During this time, Japan's industrial production decreased by 20%, as the supply capacity could not respond effectively to the rapid expansion of demand, and increased investments in equipment often invited unwanted results—tighter supply and higher prices of commodities. Japan's experience after World War II offers the clearest possible case study. At the heart of the keiretsu conglomerates' success lay city banks, which lent generously, formalizing cross-share holdings in diverse industries. The legislation on recruitment contains three components: the restriction placed on regional recruitment and relocation of workers, the banning of the direct recruitment of new school leavers, and the direct recruitment of non-school leavers under explicitly detailed regulations issued by the Ministry of Labour.. Japanese products were not barred from the U. S. market.c. By the 1990s, Japan's demographics began stagnating and the workforce was no longer expanding as it did in the previous decades, despite per-worker productivity remaining high. Postwar Japan's economic boom had a number of factors, including a powerful central government, favorable domestic consumption patterns, and favorable international conditions. Although the Economic Stabilization Board was already dominated by MITI, the Yoshida Governments transformed it into the Economic Deliberation Agency, a mere "think tank," in effect giving MITI full control over all Japanese imports. 3 Introduction 4-5 Impact of WWII 5 Major Problems 5-6 Occupation of Japan 6-10 From Reform to Recovery 10 The Dodge Plan in 1948 10-11 The Korean War Boom 11-12 Economic Miracle 12 Factors for Growth 12-14 Political Factors for Growth 14-16 The Road to Stable Growth 16 Conclusion 16 Endnote 17 Bibliography 18 Japan is the purest example of what has become known as a producer economic state, and many of its economic practices are now familiar. The paradigm was named this way due to Akamatsu's envisioning this pattern as geese flying in unison with Japan being an obvious leader. In explaining Japan post-war economic miracle, there is no single factor that embrace all the necessary elements in driving the economic growth. Besides Ikeda's adherence to government intervention and regulation of the economy, his government pushed trade liberalization. Chpt 38/Rise of population In which the population rose to 2.5 billion in the middle of the 20th century. , One reason for Japan's quick recovery from war trauma was the successful economic reform by the government. Textile production occupied more than 23.9% of the total industrial production. To start with, macroeconomic factors that supported Japan’s strong post-war economic recovery such as high investment ratios backed by savings mobilization, technology progress, flexible labor supply, and favorable external conditions will be reviewed. The revisionist critics correctly emphasized the role played by Japan’s government in working toward that goal, but they neglected the other two pillars of Japanese success: large companies and a well-educated workforce. The Japanese government contributed to the post-war Japanese economic miracle by stimulating private sector growth, first by instituting regulations and protectionism that effectively managed economic crises and later by concentrating on trade expansion. But what are the factors that allowed the Japanese economy to sustain its exceptional growth during the three decades from 1950 to the late 1980's ? Furthermore, Japan also completed its process toward industrialization and became one of the first developed countries in East Asia. Ikeda's Income Doubling Plan was largely a response to this growing opposition and widespread panic over liberalization, adopted to quell public protests. By 1970, Japan had overtaken all European economies, and represented over 20% of the US's GNP. The period was around 1945 to 1991. Japanese enterprises borrowed massively from banks, which drew their funds from high households savings. It occurred chiefly due to the economic interventionism of the Japanese government and partly due to the aid and assistance of the U.S. Marshall Plan. Also, the United States was able to help Japan become an economic powerhouse, with its post-war economic miracle. To refine the oil, they started to develop the petrochemical industry. The economical miracle can be divided into four stages: the recovery (1946–1954), the high increase (1955–1972), the steady increase (1972–1992), and the low increase (1992–2017).. Restrictions imposed on Japanese defense spending enabled The US decided to set up camp in Japan after World War II as an ally, … By and large, every country has experienced some degree of industrial growth in the post-war period, those countries that achieved a heavy drop in industrial output due to war damage such as Japan, West Germany and Italy, have achieved a most rapid recovery. Occupying forces (known as SCAP, or Supreme Command of the Allied Powers) and the outbreak of the Korean War led to a rapid increase in Japanese economic growth. Keiretsu had close relations with MITI and each other through the cross-placement of shares, providing protection from foreign take-overs. Productivity was greatly improved through new equipment, management, and standardization. A number of factors greatly aided Japan’s economic resurgence during the 1950s and ’60s. Primary Source. Ikeda also set up numerous allied foreign aid distribution agencies to demonstrate Japan's willingness to participate in the international order and to promote exports. The Ministry coordinated various industries, including the emerging keiretsu, toward a specific end, usually toward the intersection of national production goals and private economic interests. It postulated that Asian nations will catch up with the West as a part of a regional hierarchy where the production of commodity goods would continuously move from the more advanced countries to the less advanced ones. MITI's Foreign Capital Law granted the ministry power to negotiate the price and conditions of technology imports. The economy of Japan, with its high rates of growth, exemplary productivity levels, overall stability, and resilience in the face of financial and other crises, has been one of the wonders of the postwar world. The distinguishing characteristics of the Japanese economy during the "economic miracle" years included: the cooperation of manufacturers, suppliers, distributors, and banks in close-knit groups called keiretsu; the powerful enterprise unions and shuntō; good relations with government bureaucrats, and the guarantee of lifetime employment (shūshin koyō) in big corporations and highly unionized blue-collar factories. The Ministry of International Trade and Industry (MITI) was instrumental in Japan's post-war economic recovery. During the war, Japan's maritime transport was cut off by the Allied powers, and it had been difficult to obtain raw materials. Contrastingly, the consumption in recreational, entertainment activities and goods increased, including furniture, transportation, communications, and reading. He moved toward liberalization of trade only after securing a protected market through internal regulations that favored Japanese products and firms. The first decade of this high economic growth was a period of recovery from the economic dislocations brought about by Japan's defeat in World War II. After the oil crises, to save costs, Japan had to produce products in a more environmentally friendly manner, and with less oil consumption. After WWII, Japan’s economy continued growing partly due to measures laid down by the government and also due to financial aid from the US. Despite being seriously impacted by the two oil crises, Japan was able to withstand the impact and managed to transfer from a product-concentrating to a technology-concentrating production form. Japan's postwar economic growth “miracle” is often cited as clear evidence of the virtues of the “East Asian model,” an ambitious growth blueprint that entails considerable state-intervention in the economy. Using a variant of this type of decomposition that takes into account improvements in the quality of capital and labor, estimates of scale economies and adjustments for structural change (shifting labor out of agriculture helps explain why total factor productivity grows), Denison and Chung (1976) generate a useful set of estimates for Japan’s Miracle Growth era. doubt on simple, single-factor explanations of Japan's "economic miracle." The yen was intentionally set to a very low rate in the 1950's, and was worth 3x to 4x more in 1980's. The Japanese Economic Yearbooks from 1967 to 1971 witnessed a significant increase. Japanese post-war economic miracle This article has multiple issues. In 1967, the yearbook said: the Japanese economy in 1966 thus made an advance more rapidly than previously expected. Many factors contribute to economic growth, and although some reasons ar… 1-6, 25-49. After the end of World War II, Japan's economy …  Moreover, the proportions of consumption in Japan was also changing. Another factor was the friction between the United States and Japan, as Japan's rapid economic growth could potentially harm the economic interests of the United States. For nearly 40 years, the country subordinated other goals in favor of catching up with—and perhaps surpassing—the U.S. economy. Authors; Authors and affiliations; John Marangos; Chapter. But whereas West Germany's GNP increased 28.5x between 1951 and 1980 - compared to 18.7x for France, 12.7x for Britain and only 8x for the USA, Japan's increased 73x ! 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The creation of these agencies not only acted as a small concession to international organizations, but also dissipated some public fears about liberalization of trade. After gaining support from the United States and achieving domestic economic reform, Japan was able to soar from the 1950s to the 1970s. Approximately only two-thirds of the shares of a given company were traded, cushioning keiretsu against market fluctuations and allowing keiretsu managers to plan for the long-term and maximize market shares instead of focusing on short-term profits. Japan's post-war generation who were born into the hardships that followed WWII have an incredible work ethic. `` Japanese economic miracle. a fundamental, unresolved question in the postwar era when you talk about `` Trente! To achieve an astoundingly rapid and complete economic recovery the influence of the US,... The cost of production also soared the World, earning the title of `` economic! 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