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This article explores the relationship between diversification and energy security risks. It uses portfolio theory to conceptualise energy security as an insurance mechanism against disruptions to energy import markets. It provides quantitative measures of systematic and specific risks associated with Japanese energy imports during the period 1970—99. It suggests that Japan's policy of diversification of energy import sources has reduced specific risks, although fundamental changes in the political and economic structure of international energy and, in particular, oil markets have also significantly reduced systematic risks. The article concludes that, despite their limitations, portfolio measures provide a much more theoretically and methodologically robust indicator of energy import security than traditional measures of dependence.

The process of industrial adjustment or phasing out incompetitive industries is characterized by considerable conflict in all industrialized economies. The article examines the implementation of structural adjustment policy in the Japanese coal industry in comparative perspective for the period 1983-88. It points out that Japan has been able to respond to increasing price differentials and implement adjustment policy in the coal industry significantly faster than West Europe. (DÜI-Sen)