAPANESE SUPPLIER RELA 7170NS: A COMPARA TIVE PERSPECTIVE

development as well as tooling for production with no guarantee of reimbursement by theautomaker. For DS supplier, the automaker will guarantee reimbursement for specificinvestments such as tolling. Whether DA or DS, the automaker makes a firm cominitment
to use tlie supplier for the 4-years production life ofthe model.

Recent evidence suggests that although the Japanese companies encourage their suppliers
to make customized investments, they use forced competition with one or two competitors
to make sure that their suppliers are disciplined by the ever-present threat of competition.

This competition often begins at the design stage when the automaker invites guest
engineers from two suppliers to work at the automaker's technicai center as part of thedesign team. As the design work proceeds, the automaker meets with each supplierseparately to review proprietary ideas and eventually decides which supplier has superior

product design. The losing supplier may become a secondary supplier for that model or
may simply have an opportunity to deyelop a design for a different model. Liker, et aL(1996) shows that Japanese suppliers face less competition in the design andmanufacturing stage than U.S. suppliers, though Japanese suppliers do face considerable

competition - about two competitors for a given design and manufacturing contract on

9average.
The buyer can strengthen the incentives for cost or quality improvements by making theprice paid to each supplier dependent on relative performance. The second-place supplierloses out on additional business and the bonus for good pefformance. However, the buyer
does not abandon a weak supplier, but works with it to help it compete with the strong
suppliers.iO The forced competition among the limited suppliers can be explained with thetheory ofprincipal-•agent. The theory focuses on how a principal may compensate an agent
for works delegated. The theory deals with the design of optimal compensation scheme inorder to motivate an agent to work efficiently under the situation where an agent's action is

not observed perfectly. According to the literature in the use of contests to compensate
multiple agents, contests among the suppliers can work as a mean for providing incentive
to suppliers. The contest serves to make the supplier's reward dependent on his rivals'
efforts as well as his own, while the reward is actually independent ofthe supplier's cost. It

can be shown that contests outperform individual-agent-incentive schemes in solving the

problem in unobservable efforts when suppliers face some degree of common production
uncertainty in addition to their own uncertainty. 'Ihus, the buyer as a principal can increase

incentive of supplier, as an agent for enhancing efficiency of production through multiple
9 Liker, et al (1996) examines supplier involvement in design based on a 1993 survey of approximately 143
Japanese and 189 U.S. automobile component suppliers. The survey was based on mailed, self-administeredquestionnaires. Respondents were asked to identify their 1argest dollar-volume automobile component orcomponent group. The questions were also to be answered with their 1argest automobile customer.

10 Green and Stokey (1983); Lazear and Rosen (1981); Nalebuff and Stiglitz (1983) have examined the use ofcontests to compensate multiple agents.

62

KOBE ECONOMIC & BUSJNESS RII VJEM, 44(1999), 53-76.

suppliers.

4 Transaction-specific Investments
4.1 Investments in Specific Assets

Automaker-supplier relationships in Japan are characterized long-term and highlycommitted, whereas they are more likely to be governed by short-term, arm's-length
relationship in the U.S. One of the major benefits of the Japanese supplier involvement indesign is access to highly customized design with unique features for a particular buyer'needs.

Japanese automobile suppliers develop more unique parts for their customers and makegreater investments in speciaiized assets than U.S. suppliers do. A first-tier suppliers does

not usually receive a separate payment for the investment in tools, dies, molds, and jigs
that are highly customized and would need to be scrapped if the automaker cut off orders
to the supplier. The suppliers' specialized capital investments make them highly dependent
on the automakers, with the real possibility ofhold-up problems. However, automakers arealso significantly dependent on the suppliers. Most DA suppliers' parts are "black box,"

meaning that the automaker provides only very general specifications while the supplierdoes all of the detailed functional specifications and blueprints. Consequently, DA
suppliers have significantly more knowledge about the design and manufacture of the part
than does the automaker. Because black-box parts are customized to a specific model, theautomaker is highly dependent on the supplier. If the supplier did not perform as desired,
the automaker would have difficulty simply shifting business to another supplier, given the

product's specific nature.'i Some DA suppliers claim that they do not provide theautomakers with all of the specific functional details when they submit their design
drawings for approyal, but intentionally leave out certain important details such as
tolerances, Because the automaker does not know the part's exact design specifications, it
is difficult to change suppliers, resulting in the automaker's dependence on the supplier.
Asanuma (1989) argues that the more technological initiative DA suppliers have, the more
likely they are to earn from supplying relations with automakers. Automakers can respondto it by investing in technological development or starting in-house development andproduction, or finding rival suppliers.i2

Under these conditions, each party makes commitment with substantial transaction11 Most automakers in Japan restrict suppliers to sell design specification to other eompanies (Fair Trade

Commission in Japan, 1993),
12 Denso Corp. is one of the maJor suppliers of e)ectronic components to Toyota. Denso supplied 50e/e ofToyota'S total electronic component needs in i997, Toyota maintains multiple sourcing poliey. The secondsource can give Toyota the leyerage to impose its stringent schedule of cost reduction on the primary source.

But Toyota cannot find rival suppliers of Denso who could serve as alternative sources of electronics parts.

Consequently, it has been decided that Toyota' itself must beeome the riyal to avoid heavy dependence ontt
Denso for electronics(Lincoln, Ahmadjian, and Mason, 1998). i

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KOJJMA: JA,PANESE SUPPLILEI R RELA TIONS: A COMPAR,4 TIVE PERSPECTIVE

specific investments, which creates quasi rents only if the both parties continue working
together. Ifthe relationship is terminated, each party loses some ponion of the rent. Thus
these specialized investments create interdependence, which in turn creates incentives tocooperate. According to transaction cost economics, it may be dificult to specify ex ante

precisely how the assets will be employed in production even if transaction-specificinvestments are entirely contractible. Once transaction-specific assets are in place, thecharacteristics of the transaction and the gain from trade will be determined by ex post

bargaining between the buyer and the supplier. Highly transaction-specific investment
should be avoided by buying commodities in the market and making customized products
in-house where the hierarchy can be used to reduce transaction costs (Masten, Meehan, andSnyder, 1989; Monteverde and Teece, 1982; Williamson, 1979). By contrast, Japanese
automakers have increasingly delegated responsibility for design and manufacture ofmore
complex subsystems to a close-tied group of suppliers who are willing to make significant
transaction-specific investments in developing customized parts for the buyers. Moreover,Japanese automakers seem willing to allow suppliers to development capabilities to receive
the long-term advantages ofcooperation. In fact, transaction-specific investment increases

mutual dependence if they are made equally by both parties. Since these specificinvestments increase the exit costs for a party and reduce the potential for opportunistic

behavior, parties are likely to be comforted and thus may increase their commitment toeach other. This, in tum, creates incentives to cooperate, and the reduction in cost andimprovements in quality that are gained through the cooperation outweigh the risks ofopportunistic behavior from the parties involved.
Liker et aL (l996) shows that suppliers have a close and long-term relationship with their

1argest customer both in Japan and U.S. automobile industry. They also suggest closer,

more long-term relationships in Japan, though these differences are not as large as
expected. It is observed that Japanese automakers have the most dedicated relationships

with subsystem suppliers and the least dedicated with lower-tier suppliers. Japanesesuppliers are considerably more dependent on their 1argest customer. These results suggest
U.S. automobile companies are as likely as Japanese companies to out-source design, given

suppliers early information about product development, and allow them to develop uniquedesign capabilities the automakers carmot replicate.i3

4.2 Investments in Customized Assets
Japanese suppliers dedicated some of capital investments to their primary customer thatthese customized physical assets that could not be re--deployed ifthe customer terminate topurchase from them. Clark and Fujimoto (1991) suggested that dedicated physical assets
13 Korean automakers demand a high degree of loyalty from their suppliers. Suppliers make highly customized
investments and coordinate closely with their automakers (Dyer, Cho, and Chu, 1998).

64

KOBE ECO?VOMIC & B USINESS RE] VJE PV, 44(1 999), 53-76.

play an important role in the improvement ofproduct integhty and thus in overall productquality. It generally requires various types of investments in customized assets by one orboth firrns in order to make the production and physical distribution more etheient. Dyer

and Ouchi (1993) identify three types of customized investments employed in supplier
relationship: (1) site-specific investment; (2) physical investments; (3) human capital
Mvestments.i4(1) Site-specific investments: Site specificity refers to the situation whereby successive
production stages tliat are irnmobile in nature are located in close proxirnity to one anotherto improve coordination and economize on inventory and transportation costs. Plants arelocated so that they are dedicated 1argely to a particular customer in order to improvecoordination and economize on inventory and transportation costs. Supplier relations inJapan involves building a supplier plant within fifteen miles of the customer plant to

reduce transportation costs, improve delivery, and generally improve coordination. It

allows supplier engineers to work daily at customer technical centers with customer
engineers in designing new products.

(2) Physical investments: Manufacturing equipment such as tools, dies, molds, jigs,
machinery, inforrnation system and so on is customized. Physical specificity refers totransaction-specific capital investments. Physical asset specialization allows for developing

unique feature ofproduct and may improve quality by increasing product integhty.

(3) Human capital investments: Dedicated design to manufagturing requires engineers todevelop significant customer-specific knowledge. Human capital specificity refers totransaction-specific know-how accumulated by trade partners through long-term trading
relationships.

Mutual human capital increases as trade partners develop experiences working together

and accumulate specialized information, language, and know-how that allows them tocommunicate eficiently and effectively. It involves transfening the buyer's executives or

employees to the supplier to work on a temporary or permanent basis, and sending
consultants to work with the supplier to improve production methods, implement just-intime delivery systems, or assist in solving other problems.

Dyer (1996a) shows greater transaction-specific investments are sunk in Japanesesupplier relations than those in the U.S. Japanese automakers are more effective atcoordinating the supply-•production system. Greater mutual human capital gives Japanesecompanies the ability to rapidly disseminate information and to improve interfirm
communication, thereby coordination in supplier relations. Japanese suppliers are much

more likely to share key task-related information with automakers, notably technicalinformation and information on their production costs. Furthermore, Japanese automakers
14 Asanuma (1989) identified that transaction-specific investments are preyalent in supplier relations in Japan,
and developed the notion of "relation-specific skill.

65
KOJIMA: JAPANESE SUPPLJER RELA 7]rONS: A COMPARA TIVE PIIRSPECTIVE

are providing more inforrnation to assist affiliated suppliers in reducing costs, increasing

quality, and improving delivery.

4.3 Relationship between Transaction-specific Investments and Performance

Dyer (1996b) examines the relationship between inter-firm asset specificity andperforrnance in the automobile industTy. The survey consists of two Japanese automakers
and all three U.S. automakers and a sample of their suppliers. The unit of analysis is the
supplier-automaker relationship. Toyota and Nissan's supplier indicated tliat approximately

21 percent of their capital equipment investments were not re-deployable, compared with

20 percent for Ford suppliers, 14 percent for GM suppliers. On virtually every assets
specificity measure, Japanese automakers and their suppliers were more specialized thantheir U.S. counterparts. Moreover, with regard to site and human asset specificity, Toyota's

supplier group was more specialized than Nissan's supplier group. More specifically, it
examines the extent to which differences in supplier-automaker asset specialization may

explain performance differences between Japanese automaker and the U.S. The findings

indicate a positive relationship between supplier-automaker specialization andperformance. In particular, the data suggest a positive relationship between inter-firm

human capital specificity and both quality and new model cycle time. Moreover, site
specialization is found to be positively associated with lower inventory costs. The findings

suggest that in the automobile industry a tightly integrated production network
characterized by proximity and a high level of mutual human capital specificity will
outperform a loosely integrated production network characterized by low level of interfirm specificity.

A firm may choose to seek efficiency advantages by creating assets, which are specializedin conjunction with the assets of a trading partner. These transaction-specific assets as thevehicle through which trading partners are able to generate relational quasi rents. Although
investments in specific assets boost productivity, the incentive to make transaction-specificinvestments is tempered by the fact that the more specialized a resource becomes, thelower its value in altemative uses. The contingent value of a specific resource exposed its

owner to a greater risk of opportunism than the owner of generalized resources. According
to the transaction cost economics perspective, if trade partners make transaction-specificinvestments, then they must safeguard against the hazards of opportunism. Source ofadvantage is contingent on the costs associated with safeguarding those investments.
Transaction-specific investments are more likely to result in high perforrnance when trade

partners have developed safeguards which can control opportunism at relatively low cost
and task activities are characterized by a highly degree ofinterdependence.

It would be misleading to suggest that asset specificity is the only, or even the primary,factor that contributes to performance differences among automakers. Undoubtedly

66

KOBE ECONOMIC & BUSINESS RE VJEM, 44(1999?, 53-76.

numerous other factors not oaptured in the model contribute to performance differences.
The optimal level of inter-firm asset specificity will depend on the costs of safeguarding

specific investments. If the safeguard costs are particularly high then the gains from
specialization may be outweighed by the costs. The fact that kankei gaisha (affiliatedsuppliers) exhibit greater asset specificity than U.S. in-house division is intriguing. Trust

may be a highly effective and low-cost means for safeguarding transaction-specificinVestments. One can argue that constraints on opportunism within the Japaneseinstitutional environment allow Japanese companies to generate relational quasi rents more
effectively (Dyer, 1996b).
The efficient level of specificity between trading partners is likely to be contingent on thetask activities and degree of interdependence. Generally speaking, the greater theinterdependence, the more both parties will benefit from investments in specialized assets.

The findings suggest that when working activities are highly interdependent as they are in

the automobile industry, the Japanese automakers are more efficient than the U.S. Thesetransaction-specific investments create substantial buyer and supplier switching costs and,once sunk, make the two panies highly interdependence. This interdependent relationshipcan create potential contracting problems if the parties do not completely trust each other.

Toyota's just-in-time (JIT) system is a good example of how customized investments cancreate value. Just-in-time system was designed to reduce complexity and costs byeliminating inventories and work in process and to ensure that there was no redundantbuffer stocks, distribution facilities, or quality inspections, However, to implement JIT

efficiently, Toyota and its suppliers had to make customized investments in information
systems, plants, and flexible manufacturing systems that created mutual dependency.

5 Supplier Involvement in Product Development
5.1 SuppHers' Roles in Product Development
One ofthe key features ofJapanese supplier management is the substantial involvement of

suppliers in product development, The early involvement of suppliers in productdevelopment is instrumental in reducing lead-time and avoiding costly production
problems in automakers (Clark and Fujimoto, 1991), Clark (1989) finds that gains ofJapanese automakers from having close relations with suppliers with superior capability inproduct development is a great proponion of unique parts without substantial increasing
their own engineering costs. Kamath and Liker (1994) exatnine supplier-management usedin product development practiced by major Japanese automakers. They observed closely
coordinated buyer-supplier relationships in product development. It is widely believed thatJapanese automakers treat virtually all their primary suppliers who deal directly with theautomobile assembler as close partners. In fact, they typically regard only a handfu1 aspartners and assign more limited roles to the rest. Nor do buyers and suppliers work

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KOJIMA: JAPANESE SUPPLIER RELA 770NS: A COMPARA TIVE PERSPECTIVE

together in free-flowing teams to develop new products. Rather, Japanese automakers
design their development programs tightly and use targets and prototypes to keep suppliersin line. Managed correctly, suppliers can help their automakers reduce lead times andmanufacturing costs. and can aid the design process.

Japanese automakers assign suppliers different roles and give even first-tier suppliers

varying levels of responsibility for the product development. The Japanese hierarchicalstructure simplifies communication between buyers and suppliers: first-tier suppliers

coordinate the activities of the second tier and so on down the hierarchy, allowing
customers to focus scarce communication resources on the top tier. Sti11, with 100 to 200
first-tier suppliers, an automaker cannot easily work with all ofthem as partners in productdevelopment. Successfu1 partnerships depend on the right balance among supplier's
technological capabilities, an automaker's willingness to share information, and bothcompanies' requirements. 'Ihere is a range ofpostures that automakers and suppliers canadopt within a long-term cooperative relationship. Suppliers may play different roles fordifferent buyers. Each posture carries fundamentally different responsibilities during

product development, and the automaker-supplier relationships vary considerably incloseness and intensity.

Primary suppliers top the hierarchy. These selected first-tier suppliers can also be thought

ofas fu11-service providers and DA suppliers. Primary suppliers are responsible for entire

subsystems such as heating, ventilating and air conditioning. They often participate inplanning a new model even before the concept stage. Their understanding oftheir products
and processes are superior to those of their buyers. and they suggest solutions to meet theirbuyers' price and perforrnance objectives. They do their own testing and may even be
responsible for testing other suppliers' parts. One ofthe major partners is Denso, which has

grown to become an independent supplier of a broad range of components approaching toToyota in size.

One type ofDS suppliers refers to as a fuIl-system supplier designing and manufacturing
complex assemblies. Because they lack the technological capabilities ofpartners, they haveless influence on design. The automaker gives these suppliers critical specifications for

performance, interface requirements and space constraints. These suppliers then develop
the systems on their own. Moreover, these suppliers take on major testing responsibilities:

an automaker might not eyen verify the test data these suppliers submit along with its
prototype.

Another type ofDS suppliers has even less infiuence on design specifications. They may
participate as consultants in meetings with the automaker during the concept stage, but thebuyer determines in explicit detail the specifications for the part. The responsibiiities ofthese suppliers include working out the detailed of the design and building and testing

prototypes. But the automaker often conducts critical tests internally to assess the

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KOBE ECOIVOIL`firC & B USJNESS REP?7Evar, 44(1999), 53-76.

performance of the supplier's parts. Communications are not very intensive in the concept

stage but intensify during prototyping, though not to the same degree as with primary
suppliers.

Commodity suppliers simply manufacture parts designed by the automaker, usually
standard parts. This role is appropriate when a customer chooses to supplement its own
internal ability to design those parts with a commodity supplier's manufacturing capacity.

Commodity-suppliers and their buyers may communicate frequently during the lateprototype and production-preparation stages, though commmication is less intensive than

it is in the other roles. These suppliers may have long-term relationships with theircustomers ifthe suppliers' unique manufacturing capabilities make them necessary or ifthe

automakers' just-in-time manufacturing schedules are so tight that they require them.
Suppliers and their customers become increasingly interdependent as they work together
and their trading relationship grows. The buyer depends on the supplier's know-how andrelies on the supplier to deliver on time and on target. Committed ever more heavily to thecustomer, the supplier depends on it for its future business.

Japanese automakers manage product development tightly. They set clear, understandable
goals and communicate them consistently to suppliers, and they use targets and prototypes
to enforce those goals. It is a simple, rigid process, much like an assembly 1ine. Suppliersmust keep the line moving as a highly regimental role. With a highly structured androutinized product-development process, Japanese suppliers know exactly where they fit in

and when, and this arrangement allows them to be innovative within clearly determinedboundaries. Japanese automakers give marching orders to suppliers through carefu11y
considered targets for price, delivery date, performance, and space constraints. Then the
suppliers go off and design to those targets. There is usually little room for missing thembecause a deviation by one supplier will have implications for designers of mating

components systems. Suppliers are expected to work hard to meet targets on time.
Although buyers generally understand if supplier cannot meet a target, they are
unsympathetic ifthe supplier shows signs that it has not worked very hard. The automakeris responsible for avoiding arbitrary and capricious changes in targets, because they would
reverberate throughout the system and could disrupt other suppliers' design work.

Liker, et al. (1996) show that Japanese suppliers have more responsibilky and a greater
percent of subsystem suppliers designed parts themselves rather than jointly with theircustomer. There is a high level of supplier involvement in product development in bothcountries for the early stages of design, particularly among suppliers ofmajor subsystems.
Compared to the Japanese, U.S. suppliers are involved as early in the concept stage, takecomparable levels of responsibility for design, analysis, prototyping and testing, and are as

likely to influence the requirements for their component and communicate even more
frequently with their customer in the early stage ofdesign. The U.S. automakers seem to be

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KOJIMA : JA.PANESE SUPPLIER RELA 710?VS: A COMPARA TIVE PERSPECTIVE

giving suppliers the responsibility and opportunities to exploit advantages of asset
specificity and customer dependence on the supplier, without the same level of control as
we see in Japan. They do not hoid equity in the supplier, they do not represent as large a

volume ofthe supplier's sales, they have less internal capability to design the parts
themselves, and they are not repeating supplier's tests as frequently. There iS no evidence

in these data that Japanese suppliers are given greater responsibility for prototyping inJapan than in the U.S. Nor is there evidence that Japanese companies expect more
complete prototypes and trust their suppliers enough not to replicate their component test.
In fact, there is a sigriificantly greater likelihood in Japan that supplier prototype tests are

replicated. Japanese automakers are closely monitoring their suppliers' design.

5.2 Information Sharing in Product Development StageThe Japanese supplier management suggests suppliers are trusted enough to be given
model information relatively early in the design process - often at the concept or pre-concept stage - and suppliers, particularly the DA, are expected to panicipate in thedevelopment, beginning at the concept stage. Japanese DA suppliers wield significant
influence over the process of defining custorners' requirements so that the product designs
exploits the suppliers' unique manufacturing capabilities. Liker et al. (1996) indicate that

almost all of the subsystem supplier in Japan receive early vehicle concept informationfrom their customers although they do not necessarily have a great deal of influences overthe setting of specifications for tlieir subsystems, Contrary to the current literature thatsuggests Japanese automakers provide broader specifications that allow the supplier greater
freedom to innovate, there were no Japanese-U.S. differences in the degree ofspecificity of

the customer requirements. Japanese automakers were as likely as their U.S. counterparts
to include actual dimensions in the requirements,

Japanese automakers provide early new model information to primary suppliers as the
product concept is forming and issue only the minimum critical product requirements. U.S.

automakers are thought to provide much more detailed specifications to their suppliers,
allowing suppliers little latitude on specifying the design. Japanese supplier management

involves intense and frequent communication during the product development cycle,
particularly in the early stages when the product is being defined. This includes the intense

and regular. sharing of technical information to improve performance and reduce cost.
Because these are long-term automaker-supplier relationships, the quality and efficiency of

information exchange is significantly higher than it would be in new relationships. Thus

mutual human capital investment enhances information sharing and communication
between automaker and supplier.

There was considerably more frequent exchange of design information reported in the
U.S. compared to Japan at all tier levels and all stages of the development process. The

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KOBE ECONOMIC & BUSINESS ne VIEPV, 44(1999), 53-76.

frequency of communication does not necessarily reflect the quality of commmication.
Ihe Japanese relations have a long and continuous history ofworking together with their
suppliers on design that they can coipmunicate quickly and easily between them. Directcommunication and relationships developed over a long period of time have made detailed
and explicit written communications 1argely unnecessary. The result of this emphasis oncommunication is greater efficiency, faster product-development cycles. The greater
frequency of information exchange about product development between automakers andsuppliers in the U.S. may refiect less effective communication and decision making.
Japanese suppliers are given specifications formally, asking to go off and do the desigti andreturn with a prototype on time, Communication has been streamlined so it is less frequent

than in the U.S. The Japanese supplier relations can be thought to involve intense andfrequent communication during the product development cycle, particularly in the earlystages when the product is being defined. This includes the intense and regular sharing of

teclmical information to improve quality and reduce cost. When a supplier gets a noticethat the concept session for a specific vehicle model is being scheduled, there is noambiguity about what the supplier must bring to the session; approximately when the first,
second, and third prototypes will be due; and what the buyer's expectations at each ofthosemilestone events will be. One can find clear and consistent communication between
suppliers and automakers in the Japanese relations.

5.3 Cost-reducing Efforts
Japanese automakers use a prolonged target-setting process to further explore the design
and improve cost and quality, For example, Toyota gives them targets shortly after the 36-month presentation. Usually, maximum!minimum targets are generally expressed in termsof improvements over an existing product or the prototype in the presentation: Toyota islikely to want about 4 percent reduction in cost, or about 5 percent improvement in power
output. During the months that follow, the suppliers diligently strive to meet the targets
through design improvements. If the targets are met or exceeded, this eventually becomes
the specification; if not, in negotiations, the supplier demonstrates with test data that thetarget is impossible, and the both parties compromise on a target. Toyota's engineers
typically set targets on each component higher than really necessary by as much as 20
percent. They realize that, with production variations, this ensures a comfort zone so partsout oftolerance will actually be quality parts, They also want the suppliers to stretch; ifthetargets are too easy, the supplier will relax and not try to continuously push possible
boundaries. Ifthe supplier cannot achieve the very challenging goal, there is still room fornegotiation (Ward, et al,, 1995),

Along with specifications for a component, Japanese automaker gives suppliers a target
price (Asanuma, 1988b). TThe automaker decides what price the market will bear for the

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KOJIMA: JAPANESE SUPPLIIIR 1enLA 7707VS: A COMPARA TJVE PERSPECTIVE

total vehicle and works back, roughly allocating costs to major subsystems andcomponents. It then gives that cost to the supplier as a target at the beginning ofthe design

process. When the Japanese automaker hands design specifications to its suppliers, these
specifications include a target price, whereas U.S. automobile companies tend to rely moreon direct market forces to control costs. Aggressive target prices are a major factor indnving supplier to use value engineeimg and reduce cost so they can make a profit at theprice dictated by the customer. In fact, Japanese automakers also know the cost structure of

their suppliers and generally set the target price very aggressively under the assumptionthat suppliers will continually reduce costs over experiences of the previous model.
Supplier which are dependent on a principal customer have no choice but to reduce cost
aggressively or risk losing the affiliation with that customer which could mean going out ofbusiness. The supplier has a great incentive to design the part so it can meet that price andstill make a profit. Although there seems to be less flexibility in the target prices, there ismuch greater opportunity to explicitly consider trade-off between cost, performance in theearly design stage (Ward, et al., 1995).

Liker, et al. ( 1996) shows the date to support the more widespread use of target pricing inJapan and the greater prevalence of competitive bidding in the U.S. However, there is also
considerable evidence that U.S. automakers are using target pricing. More than halfofboth

the U.S. and Japanese suppliers said the use ofcompetitive bids was a major way to set
prices. Value engineering has become an institutionalized practice in these companies. The
term used for identifying ways to reduce cost in the productiprocess development stage isvalue engineering. In fact each buyer has a formula for splitting the cost saving suppliers

have achieved through value engineering between the customer and suppliers.

6 Convergence
Supplier relations in the U.S. are changing rapidly and are moving close to those in Japan.

Cusumano and Takeishi (1991) present the results ofa questionnaire survey to a sample ofautomobile manufactures in the U.S. and Japan during the spring of 1990. The survey
provides evidence that U.S. automakers and suppliers have adopted at least some practices
traditionally associated with the Japanese, thus indicating a possible convergence toward

the Japanese supplier relations. The evidence shows that U.S. automakers appeared tomove close to the Japanese model during the 1980s in several areas. It is found that
decreases in the number of suppliers per part for the U.S automakers during the late 1980s
and early 1990s.
Liker, et al. (1996) find little support for the expected differences between Japanese andthe U.S. automakers in supplier involvement in the design process. U.S. automakers havebeen increasing levels of supplier involvement in product develgpment rivaling theJapanese. U. S. automakers are as likely as the Japapese to be more dependent on suppliers

72

KOBE ECONOMIC di BUSINESS REVTEM, 44(1999?, 53-76.

in design, give suppliers early information about product development, and allow them todevelop mique design capabilities that automakers cannot replicate.

Once contracts were short-term, arm's-length relationships, now contracts haveincreasingly become long-term in the U.S. Helper and Sako (1995) shows that U.S.
suppliers provide buyers with detailed information about their processes, and buyers talk ofpartnerships with their suppliers. 87 percent of Japanese suppliers, compared with 68
percent of U.S. companies, thought that their customer's commitment would 1ast more thanfour years, the typical duration of a model cycle. The actual record of trading with thesame customer was significantly longer in Japan than in the United States.

In the U.S., more suppliers provided their customers with a detailed breakdown of thesteps in their production process, an increase that is compatible with a trend towardcollaborative relationships between 1984 and 1993.'S More and more U.S. suppliers havegiven their customers a detailed breakdown ofprocess steps, so that the gap between U.S.

and Japanese companies was eliminated by 1993 in this respect. At the same time,
automaker commitment, measured by either past record or suppliers' future projections,remains higher in Japan than in the U.S. In joint problem solving, suppliers' expectations ofcooperation have increased in the U.S. but declined in Japan. In the U.S., suppliers are
significantly more likely than they were five years ago to provide detailed information totheir customers, have long-term contracts, believe that their customers are serious about

product quality, and have defect-prevention systems in place.i6 These results indicate
progress toward cooperative relationships, in which suppliers play an important role insolving problems and developing new ideas about products and processes. Despite themovement toward the Japanese supplier relations in the U.S., suppliers with U.S.
automakers do not feel that their customers are more trustwonhy than were five years ago,

do not receive much assistance from them in reducing costs or adopting new technology.
One ofthe reasons behind seemingly contradictory trends can be the significant differencesin purchasing policy among U.S. automakers. Therefore, there has been a limited, yetnoticeable, convergence in the nature ofU.S. and Japanese supplier relations.

Sako and Helper (1995) also show that there has been a considerable convergence in themethods of supplier relations towards those consistent with closer and longer-term
relationships in Europe, the U.S. and Japan." An increasing proponion of European and
U.S. suppliers have provided their customer with a detailed breakdown ofprocess steps, so
15 Frey and Schlosser (1993) present a case of the Ford-ABB Oakville paint-finishing project that shows how
cooperative and innovative buyer-supplier relationships can be achieved in the U.S. automobile industry,

16 Helper (1991) conducts survey of U.S. automobile suppliers and finds that automakers have increased thelength of the contracts they offer, and suppliers are more likely to provide process information. However,suppliers still feel a 1ack of automaker commitment, since their level of trust in the automaker does notincrease. Suppliers do not receive much assistance in reducing costs or adopting hew technology. Moreover,
perforrnanee improvements often come at the Suppliers' expenses.

KOJIMA: JAPANESE SUPPLIII ll RE LA 71rONS.- A COMPAR,4 TIVE PERSPECTIVE73

that the gap between European and the U.S. on the one hand and Japan on the other in thisrespect is eliminated by 1994. At the same time, customer commitment, measured either by
past record or by supplier's future projection, remains higher in Japan than in Europe or the

U.S. Suppliers' expectations ofjoint problem-solving have increased in Europe and the
U.S. but declined in Japan.i8

7 Conclusion
Supplier relations are important areas for any fimi that subcontracts portions ofcomponent

design and production because this contributes to enhance value ofproduct and ethciency
ofproduction. There have been significant differences in supplier relations between Japanand the U.S. Supplier relations in Japan can be described to have distinctive characteristics

in several aspects compared wnh the U,S. counterpart. It is important to understand how

efficiently Japanese supplier relations work and whether it can be applied in othercountries. Furthermore, it is also important to understand the economic rationale ofsupplier relations in Japan.

In this paper, major characteristics of Japanese supplier relations are described incomparison with those of the U.S. Economic rationale for those relationships are provided.
Furtherrnorg. comparing supplier relations in Japan and the U.S., convergence in the natureofthose are discussed. Significant features ofJapanese supplier relations are characterized

as follows: (1) long-term relationships and commitments with frequent planned
communication, which reduced transaction costs between buyer and supplier; trustbuilding practices like supplier-assistance prograrns, owning stock, and keeping employees'

personal ties that create a high degree ofmutual trust; (2) forced competition among few

suppliers focusing on improvements in costs and quality; (3) significant transactionspecific investments in plant, equipment, and human capital as well as to share valuable

technical information; (4) substantial involvement of suppliers in product developmentwith intensive and regular sharing oftechnical and cost information to improve quality.
17 Sako and Helper (1995) conducts mai1 survcy of first-tier parts suppliers in the U.S., Japan, and Europe during

the period 1993-94. The findings are from responses from 1416 suppliers.

18 In the U.K. automobile industry the traditional buyer-supplier relationship was promised on stable, highvolume, low variety production; relationship was one of close competition, Nvith an}' new business secured by

one supplier being won at bidding; price was the primary criterion on which contracts were awarded, Today,
one can notice that several automakers are trying to shift toward reducing costs, and resolving schedulingproblems, technical diff7iculties and the 1ike through a process of cooperation rather than competition. The new

relationship was characterized by far greater dependency .as it inyolyed suppliers in design, research anddevelopment work, and quality control, and this in turn facilitated more commitment frorn suppliers byallowing them to engage in more forward planning. Reducing the supplier base is one feature of the current
transformation, long-term collaborative contracts awarded to a limited number of suppliers, and buying more
assembled component systems rather than individual components. However, the structure of the U.K. vehicleindustry presents severe technology transfer and to the close collaboration betsveen buyers and suppliers. Thereis a largely independent and common first-tier of suppliers, as well as a common secondary/teniary tier, which
are shared by a numbeT ofvehicle assemblers (Turnbull, et aL, 1992).

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KOBE ECONOMIC & BUSINESS REVIEPV, 44(1999], 53-76,

Supplier relations in the U.S, are changing rapidly and are moving close to those in Japan.

In the U.S., suppliers are becoming significantly more likely to provide detailed
inforrnation to their customers, have long-terrn contracts, make efforts in improving, costs

and quality. These results indicate progress toward collaborative relationships, in which
suppliers play an important role in solving problems and developing ideas about products
and processes technology. rlherefore, there has been a limited, yet noticeable, convergencein the nature ofU,S, and Japanese supplier relations,

Despite many empirical studies on supplier relations, particularly in automobile industry,

many empirical and theoretical problems are still left unknown, Can we identify samecharacteristics in supplier relations across industries in Japan compared with the U.S.
counterpart? Can the Japanese practices be unique to the peculiar circumstances of theJapanese social system? Future research needs to provide empirical analysis based on
different perspectives to gain insights.

How efficient Japanese supplier relations can be? Research need to combine theviewpoints ofboth automakers and suppliers. This analysis could lead to a better picture of

how supplier relations as a whole affect efficiency and innovation in product development
and production of automobile industry. Furthermore, theoretical models can be required to
explain how efficient those relations can be.

To what extent can the nature ofsupplier relations in different countries converge? Weknow that each automakers attempt to seek more efficient way to manage supplier relations

that work effectively in different countries, We need to continue to study how thecircumstances affect characteristics of supplier relations in different countries to calibrate

the likely patterns that supplier relations will converge in the future. Generalizations on aconvergent pattern of supplier relations need longitudinal studies with multiple
perspectlves.

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t)KOBE ECONOMIC & BUSINESS REVIEM, 44(1999), 77-94.

DEVELOPMENT OF THE FOREST STEWARDSHIP COUNCIL
CERTIFICATION PROGRAMAKIRAKAJIVVARA KobeUniversity
TODD MALINICK University ofVVashington

Abstract
The Forest Stewardship Council is a non-profit, non-governmental organization which has become
the most successfu1 worldwide accreditor for third party conformance or certification of forest lands.
This arti'cle provides a brief summation of the historical development ofFSC and a description of its

organizational structure. The forest certification program of FSC is controversial and has received
criticism from many factions. Understanding the goais of FSC and predicting its success is discussed

in relation to the forest management failures which FSC was conceived to address. Descriptions of
the benefits of forest cenification and discussion of the costs of certification are given as they relate
to buyers, producers, and consurners. Distribution ofcertified forests and forest areas are provided inrelation to regions and certifying agencies.

JEL CIassification: K32, L73, Q23.
Key PPrords: FSC, Forest Certification, sustainability.

Introduction
During the past decade the management and preservation ofthe world's forest resources
have come under increasing worldwide public scrutiny. Environmenta1 research identified

overuse and mismanagement ofnatural resources by commercial enterprise, private
landowners, and govemment agencies as causes for the world wide deterioration ofnatural
habitat. Publication of scientific reports, special interest group activities, and popular
Corresponding address:

Akira Kajiwara
Research Institute for Economics and Business Administration (RIEB), Kobe University

2-1 Rokkodai-cho,Nada-ku, Kobe, 657-8501, Japan
E-m ail: kajiw ara@rieb.kobe-u,ac .jp

Phone/Fax: 81-78-803-7039
Todd Malinick
College of Forest Resources

University of Washington,

Seattle, WA 98195-21OO, USA
E-m ail: tm al inic@u,washington.edu

Phone: 1-206-524-9370

78

KOBE ECOIVOA•tffC & BUSINESS REV7EPV, 44(1999), 77-94

media coverage of these environmental concerns generated public involyement'and put
pressure on nations to address these problems. The convening of the United Nations

Conference on Environment and Development (UNCED or more commonly known as"Earth Summit") brought together representatives ofmany ofthe world's nations to addressthese environmental quality issues as global problems requiring unified response.

Even though the scope of the Earth Summit conference was much broader than concernswith forest habitat, many issues and concerns regarding global forest management received

extensiye attention. Since the Earth Summit, many of the world's nations have continued

to panicipate in international discussions and have formed agreements concerning themanagement of forest resources. Initiatives such as the Montreal Process, the PanEuropean (Helsinki) Process, and the Tarapoto Proposal are indications of the seriousness

with which these nations have attempted to address these problems. Initiatives such asthese acknowledge that maintaming and monitoring responsible forest management as well
as defining forest health require unilateral internationalization and globalization ofstandards, policies, and regulations.

Environmental interest groups, forest industry associations, and other non-govemmentalorganizations (NGOs) have not allowed this time of international policy and regulation
development to proceed without their input. They have participated in order to make surethat their special interests and agendas would be part of the decision making process. One
ofthe most controversial initiatives to come out ofthis collaboration has been that ofthird-

party conformance assessment also know as forest certification. The Forest StewardshipCouncil's forest certification program has been one of the most successfuI attempts to gain

relatively widespread establishment and implementation of standards relating to forest

health and management. 'GOALS AND ORGANIZATIONAL STRUCTURE OF THE FOREST
STEWARDSHIP COUNCIL
The concept ofthe Forest Stewardship Council Qriginated in 1990 in order to confront theperceived threat of tropical defore.station and assist in the preservation of global species

diversity. By 1993 that original collaboration of a few timber users,, traders, andrepresentatives of environmental and human-rights NGO's had developed into the 130

member Founding Assembly ofthe Forest Stewardship Council. By August 1994 adefinitive set ofguidelines, Princi les and Criteriafor Forest Management, were drafted

and approved by the Founding Members.

Tables attached show the current distribution ofFSC members. Table 1 shows that
Northern hemisphere members are dominant with Europe and Nonh America as the two
major regions that occupy the current assembly of FSC. Among the top ten countries,
three countries, USA, Canada and UK, occupy almost halfof the total numbers ofFSC.

lkZ4,UMARAmouaAUCKDEVELOPneNTOFTHEFORESTSTEPrARDSHIPCOU?VCILCERTIFICATIONPROGRAInterestingly, Canada is the second top country in terms of the number of FSC member
even though Canada has a very smal1 ponion ofFSC certified forests in number as well as

in area (Table 2). In terms ofchamber in the FSC assembly, economics and environment

are competing (Table 3). 'Table 1. Distribution ofFSC Members by Region.
.relonAfrica#ofmembers
810119621086

Asia

EuropeL.America
N.America
Oceania

38.0
19.8
34.5
1.9

313
228

Total

Nomh

o/o

2.6
3.2

South

85

Total

313

100.0
72.8
27.2
100.0

Data sunmierized from FSC (1999b)

Table 2. Number of Members from Top Ten Countries.
count

USA

CanadaUK

Germany
BrazilNetherlands

SwedenMexicoDenmark
Belgium
Switzerland
Total#ofmembers

o/o

58
50
33
25

18.5

18
15
15
8
7
6

5.8
4.8
4.8
2.6

6
241

16D
10.5

2.2•
1.9
1.9

77.0

Data summerized from FSC (1999b)

Table 3. Distribution ofFSC Members by Chamber.

Chamber#ofmembers

o/oEconomics
Environment

125
136

39.9
43.5

Social
Total

52
313

100.0

Data sumrnerized from FSC (1999b)

16.6

KOBE ECONOILflC & BUSINESS REVIEPV, 44(1999), 77--94

80

Operating as a non-profit, non-govemmental organization, FSC created their guidelines

with the intention of encouraging forest managers to improve efficiency of theirperformance as well as conservation of forest resources. 'lhe founding members believedthat setting impossibly high goals for forest management would be counter-productive tothis purpose (Ferguson 1998). rlheir mission statement was crafted to include the threefields ofenvironment, society, and economics.

The goal of the FSC is to promote environmentally responsible,socially beneLficial and economically viable management of the world's

forests, by establishing a worldwide standard of recognized andrespectedPrinci lesofForestManagement. (FSC 1999a).
From its inception based on these guidelines, FSC has gained prominence as the primary
institution providing a means ofcenifying forests worldwide.

As of September 30, 1999, FSC cenified 189 forests and approximately 1.7 million
hectares in the world. By region, Europe and America (Nonh and South) are outstanding
in number as well as in area (Table 4). By countTy, Sweden is head and shoulders above

the rest in area, though USA is top ranked in number (Table 5). This is because
AssiDoman, the world's 1argest timber company, supports FSC cenification programs. By
forest type, natural and semi-natural forests dominate in number as well as in area (Table
6). By tenure, industrial forests rank highest in number as well as in area, and govemment
forests follow (Table 7).

Table 4. Distribution ofFSC Certified Forests by Region.

Reion
Africa#ofForesto/oAreahao/o

5.8

1,842,872
134,397

10.6
O.8
65.4
12.5

11
6

3.2

N.America

61
39
66

32.3
20.6
34.9

Oceania6

32

8.6,631

O.5

189

100.0

17,346,605

IOO.O

Asia

EuropeL.Ainerica

Total

Data summerized from FSC (1999b)

11336727))

2,176,350
1769628le102

swIvaL4R,4.4NDA4ALINICKDEVELOPME.NUiOFTHEFORESTSTEPVL4RDSHIPCOUNCILCERTIFICATIONPROGR,4V 81

Tab]e 5. Number and Area of FSC Certified Forests from Top Ten Countries.

Coun
Sweden#ofForest

Areahao/o

Av.Area88759797)

512

2,324,O13

13.4

355,039
387,336

o/o

25

13.2

Poland

6

32

USA

63
9

33.3

Zambia1

O.5

Bolivia6

3.2SouthAfrica

8

4.2

560,133
495,322
211O13,

Brazil4.8

15586157)

9.0

24740'

1,329,705
1,273,700

7.7

147,745
1,273,700
93,356
61,91570,33895,800

7.3
3.2

2,9

Canada3

1.6

Belize1

O.5

95,800O.6

Mexico

4
126

2.1

66.7

94908
16819188

97.0

Total

1.2

23727
253370O.5

Data summerized from FSC (1999b)
Table 6. Distribution of FSC Certified Forests by Forest Type.

ForeatTe#ofForest

Plantation
PlantationlSemi•-natural
PlantationlNatural

Mixedsemi-naturalrplantation
Mixednaturalrplantation
Semi-natural
NaturalTotalo/oAreaha

o/o

25
17

13.3

1,654,327

9D

5

2,7

91,10822,739

9.7
O.5
O.1

Av.Area
66173,
5359,

4,548

1

05

16,425O.1

16425,

3

1.6

18.6
54.3
loe,o

5898707
17026604

3.9
51.0
34.6

219034,

35
102
188

657,I028,686,196

248177'

57830

100.0

Data summerized from FSC (1999b)

Note: Graninge Skog Och AB(Sweden, 320,OOOha) was excluded because of unknown
forest type.

Table 7. Distribution of FSC Certified Forests by Tenure.

Coun
Communal
Govemment#ofForest
22
28

o/o

Areahao/o

Av.Area

1,546,187
3,269,224

9.1

70,281
116,758

232,381

1.4

10,209,054
187,191
1,533,566

60.0

189,057

Ll

7,800
58,983
2,450

Group

14

11.7
14.9
7.4

Industrial

54

28.7

Non-Industrial

12.8

ResourceManaer

24
26
20

Total

188

100.0

Private138
10.6

49,O02
17,026,604

19.2

9.0
O.3

16599,

100.0

Data summerized from FSC (1999b)

Note: Graninge Skog Och AB(Sweden, 320,OOOha) wasexcluded because of unknown
tenure.

,krOBE ECONOMIC & BUSINESS RE"EM, 44(1999?, 77-94

82'Ihe FSC forest cenification process consists of examining the management practices ofa forestry organization in accordance with the Principles and Criteriafor Forest

Management as defined by the FSC Assembly. Successfu1 completion of a thoroughassessment permits the party seeking certification to associate wood product from theirland with the FSC logo. rlhis logo is intended to communicate to the consumer that the

product they are purchasing originated from "certified well-managed forests". The FSC
itself does not certify forests; it is instead an accreditor of certifying agencies. Worldwide,

the FSC has approved six organizations to grant certification status: Skal in the

Netherlands, IMO in Switzerland, SGS Forestry QUALIFOR programme and Soil
Association Woodmark Scheme in UK, the Rainforest Alliance's Smart Wood Programand Scientific Cenification Systems (SCS) in USA.

Table 8 shows distribution of FSC Certified Forests by certifying body. Rainforest
Alliance takes over sole possession of first place in number and SGS in area. Generally,each cenifying body certifies the forests in that region where the body is located, but somebodies take active part in cenifying forests out ofthe regions such as Rainforest Alliance in

Latin America and SGS in Affica (Table 9). Especially, SGS seems to have influence on

Commonwealth countries. Table 10 implies that there is a relationship between acertifying body and tenure ofa client. Among American certifying bodies, Rainforest
Alliance, non-profit NGO, has many clients from the non-indusnial sector (communal,
non-indusnial and private), and SCS, a private company, has many clients from industrial
cluster.

Table 8. Distribution of FSC Certified Forests by Certifying Body.

CeniinBodo/oAreaha3

1.6

RainforestAlliance

84

44.2

scs
SGS

29
47

24.7

IMO

Skal
SoilAssociation
Total#ofForest

o/o

Av.Area

15,761

O.1

13.9
17.4
51.4

5,254
28,807
104,720
190,806
6,397
163,5289

4.7

2,419,752
3,Q36,876
8,967,881
57,577

18
190

9.5

2943495)e

15.3

100.0

17,441,342

O.3

16.9
100.0

Data summerized from FSC (1999b)
Note: Menominee Tribal Entereprises(94,737ha) was included in both Rainforest Allianceand SCS due tojoint cenification.

1ooJPVAIMANDMALINICKDEVELOPMENTOFTHEFORESTSTEPVARDSHIPCOUNCILCERTIFICATIONPROGRA

ed Forests by Cenifying Bodyi

Table 9. Regional Distribution of FSC Certifi

CertiinBod
IMO
RainforestAlliance

scs
SGS
Skal

SoilAssociation
Total

Africaoo

AsiaEuroe L.America N.AmeriCa Oceania

o

3

o

o

1

o

30

52

o
1

o

o

8

6

15

o

10
o

5

25

3

o

4

o

9

o

o

o

1

o

16

o

o

1

11

6

61

39

67

6

Data summerized from FSC (1999b)
Note: Menominee Tribal Entereprises(94,737ha)

was included in both Rainforest Allianceand SCS due to joint certification.

Table 10. Tenure Distributi
CenifinBod
IMO
kainforestAllianceon ofFSC Certified Forests by Certifying Body.

Communal Governmenta1 Grou
o
2
o
5
2
17

Industrial

on-Industrial

o
9

o
19

PrivateResourcesMer

17
3

o
15
5

o

1

scs
SGS

o

1

1

18

1

4

9

7

1

1

Skal

o

8

o

1

o

SoilAssociation

1

5

3

3

3

o

22

28

o
2
14

25
o
55

24

26

20

Tota1

Data summerized from FSC (1999b)
Note: Menominee Tribal Entereprises(94,737ha) was includ ed in both Rainforest Allianceand SCS due to joint cenification.

Since the formal begimings of the FSC in 1994, the organization has developed into acomplex system aimed at affecting the production, preservation, distribution, promotion
and overall management ofthe world's temperate and tropical forests. The FSC recognized

early on that even though the Princi les and Criteriafor Forest Management provide ageneral framework under which forest cenification is initiated, regional standards would benecessary. Therefore, the organizational system was designed to include national branches

that are responsible for coordinating such activities as the development ofnational andregional standards for forest cenification. The certifying bodies mentioned work withthese regional branches to implement the regional standards. The U.S. regional star}dards,

for example, upon completion, will include the Northeast, Appalachl'a, the Southeast,
Mississippi Alluvial Valley, Ozark, Ouachita, the Great Lakes, the Southwest, the Rocky
Mountains, the Pacific Coast, Alaska and Hawaii.

84

KOBE ECONOLILtfirC & BUSINESS REVILE M, 44(1999), 77-94

CONTROVERSARY RELATED TO THE FOREST STEWARDSHIP COUNCIL
Though the FSC organization has attempted to better stmcture itself over it's short history

to converge upon its overall objectives, the council and its procedures are not free of
debate. Contention exists regarding the political leanings ofthe organization. For example,

the overall concept of the FSC was developed and strongly promoted by tlie World Wide

Fund for Nature (wwF), an environmental interest group. Though both the FSC and theWWF have made significant effort to distance themselves from each other', many timberindustry proponents are hesitant to enter a program originating from the 'green' faction.

These same industry proponents criticize the FSC program for being too prescriptive, andclaim that adequate input from forest industry groups does not exist. This, many argue, hasresulted in a program that does not allow for an adequate degree of flexibility to deal withsite specific management issues.

Regardless of the existing debates, the FSC program does seem to be gaining ground.
Currently over 180 forests worldwide accounting for nearly 1.7 million hectares offorested
land are FSC-certified. Additionally, the utilization ofcertified wood in end-use products is

also becoming more prevalent. Buyer's groups and networks have arisen to more
effectively link timber producers with value-added manufacturers. These same groups
work to broaden the customer base and, hence, demand for cenified forest products, whileat the same time helping to minimize some ofthe costs inherent in developing a new well-defined and accessible market. Ten countries have buyer's groups and wwF 1995+Group
in tlie UK and the Cenified Forest Products Council in the U.S. are considered the mostactive ones in the world. In five more countries including Japan, there are movements to
set up buyer's groups and networks.

The nature ofmuch ofthe debate surrounding FSC can be attributed to the relative youth
ofits oertification program. At this point in time, it can be assumed that adjustments in its

structure and procedures will be necessary to develop the FSC cenification program into aneffective means of attaining the FSC objectives. This infancy and the associated politicalissues, however, do create problems when trying to draw definitive conclusions, as we will
see later, regardmg the appropriateness or effectiveness ofthe program.

FSC AS A RESPONSE TO PERCEIVED FOREST MISMANAGEMENTFAILURES
Attempts to speculate on whether or not the FSC cenification program can meet its goals

require assessment ofhow those goals are tied to management failures on forested lands.
Public concern over the perceived mismanageme'nt of global forest resources has revolved

around the concept offorest szLstainability. While clear and unanimous agreement on the
1 As just a brief example, a thorough examination of both the WWF and FSC web-sites reyeals absolutely no
mention of the other organization.

K4.JIIVAR,4AIYCDAL4LLNVCKDEP{ELOP14ENTOFTHEFORESTSTEMARDSHIIPCOenVCILCERTIFICATIONPROGR4td' 85

meaning of sustainability is not yet available, certain aspects of the issue do seem clear.

When speaking ofsustainability, we are necessarily referTing to the allocation ofresources
across generations-this seems certain. What is less clear is how to achieve sustainability

and at the same time meet the worldwide demand for wood products. In the midst of thisuncertainty, FSC has bravely or foolishly chosen to makeforest sustainability one of its
main objectives. A not yet defmed concept as a primary objective places the organization
in a vulnerable position for criticism from al1 political factions.

A feasible starting point in examining this issue, while simultaneously clarifying its

relationship to certification, would be to identify the effects of the perceived
mismanagement. Upton and Bass (1996) provide an overview of the results of forest
mjsmanagement Included in their list of "Forest Problems" are the following: thereduction of forest area and quality, environmental degradation of forested areas, loss of
biodiversity, loss of cultural assets and knowledge, loss of livelihood, and effect on climatechange. Though a clear and obvious relation between these "Forest Problems" and specificforest practices may not be clear, what is certain is that many of the causes that underlie

some "Forest Problems" are external to the forest industry. From this, we could infer that

activities from within this sector alone would most likely not solve the fu11 array ofproblems. Based on this assumption, FSC should anticipate a wide variety ofsocio/cultural influences across regions and national borders when making policy changes
and approving regional and national standards as conforming to the FSC guidelines.

To assess some possible solutions, it is worthwhile to examine what failures may beoccurring that have bearing on FSC current and future policy making. Again, Upton andBass (1996) provide an outline of what they believe are the 'breakdowns' of the current
market structure (see Figure 1 for an overview of many of these elements). The relevant

failures are composed of three broad categories including market and policy failures,
institutional fai1ures and other causes.

' The fai1ures undervalue forests' The fai1ures overvalue the benefits ofremoving forests' The failures do not reflect the social and environmental externalities of forest

management or removal' The failures make investments in sustainable forest management unprofitable or too

risky' The failures count against primary production

IAC TI TI IVAL AIL

ES" monitoring of forest stocks' and flows and changes affecting forgsts' PoorKOBE ECO?VO?Ld]rC & B USINESS RIIVIE M, 44(1999), ' 7 7-94

86

' Differing priorities between stakeholders' Uncoordinated decision-bmaking' Outdated or unclear institutional roles? Government control mechanisms which areinappropriate, weak or ineffectiveQl]IZMZ.caUS!iE' Increasing global population' Increasing demands for forest products' Fragmentation ofthe forests' Increasing extent ofinfrastmcture' Inappropriate technology and ski11s applied to forest management

Figure 1. Failures that have Created the Problems Relative to Sustainable Forest

Management.
(Excerpted from Upton and Bass, 1996)

FSC has been instrumental in the evolution of the concept of forest cenification as ameans ofconfronting many ofthese perceived failures. Forest certification has evolved asa softpolicly tool, which differs from traditional command-and-control policy instruments.
Instead of strictly regulating, and hence creating the ineffTiciencies inherent in this type ofapproach, certification operates as an incentive. This incentive provides those who manage
the worlds forest resources with a means to do so in a way that may ethciently take into
account traditionally ignored or undervalued characteristics. This is beneficial to regulation

because it provides a means of offsetting the costs (or possibly providing non-monetary

benefits) that help to reduce the impacts of enlisting more costly forest management
practices by the landownerlmanager.
For optimum effectiveness, certification should be a voluntary process in which a third-

party assessor implements an examination and forest activities are compared against awell-defined and understood set of standards. Some argument has taken place regarding thedevelopment of the standards. Much ofthe current debate centers on the idea ofthesestandards in the sense that they are considered by some (usually industry proPonents), to be

too prescriptive and hence costly, or are relatively ambiguous in their application. Also,
there is a certain degree of mistmst in the standards because some believe (again, usuallyindustry proponents), that environmental interest groups have too much say in theirdevelopment. This has been particularly evident ih the controversy surrounding FSC
cenification.

Finally, to operate most efficiently a,nd effectively, benefits should be obtained by all

entities within the production and distribution chain (Bhharuddin and Simula 1994).

swIPPIARAANDMALIMCKDEVELOPMENTOFTHEFORESTSTEWARDSHIPCOU]VCILCERTIFICATIONPROGRAM

Theoretically, these rewards are derived from higher product prices paid by the consumers

who desire the assuredness that the products they purchase originated from responsibly

managed forests. However, today, it is becoming more evident that other benefits andincentives may be driving resource managers into the market.

BENEFITS OF FOREST CERTIFICATION
Several assumptions underlie the concept of certification. For consumer behavior to besignificant enough to change forest policy, it must be assumed that consumer interest inforest management, or the effects of this management upon the global environment, isstrong. In aggregate, this interest would theoretically cause discrimination between
products originating from environmenta11y sound management practices and those that donot (Abt Associates 1994). Ifthere is a revealed preference for these responsiblyproduced
products, theoretically an associated vvillingness-to-pay (WTP), a higher price for theseproducts would follow. Stevens, Ahmad and Ruddell (1998) point out that the WTP, ahigher price is dependent on two important factors. First, it is necessary that consumers
recognize the certification process as being credible. The second is that there must be adesire by the consumer to support certified management practices tlirough their purchasing
decisions.

If cenified products are adequately differentiated, access to the growing number of nichemarkets andlor increased market share couid be attained. A survey ofwood productmanufacturers in the US revealed that 48 percent of the respondents indicated that
increased market share would motivate them to sell cenified products (Stevens et al. 1998).

In addition, consumer demand for forest products originating from environmentally soundoperations could help to maintain their market share among the growing number of nonwood products. This last expectation is based on the assumption that consumers appreciate

the inherent qualities of natural wood and paper products as being derived from arenewable resource and additionally, that they are biodegradable (Upton andBass 1996).
As briefly mentioned earlier, contrary to the voluntary nature of cenification, the aspectofproduct differentiation is also arising in other contexts-for some it means maintaining

market share. For example, in the United Kingdom during the early 1990's the World Wide
Fund for Nature, an environmental interest group, pressured many 1arge retailers and otherforest product buyers to join a group that pledged to purchase wood and paper from third-

party certified forests (De Cal1ejon 1998), Similar movements are expanding to Holland,
Gerrnany, Austria, Switzerland and the United States.

The improved public perception ofthe way an organization operates is another important
benefit to entering a certification program, or distributing certified products. Whether rightor wrong, public and environmental NGO pressures are presenting many industry activities
as contributing factors to the degradation of the forest ecosystems. Entering a cenification

88

KOBE ECONOMIC & BUSINESS REVIEPV, 44(1999), 77-94

program could enable many of these participants with the means of communicatmg to the
public the assurance that they are responsibly managing the forest resources A study
surveying companies currently offermg FSC-cetufied products found that 1O percent of the
respondents entered the market for improved public perception (Stevens et al 1998).

A benefit that some may seek to gam by entenng a certification program is the foothold

agamst further regulation We frequently see environmental regulations becoming
mcreasingly restrictive The foreseeable costs imposed upon forestland owners andmangers from this mcreasing level of regulatton may also lead many to enter programs ofcertificatron m hopes that today public assurance ofresponsible management may slow themertia of future regulation

A final benefit to cernfication that many have overlooked became evident when
examinmg the impetus and effectweness ofcertifying an array of public lands in the US(see Pmchot Institute 1998) The participants of this study clatmed that they believe thatcertification helped them clanfy their management strategy and also provides strategic
assistance m highhghtmg areas of concern

COSTS OF CERTIFICATION
Even though the possible benefits to certification may reward many for their participation,

this does not come without costs 'Ihese costs will differ for all mdividual organizations
applymg for certificatton and these costs will be both financial and non-financial burdens

In a general sense, all relevant costs can be viewed as drrect or mdrrect (Simula 1996)
Direct costs are the costs ofimtiatmg the certification process and thcy are typically patd tothe cernfying agency that rmtrates the assessment lncluded here are fees associated with
the imtial apphcation, mspection, annual auditmg and fixed fees (or royaltres) In general,these fees will vary with the scale of operations to be certified, but only the mspection fee

is significant. Figure 2 provides the theoretical umt cost fimction (from Simula 1996)

Slze of unlt (acres)

Figure.2 Theoretical Unit Cost Function.

KL4JIIV.4R4ANDMALINICKDEVELOPAIENTOFTHEFORESTSTEVVL4RDSHIPCOUNCILCERTIFICATIONPROGR./IM 89

When cenifying individual operations, the variable fee rate implies a decreasing unit costfunction (Simula 1996). The FSC has recognized this fact and has developed a cenification
option that allows forest resource managers to become cenified. This alternative provides

an incentive for small private landowners, who would otherwise find it too costly toparticipate. Under this alternative, resource managers can include all applicab}e lands
under their care into one group, thus gaining economies of scale.
The indirect costs of forest certification arise from ari array of factors (see Figure 3). In a

broad sense, these segment into the marginal costs of altering forest management to meetthe cenification standards, and the certification-related information costs.

1) Marginal costs of altering forest rnanagement practicesa) Investment costsb) Silviculturec) Harvestingd) Other costs such as those associated with delineating conservation areas

2) Information costsa) Forest managementi) Resource inventories and surveys (i.e. timber, biodiversity, soils, waste, etc,)ij) Socioeconomicsurveysiii) Forest management planningiv) Reponing and records managementv) Internal inspectionsb) Chain-of-custodyi) Markingoflogsandproductsii) Recording andreportingiii) Transportation, storing, processing and distributioniv) Internal inspection and other management costs

Figure 3. Indirect Costs Associated with Entering a Forest Certification Program.
(Excerpted from Simula 1996).

The indirect costs will obviously differ among participants, but an obvious conclusion isthat those organizations whose forest management practices are similar to the FSC
standards will have lower overail costs.

As for the information costs,. good data is relatively scarce. 'Ihis may be because mostcertificates granted so far have gone to private companies or individuals (55.8 percent),

research managers (26.9 percent) or grouplcommunal holdings (7.7 percent). Frequently
these ownerslmanagers consider financial information proprietary and are often reluctant to90

KOBE ECONOMJC & BUSJNESS RII VIEM, 44ne99?, 77-94

release it to the public. Only five of the 52 (or 9.6 percent) cenificates awarded have goneto public entities (state, county or city), and the majority ofthese were granted too recently
to observe the fu11 implication ofcosts.

One basic inference is that several of these costs will be new to an organization. For
example, socioeconomic surveys and internal inspections typically are not part ofa forestry

organizations operational procedure. Nevenheless, the greatest finaricial (and procedural)burden will most likely result from chain-of-custody issues.

Chain-of-custody consists of tracking wood from the forest to the consumer. In a simple
sense it is merely inventory control, but the soning, storing and tracking complications that

may arise from, say a mill that receives raw product from various sources can be quite
sighficant.

Chain-of-custody tracking is a necessary component of the cenification process if theconsurner is to be assured that what they are purchasing comes from certified sources.
Vlosky and Ozanne (1995) estimate the cost to conduot chain-of-custody tracking throughall distribution channels to be approximately $150,OOO. This includes the hardware andsoftware necessary to implement effective inventory controi. A survey by Vlosky andOzanne (1998) also revealed that 79 percent of the respondents opposed incurring any
costs relating to chain-of-custody unless the increased costs cguld be offset by higher
prices paid by consumers. Additionally, 16 percent of the respondents replied that theywould be willing to incur a cost ofbetween $5,OOOO and $10,OOO. This, they note, falls far
short ofthe estimated $150,OOO.

THE MARK[ET FOR CERTIFIED FOREST PRODUCTS
The most dominant markets for cenified forest products currently exist in Europe andNorth America and no expected change is foreseeable in the immediate future (De Cal1ejon

1998). The regional demand for certified products appears to parallel the degree ofenvironmental activism in a region. This is probably the leading factor as to why cenified

product demand is so much more prevalent in Europe and North America.

Although Japan and Asia have shown domestic concern for sustaining their forest
resources, they have not yet shown a substantial interest in purchasing certified forest
products. No cenified wood is sold as such in those markets (De Cal1ejon 1998).
On a global scale, current Emnual industrial roundwood production worldwide is estimatedat 53 ,billion ft3 (FAO 1999), Of this, only an estimated O.6 percent (approximately 318
mi11ion ft3) is FSC-cenified (De Callejon 1998). Further, only a fraction of the O.6 percent

is sold or marketed as cenified product. This does not necessarily imply a lack of demand.

More likely, it is the result of inefficiencies in the chain-of-custody procedures. For
exaipple, though the forest itself may be c,enified, al1 components of the production anddistribution chain must also have chain-pf-custody procedures in place. Ifone link in theIL4llW)IR,4ANDMAUNICKDEPELOPMENTOFTHEFORESTSTEMARDSHIPCOU]VCILCERTIFICATIONPROGRAM

chain is broken, the cenification chain is broken, Consideimg the costs, complications, andlack ofparticipation ifi installing chain-of-custody procedures, it should be obvious as tohow cenified timber may not reach the final market as cenified product. Nevertheless,debate exists regarding whether or not future demand for certified products will beadequate to support the program.

One major complication in doing a thorough economic analysis ofthe market for certified
forests products lies in the relative infancy of the market. At this early stage it is not only

difficult to assess the overall tendency for consumers to demand cenified products, but it iseven more complicated to fu11y assess what specific goods the consumer may demand (i.e.

hardwood and softwood products).
Current demand for cenified forest products is both weak and segmented (Mater 1995;

Lyke 1996; Ferguson 1998; De Callejon 1998; Hansen and Punches 1998). The
predominance of certified wood is currently hardwood species used in relatively smallscale goods such as guitars, indoor and outdoor fumiture, shelving, and millwork. There isa noticeable lack in the utilization of certified softwood species that would be applicable tolarge-scale projects such as new home constmction or home remodeling.

The increased future use ofsoftwoods is likely though. The American Institute ofArchitects and the American Society of Interior Designers have both developed
environmental and sustainable wood specification policies and are promoting the use ofsustainable forest products by their members (Winterhalter and Cassens 1994). De Cal1ejon(1998b) also points to the trend in Europe, spurred by German environmental interest

groups, where many publishers and other companies are actively seeking out
environmentally friendly paper. She expects that this act may soon shift the current
predominance ofcertified wood products to certified pulp.
Though there are signs that the market for cenified forest products is growing, it is notclear ifa market-wide price premium will surface. Many studies have attempted to assessthe demand and WTP higher prices for certified products. When examining consumers,
nearly all studies have revealed a preference for products that originate from responsibly

managed forests (Winterhalter and Cassens 1994), or more specifically, cenified forest
products (Winterhalter and Cassens 1993, Ozanne and Vlosky 1997). The results of thesesurveys vary concerning the WTP higher prices for these products.

Winterhalter and Cassens (1993) claimed that about 34 percent of the 'affluent'2
respondents in their study were willing to pay between 6 apd 10 percent more forassurances of sustainability. Sixty-eight percent claimed they would 'spend more than they

currently pay'. Ozanne and Vlosky (1997) examined the WTP by consumers for various
cenified goods ranging from a 2 x 4-8' stud, to a new home. Their results showed that that
2 Their surVey of the 'affluent' population included households Nvhere 'single or dual income waS at least $50,OOO

annually.

92

KOBE ECONO?LflC di BUSINESS REVIEM, 44(1999), 77-94

respondents claimed they would pay from 4.4 to 18.7 percent more (weighted average of
12.5 percent), depending on the good.

Stated earlier was that to be most effective, benefits should amass for all entities
throughout the production and distribution chain. Vlosky and Ozanne (1997) surveyedarchitects, building contractors and home center retailers. The WTP a higher price byarchitects and building contractors was examined with reference to 2 x 4-8' studs (baseuncenified price of $3501thousand board feet), hardwood flooring (base uncenified price$20!square foot) and a new home (base uncertified price $100,OOO). On average, architects
were willing to pay 11.3 percent more for the studs, 16.4 more for the hardwood flooring
and 5.1 percent more for the new home. Thirty-one percent showed no interest in paying a
price premium at all. As for the bui1ding contractors, they revealed a WTP of 10.7 percent

for the studs, 12.3 percent for the hardwood flooring and 3.7 percent for the new home.
Forty-two percent stated they would not be willing to pay any price premium. Home center
retailers were asked to reveal their WTP a higher price for 2 x 4-8' studs (base uncertified

price of $350/thousand board feet), a ready-to-assemble chair (base uncenified price $1OO)

and a wood dming room set (base uncenified price of $1,OOO). On average, home center
retailers were willing to pay 5.1 percent more for the studs, 2.8 percent more for the chairand 4.4 percent more for the dming room set. Here, 75 percent claimed that they would pay
no price premium at al1. The studies by Vlosky and Ozanne are summarized in Table 1 1.
2x4-8'

StudsiConsumers

Hardwood
Mooring2

New
Home3

18.70/eArchitects

11.30/o16.40/o5.10/oContractors

10.70/e12.3"/o3.70/e

HomeCenters5.10/oReady-to-

Dming

Kitchen

Assemble

Room

Remodel6

Chair`

Sets

14.4e/e

14.20/e2.80/o4.40/o11.00/eTable 11. Price Premium VVilling to be Paid for Certified Wood Products by Various

Segments of Market
iBase uncenified price $3501thousand board feet. 4Base uncertified price $100.

2Base uncenified price $201square foot sBase uncenified price $1,OOO.

3Base uncenified price $100,OOO. 6Base uncenified price $5,OOO.
Studies of manufacturers haVe revealed that there is a demand for'certified forest
products, and some of the companies' claim that their customers are willing to pay more.

One study showed that 10 percent of the respondents believed that their company's
customers would pay more for cenified products, but only 9 percent of the respondents
thought their company was willing to pay more (Vlosky and Ozanne 1998). Another study

showed that the actual price premium paid for certified wood by manufacturers, on

IC4JIMAR,4A?VD?Lva.I?VICKDEVIiLOPMENTOFTHEFORESTSTEPVARDSHIPCOU]VCILCERTIFICATIONPROGR4M 93

average, was 6.6 percent, while the average price charged to the buyers was 4.7 percent(Stevens et al. 1998).

Though the results of these studies vary, an implication is that the market for cenified
products does exist. It also seems evident that a price premium exists, though it will differ

significantly between segments and products. What is not clear is the extent to which themarket will expand in the future. Currently the greatest constraint on market development

is not demand, as many believed early on, but instead supply. One study noted that
respondents consistently mentioned inadequate supply as a constraint on expanding sales(Stevens et al. 1998). Nevenheless, more time is necessary before definitive conclusions
can be made regarding the market for cenified forest products.

References
Baharuddin, H. J,, and Simula, M, (1994). Certi:IGcation Schemesfor All Timber and Timber
Products, International Tropical Timber Organization, Yokohama, Japan.

De Callejon, D. P., Lent, T., Skelly, M., and Crossley, R. (1998). "Marketing Products from

Sustainably Managed Forestsi An Emerging Opportunity." The Business of Sustainable
Forestry: Case Studies (The Sustainable Forestry Working Group, ed.), pp. 3-1 to 3-25.
MacArthur Foundation, Chicago, IL.
Ferguson, S. (1998). "Green Cenification Comes to the Nonhwest." Forest Stewardship. v.7, n.l,p.10.
FAO (1997). State ofthe rvorlds Forests, FAO, Rome.
FAO (1999). State ofthe PVorlds Forests, FAO, Rome.

FSC (1999a). Principles and Criteria of Natural Forest Management: Revised Version, Forest
Stewardship Council, Oaxaca, Mexico.
FSC (1999b). On line http:1/www.fscoax.orglprincipal.htm,

Hansen, E., and Punches, J. (1998). "Collins Pine: Lessons from a pioneer." The Business of
Sustainable Forestry: Case Studies (The Sustainable Forestry Working ([lroup, ed.), pp. 6-1 to

6-16. The MacArthur Foundation, Chicago, IL.

Heaton, K., and Donovan, R. Z. (1996). "Forest Assessment." Cernlication ofForest Products:
Jssues andPerspectives (Vjana et al., eds.). Isiand Press, Washington D.C.
Lyke, J. (1996). "Forest product certification revisited." lournal ofForestry v.94, n.1O, 16-20.

Mater, J. (1995). "Certified Forest Products: Building Tomorrow's Market Today." Journal ofForesti y v.93, n.4, 36-37.

Ozanne, L. K., and Vlosky, R. P. (l997), "Willingness to Pay For Environmentally Cenified Wood
Products: A Consumer Perspective." Forest Prodncts Journalv.47, n.6, 39-48.
Sedjo, R. A., Goetzl, A., and Moffat, S. O. (1998). Sustainability of Temperate Forests, Resources

for the Future, Washington D.C.

94

KOBE ECONOMIC di BUSINESS REvaEPV, 44(1999), 77-94

Simula, M. (1996). "Economics of Certification." Certitication ofForest Products: Issues andPerspectives (Viana et al., eds.). Island Press, Washington D.C.

Stevens, J., Ahmad, M., and Ruddell, S, (1998). "Forest Products Cenification: A Survey of
manufacturers." Forest Products Journai v,48, n.6, 43-49.
Upton, C., and Bass, S. (1996). 77ie ]Forest Certi:lication Handbook, St. Lucie Press, Florida.

Vlosky, R, P. and Ozanne, L. K. (1995). "Chain-of-custody for Environmentally Certified Wood

Products." Proceedings of the Wood Technology Show and Clinic, Portland, OR, Miller
Freeman Pub. CA,
Vlosky, R. P. and Ozanne, L. K (1997) "Forest Products Certification: the Business Customer
Perspective," Mood andFiber Science, v.29, n.2, 195-208.

Vlosky, R. P. and Ozanne, L. K. (1998). "Environmental Cerdfication of Wood Productsi The US
Manufacturers Perspective." Forest Products Journal. v.48, n.9, 21-26.
Winterhalter, D., and Cassens, D. (1994). Consumer Perceptions and PVilhngness to Pay; Resuits of
Two National Surveys, Purdue University, West Lafayette, lndiana.

Winterhalter, D. and Cassens, D. (1993). United States Hard-,ood Forests: Consumer Perceptions
and MiUingness to Pay Purdue University, West Lafayette, Indiana.

KOBE ECONOMIC & BUSINESS REVIEWCONTENTS
NO. 39 (1994)
Labour Unions and Nominal Prices"''"'"""''•"""'"•'•''•••'''''•••'"'•••""'•"'Kazuo Shimomura
An International Perspective on Japanese Corporate Finance ' ' ' ' ' ' " " ' ' " ' " " " " • ' ' ' ' ' " "Kenji Kojima

Measuring Natural Resource Rents and their
Macroeconomic Significance for Developing Countries,
with Reference to Latin Ameri can Suger Producers " ' " " " ' ' " ' ' ' ' ' ' " ' ' " ' " ' 'Robert K. McCleery

The Influenee of Product Development Strategy on

Inter-ProjectLearning '"''''"""''"""'''"""''"'"'"'"""''"''•"""'•''"KentaroNobeoko
AComparison ofJapanese and UK Welfare '""'""'"'"'••''"''••""'•'"''""'''Stephen J, Davies

NO.40 (1995)
Financial Relati onships in JapanJ

AnInternationalPerspective """""""""""'""""""""'"""'"'''"""""'KenjiKojima
Structual Adjustment and Economic Growth in Mexico:

WithComparisonstoIndonesia ""'""'""''"""'"""""'•"""""'''`"RobertKMcCleery
Reorganizing for Multi-Proj ect Managementi

Toyota's New Structure of ProductDevelopmentCenters """"""""""""'"'""""""""""'''""'"""""KentaroNobeoko
Production Subsidies, Local Content Requirements
and Foreign Direct Investment:

A Theoretical Analysis """"""'"""'"""'"""""""""""""""""""'Roger N. Strange

NO.41 (1996)
Implications of the Asia-Europe Meeting for the World Trading System:

An Issue-Oriented Review "'"""'"""'"'"'"""'"""""""""'''''"""""'•'Shigeyuki Abe

Miehael G. Plummer
ReconsiderationofAverch-JohnsonArgument ""'""'''""''""""'"""'"""''SeiichiKatayama

Fumio Abe
Supplier Relations in Japan:

AnlnternationalPerspective """""""""'"""""""""""""""'"•"""""KenjiKojima
Alternative Component Sourcing Strategies
within the Manufacturer-Supplier Network:
Benefits of Quasi-Market Strategy

intheJapaneseAutomobileIndustry '"""""""'"""""'""""""""""'KentaroNobeoka

Value•Networks, Industry Standards, and Firm Performancein the World-Wide Mobile

Communicationlndustries ""'"""'"'''"""""'"'"'""""'""'"'""""''''"JefaeyL.Funk
The Effects of Transport Infrastructure and Urban Development Investment

in London's Docklands with Panicular Reference

to Leisure and Tourism 1970-1997"""'"""'"'"''''''''''"'''""""""""'T. S. Men{yn Jones

NO.42 (1997)
A Simple Model Technology Transfers in theNorth and South Economies;

TechnoiogyasIntermediaryGoods''"'"""""""""""""""""''"''""""'KazuhiroIgawa
Trade and Investment Relations ofJapan and ASEAN

in a Changing Global Economic Environment '''''"'''''''""""''""'"''""'"•'Shigeyuki Abe
Japanese Financial Relationships in Transition "''"""""""""""""''"''""""''''Kenl'i Kol'ima
Organizational Coordination for Project Interdependency

in New Product Development ""'""""'""'"""''"""""''"""""''"""Kentaro Nobeoko
A Regime Shift in Long-Run Money Demand in the United States "'""""""""'''''Ryuzo Miyao
The Competition between Regional Standards and the Success and Failure ofFirms in the World-Wide Mobile Communication Market '''""''""""""""''Jefaey L. Funk

NO.43 (1998)
What South Asia Can Learn from EastiSoutheast Asiai
International Trade and Foreign Direct Investment' " ' " ' " ' ' " ' ' " " " " " " " " ' " "Kazuhiro Igau,aRelational Governancein Japanese Venical Relationships '""""'"""'"'"""""""''Kenji Kojima
A Comparative Analysis ofPulp, Paper, and Packaging Companies ,in Canada, Japan and United States ''"'""''"""''"""""''""""''""""""'Ak2'ra Kaj'i'wara
Non-performing Assets ofBanks and Financial Intermediationi
Expe ri ences of Japan in the Inter-war Peri od " ' " " " " " " " ' ' " " ' " " ' " ' ' " " "Munehisa Kasttya

Published on February 2000

byResearch Institute for Economics & Business

Administration(RIEB)
Kebe University
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