what factors account for the postwar japanese economic miracle

Japan’s postwar economy developed from the remnants of an industrial infrastructure that suffered widespread destruction during World War II. Mikhail Gorbachev is usually associated with this movement because of his policy reform. The biggest factor that invited industrial changes after the oil crises was the increase in energy prices including crude oil. The Japanese financial recovery continued even after SCAP departed and the economic boom propelled by the Korean War abated. The Japanese Economic Yearbooks from 1967 to 1971 witnessed a significant increase. Japan has become the first power in the world in shipbuilding. After the deflationary policy, the Japanese economy has been through a time of low increase period which has lasted until today. To refine the oil, they started to develop the petrochemical industry. It thus took Japan many years to recover its prewar level. By enhancing the recruitment of female labour, Japan managed to recover from the destruction. The Ikeda administration also instituted the Foreign Exchange Allocation Policy, a system of import controls designed to prevent the flooding of Japan's markets by foreign goods. Coincidentally, the conclusion of the economic miracle coincided with the conclusion of the Cold War. This article needs additional citations for verification. Ikeda's government also expanded government investment in the previously neglected communications sector of the Japanese economy. Besides Ikeda's adherence to government intervention and regulation of the economy, his government pushed trade liberalization. There have a number of reasons that can achieve the economic miracle. 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. [11] In 1968, the yearbook said that the Japanese economy continued to make a sound growth after it had a bottom in the autumn of 1965. By the time Ikeda left office, the GNP was growing at a phenomenal rate of 13.9 percent. 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. We have seen what favourable conditions have prompted the economic boom following the American occupation. Japan recorded the most hours worked per capita of any country for much of the period from 1960s-1980s. Postwar Japan: From the Economic Miracle to the Bubble Economy. Massive aid from the United States enabled Japan to rebuild quickly after the war.b. For nearly 40 years, the country subordinated other goals in favor of catching up with—and perhaps surpassing—the U.S. economy. 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 consumption in daily necessities, such as food and clothing and footwear, was decreasing. MITI's Foreign Capital Law granted the ministry power to negotiate the price and conditions of technology imports. 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. doubt on simple, single-factor explanations of Japan's "economic miracle." Two-thirds of its prewar cotton spindles were scrapped by wartime administrators, and bombing and destruction of urban areas had caused a further loss of 20 percent of spinning and 14 percent of weaving capacity". According to Knox College Professor Mikiso Hane, the period leading up to the late 1960s saw "the greatest years of prosperity Japan had seen since the Sun Goddess shut herself up behind a stone door to protest her brother Susano-o's misbehaviour." The postwar Japanese “miracle” has lost much of its luster since the 1990s, when the economy fell into a protracted post-bubble slump. 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. After the end of World War II, Japan's economy … Although the economy was based on the American liberal system, the government boosted business by providing low interest loans to sectors designed for growth, and organized the economy to facilitate development as much as possible. In addition, due to the financial flexibility afforded by the FILP, Ikeda's government rapidly expanded government investment in Japan's infrastructure: building highways, high-speed railways, subways, airports, port facilities, and dams. For example, 83% of Japan's Development Bank's finances went toward strategic industries: shipbuilding, electric power, coal and steel production. But the Japanese economic miracle didn't owe only to having to reconstruct the country and mobilising the entirety of the war's military spending, installations and energy into business. The Japanese economy survived from the deep recession caused by a loss of the U.S. payments for military procurement and continued to make gains. The low cost of imported technology allowed for rapid industrial growth. In this way, MITI formalized cooperation between the Japanese government and private industry. Japanese military dominance gave way to ruin during WWII. Japan's experience after World War II offers the clearest possible case study. The "Plaza Accord" was an attempt to devalue the US dollar, yet harmed Japan the most. [8] One of the major economic reforms was to adopt the "Inclined Production Mode" (傾斜生産方式 keisha seisan hoshiki). [10] The Korean War was fought in territory that had been, until 1945, Chōsen (朝鮮) that Empire of Japan had annexed. Turning to the importance of individual explanatory variables, my results clearly demonstrate that convergence, albeit an important factor in post-war growth, is insufficient to account for the wide spread in growth rates across different economies. 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. 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 According to Knox CollegeProfessor Mikiso Hane, the period leading up to the late 1960s saw "the great… [14] Keiretsu proved crucial to protectionist measures that shielded Japan's sapling economy. Besides that, the internal factors triggered by government incentives and contribution by private sectors had driven Japan’s economic growth. While the Japanese stock market hit its all-time peak at the end of 1989, making a recovery later in 1990, it dropped precipitously in 1991. In 1965, Japan's nominal GDP was estimated at just over $91 billion. [17] As a result, Japan converted to a technology-concentrating program, ensuring the steady increase of its economy, and standing out beyond other capitalist countries that had been significantly wounded during the oil crises. The Ministry of International Trade and Industry (MITI) was instrumental in Japan's post-war economic recovery. In 1967, the yearbook said: the Japanese economy in 1966 thus made an advance more rapidly than previously expected. Capital as Will and Imagination investigates the nature of capital creation--a fundamental, unresolved question in the history of capitalism. At the heart of the keiretsu conglomerates' success lay city banks, which lent generously, formalizing cross-share holdings in diverse industries. The Japanese economy survived from the deep recession caused by a loss of the U.S. payments for military procurement and continued to make gains. Productivity was greatly improved through new equipment, management, and standardization. Japanese products were not barred from the U. S. market.c. By the late 1960s, Japan had risen from the ashes of World War II to achieve an astoundingly rapid and complete economic recovery. Economic miracles have occurred in the recent histories of a number of countries, often those undergoing an economic boom, or described as a tiger economy. "The particular speed, form, and consequences of Japanese economic growth," Chalmers Johnson writes, "are not intelligible without reference to the contributions of MITI" (Johnson, vii). In 1962, Kaname Akamatsu published his famous article introducing the Flying Geese Paradigm. Although heavily damaged by the nuclear bombardment in Hiroshima and Nagasaki, and other Allied air raids on Japan, Japan was able to recover from the trauma of WWII, and managed to become the second-largest economic entity of the world (after the United States) by the 1960s[4] (Soviet Union excluded). This economic miracle was the result of post-World War II Japan and West Germany benefitting from the Cold War. This gave the national Bank of Japan complete control over dependent local banks. Had the country ended the war intact, the economic "miracle" would not have happened. The demand stimulated the Japanese economy enabling it to recover quickly from the destruction of the Pacific War and provide the basis for the rapid expansion that was to follow. MITI also boosted the industrial security by untying the imports of technology from the imports of other goods. 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