Japan Invests in Michigan
A Japanese pension fund has purchased a Michigan power plant, the Midland Cogeneration Venture, for $2 billion with a Canadian partner.

The organization, Japan’s Pension Fund Organization, will be co-owners of the plant along with Mitsubishi, Mizuho Bank, the Japan Bank for International Cooperation, and Omers, a Canadian pension fund. The investment is being made through the Global Strategic Investment Alliance (GSIA), a partnership with Omers to target North American infrastructure assets.

Japan, the country with the third-highest overall GDP, is a major trading partner with the U.S. and has significant investments in the country. These types of investments bring money into the U.S. economy, diversify the financial backing of U.S. infrastructure, and give foreign countries a stake in the U.S. economy. Overall, having one of the largest economies in the world invested in the U.S. economy is very positive for the U.S. economy.

Japan, however, was not always one of the world’s economic powerhouses. After the Second World War, Japan was a struggling nation and needed assistance to recover. Its infrastructure was obliterated, its government collapsed, and the country was occupied by foreign powers.

The U.S. stepped in after WWII with vast amounts of aid provided mostly under its Government and Relief in Occupied Areas (GARIOA) grants. According to statistics from the Federation of American Scientists’ report U.S. Occupation Assistance:  Iraq, Germany and Japan, assistance to Japan during the U.S. occupation totaled roughly $15.2 billion. This aid is what enabled Japan to enact its miraculous postwar recovery and become one of the United States’ top 4 trading partners today.

As current U.S. Secretary of State John Kerry made clear in his first speech in the country, 11 out of the US’s top 15 trading partners are former beneficiaries of U.S. foreign assistance. Yet despite the effectiveness of giving over $15 billion in aid to postwar Japan, the U.S. now only gives $30 billion a year in aid, which amounts to less than one percent of GDP. If the U.S. can learn anything from its past successes, it is that aid is highly effective and investment in the future of the American economy.

– ­Martin Drake

Source: Financial Times, Federation of American Scientists, The Borgen Project, Foreign Policy Association
Photo: Bay City Times