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Japan's Post War Economic Boom

Page history last edited by PBworks 15 years, 5 months ago

 

 Japan's Post War Economic Boom

 

 

 

 

The post world war two period in Japan is referred to as the 'Japanese post-war economic miracle'. This is the period from 1945 to around 1990 where Japan experienced massive growth, with a record period of economic growth.

 

After World War II, Japan was left under the control of the American government, and their first aim was to to guide Japan away from communism and toward democracy. Officials believed that economic development was the tool with which they could guide Japan away from communism and the re-emergence of militarism.

 

 - Coincidentally one of the initial pushes towards the boom came from the start of the Korean war, and the US paid Japan for military goods and services. Between 1951-53 approximately 60% of all Japanese exports went toward supporting the Korean war. Large companies within Japan made profits for the first time since the end of the war and Japan's GDP soared like never before.

 

 

 - Two of the Japanese government's main aims were economic self sufficiency and to achieve full employment. Therefore, the private sector was stimulated for growth. The government therefore put strict restrictions on imports to encourage self-sufficiency. Also, large investment was put into heavy industry which provided employment. 

 

 - MITI - Ministry of International Trade and Industry was seen as instrumental in Japan's economic growth after the war. MITI made specific goals, focusing on national production goals and private economic interests. The MITI was given the power to regulate all imports. MITI made the important decision to exempt the importation of technology from the importation of other goods. The low cost of imported technology was key, and was at a time when it allowed Japan to avoid some of the trial and error processes other countries had been through. The low cost of the imported technology allowed for rapid industrial growth.

 

 - MITI also established the Japan Development Bank - providing low-cost captial for long term growth, including the FILP plan (Fiscal Investment and Loan Plan), which was a massive pooling of savings availiable as loans to the private sector. This led to many construction firms forming in Japan at that time. These contruction firms were key in the economic sucess which Japan had as it allowed production to increase massively.

 

 -  Individuals working in big corporations and highly unionised blue-colar factories had the guarantee of lifetime employment.

 

 - Manufactured an artificially low and stable interest rate to stimulate venture capital. This was done by the Bank of Japan who purposely set about a process of over-loaning, which allowed the bank complete control over the financial situation of the country. Taxes were also set low to motivate spending.

 

 - Over-loaning combined with government relaxation of laws on property and land, along with the group mentality in Japan led conglomerate groups forming (Keiretsu). These groups were large, modern industrial enterprise groups, where all activities were co-ordinated within the group. The co-operation of manufacturers, supppliers, distributers and banks was included in these groups. They enhanced the industrial efficiency of Japan and led to larger profit margins. The Keiretsu allowed Japan to start becoming internationally competitive, while at the same time through their strong ties, protected Japanese industries from foreign take-overs. 

 

 - In 1965 for the first time in two decades, Japanese exports exceeded imports.

 

 - The Keiretsu and governmental policies proved instrumental in controlling the Japanese imports and stopping them flooding the market. In 1960, the economy opened itself to international competition for the first time since the war, and even though it was still controlled in many respects, many industries prospered.

 

  - The massive movement toward production was the key governmental policy, as it increased employment. Also, population growth slowing allowed Japan to invest capital into increasing and improving standards of living.

 

 - Economic boom led to a changing economic structure;

                          1955 - 40% agriculture

                          1970 - 17% agriculture

                          1990 - 7.2% agriculture

 

 - Japan's growth rate between 1950 - 1958 = 10.9%.

   Japan's average growth rate in 1980's  = 5%, whereas US = 3.8%.

 

 - However, the economic boom did come at a high cost to the environment as polluted air, water and waste disposal became political issues in the 70's and 80's due to their neglect in the 50's.

 

 

 

 

 

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