No one country is "essential" to the health of the world economy. The USA most nearly meets the bill. Japan does not do so at all. Japan makes up less than 18 per cent of OECD GDP and just over 14 per cent of world GDP.

It is also a much more self-sufficient economy than generally realised. Japanese imports are less than eight per cent of OECD imports and only five per cent of world imports. These are WTO estimates. Other ways of compiling the figures might lead to slightly different results, but are unlikely to change orders of magnitude.

Perhaps the most important ratio is that of Japanese imports to world GDP which comes to one per cent. It is changes in this relatively modest total which could add or subtract from world demand and thus worsen a world recession or sustain a world upturn.

There is another aspect. The US punches above its weight because it is the world's most important financial centre. Wall Street movements have a powerful effect on equity prices throughout the world and thus on the whole climate of confidence and investment. This is not the case with Japan.

The problem with the Japanese economy is not that output and demand are falling, but merely that they are not rising as fast as they could and that a negative output gap is appearing. Since 1991 Japan has had a sizeable increase in its output in only one year, 1996, when GDP grew by just over five per cent. In 1998 it fell by nearly three per cent; but in nearly every other year it grew by small amounts, typically just over or just under one per cent. So the problem is not that Japan is precipitating a recession but that it is not playing its part in the present world upturn -- which may be as well for the moment, given that, according to most estimates, world output as a whole is now growing faster than productive capacity, leading to potential inflationary strains - which can be seen from the upward trend in world interest rates in almost all financial centres.

There is a broader comment to make. The western business establishment and the US political establishment have been mesmerised by Japan for too long. For many years, when Japan was simply catching up with the US economy, Japan was both demonised and admired. It was demonised because of a ridiculous fear that its rapid expansion and penetration in export markets could lead to the burial of American and European business. It was worshipped because western leaders of an authoritarian disposition preferred its managed capitalism to the uncertainties and excitements of the more market-driven Anglo-Saxon variety. These obsessions were then followed by a period of hysteria about the opposite problem -- that of a weak Japanese economy preventing the world ever seeing prosperity again.

If I were writing for a European audience I would suggest putting Japan on the back burner. The reason why I cannot say this to Americans is that the policy of successive Administrations has contributed to that country's difficulties. A durable Japanese recovery probably requires export-led growth, possibly with currency depreciation, but above all with some assurance that the yen will not be allowed to appreciate to the highs seen in the last few years. US Administrations have been too pre-occupied with a supposed threat from Japanese export competition to agree to any such concord -- the case for which has been powerfully argued by Professor Ronald McKinnon of Stanford.

The combination of exhortation to expand the economy and resistance to the currency conditions which would facilitate that expansion is reminscent of the contradictory stimuli used in torturing prisoners to obtain confessions. If I were US Treasury secretary I would stop exhorting Japan to expand but co-operate in a sensible currency concord. Which is one of many reasons why I do not occupy that position.