So it's back to the fearful yen again. If nine tenths of the analysts in the market are to be believed a weaker yen spells a return to gloom for the rest of Asia. What it means, they seem to say, is that the margin in pay which Japanese workers enjoy over their counterparts elsewhere in Asia will effectively be trimmed back, which means Japanese manufacturers will be more competitive, which means industrial recovery in the rest of Asia will be halted in its tracks and down we go. It just doesn't work that way, however, and here are three reasons why. The first is just the size of that gap in pay. According to the latest figures from the US Department of Labor, which keeps track of this sort of thing, the average manufacturing wage in Japan in 1997 was US$19.37 per hour. The average for Asian newly industrialised economies was $6.65 per hour and this includes South Korea, Taiwan, Hong Kong and Singapore, which are still treated as 'newly industrialised' in the US. You can take a figure of less than half that for the poorer ones. In other words, if the yen fell to 350 against the US dollar and US dollar exchange rates in the rest of Asia held firm, Japanese workers would still effectively be paid more than their other Asian counterparts. Anyone offering odds here? The second reason is that the extent by which other Asian currencies have risen against the yen over the past few days is actually very little. The accompanying chart shows it as an index of those currencies against the yen, weighted by gross domestic product, and put on an index base of January 1, 1997 equals 100. What's all this about a weak yen? The chart says that the longer-term trend against the yen has actually been down. There may have been a little blip upwards against the yen recently, but it looks just like any one of the other short-term movements over the past two years. The third reason is that there is little cause to worry anyway. Japan looks to the rest of Asia much more as a market than as competition. As the second accompanying chart shows, Asia ex Japan draws 18.5 per cent of its imports from Japan. At one point, this figure was as high as 27 per cent. Japan is the single largest source of imported goods. Who will complain if it happens that the yen weakens further and Japanese goods become cheaper as a result? It won't hurt the rest of us. It will help us. Of course a weaker yen may also mean that exporters from the rest of Asia will find it difficult to exploit markets in Japan against domestic competition. But so what? Less than 12 per cent of Asia ex Japan's exports go to Japan. The US, with a 26 per cent share, and even Europe, with a 16 per cent share, are more important markets. In addition, much of the exports to Japan consist of natural-resource goods such as Indonesian oil, Thai foodstuffs, Philippine wood products and other things for which there is no domestic source in Japan. It is all just another scare without much substance.