Japanese Ec Miracle

Topics: Japanese post-war economic miracle, Economy of Japan, Federal government of the United States Pages: 6 (1886 words) Published: February 23, 2011
The Japanese post-war economic miracle is the name given to the historical phenomenon of Japan's record period of economic growth following World War II, spurred mainly by United States investment but partly by Japanese government economic interventionism in particular through their Ministry of International Trade and Industry. The distinguishing characteristics of the Japanese economy during the "economic miracle" years included: the cooperation of manufacturers, suppliers, distributors, and banks in closely knit groups called keiretsu; the powerful enterprise unions and shuntō; cozy relations with government bureaucrats, and the guarantee of lifetime employment (shūshin koyō) in big corporations and highly unionized blue-collar factories. Since 1993, Japanese companies have begun to abandon some of these norms in an attempt to increase profitability and efficiency.Contents [hide]

American contributions

In the mid- to late-1940's, wartime expenses threatened economic ruin in Japan. Post-war inflation, unemployment and shortages in all areas seemed overwhelming. Japan’s immediate economic improvement was not achieved on its own. The American government, under the auspices of the Supreme Commander of the Allied Powers (SCAP), played a crucial role in Japan’s initial economic recovery, although Japanese government measures fostered rapid postwar growth. SCAP officials believed economic development could not only democratize Japan but also prevent the reemergence of militarism, and forfend communism in Japan.[citation needed] Military hostilities in the Korean peninsula further boosted the economy in 1950 because the U.S. government paid the Japanese government large sums for "special procurement." These payments amounted to 27% of Japan’s total export trade.[1][citation needed] The United States also insisted that Japan be admitted to GATT as a "temporary member" – over British opposition. During the Korean War, SCAP departed and full sovereignty was returned to the government of Japan.[citation needed] [edit]

Governmental contributions

The Japanese financial recovery continued even after SCAP departed and the economic boom propelled by the Korean War abated. Japan’s economy survived the deep recession caused by a loss of the U.S. payments for military procurement and continued to make gains. By the late 1960s, Japan had risen from the ashes of World War II to achieve an astoundingly rapid and complete economic recovery. According to 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 misbehavior." The Japanese government contributed to the post-war Japanese economic miracle by stimulating private sector growth,[citation needed] first by instituting regulations and protectionism that effectively managed economic crises and later by concentrating on trade expansion.[citation needed] [edit]

Ministry of International Trade and Industry role
Main article: Ministry of International Trade and Industry

The Ministry of International Trade and Industry (MITI) was instrumental in Japan's post-war economic recovery. According to some scholars, no other governmental regulation or organization had more economic impact than MITI. “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). Established in 1949, MITI’s role began with the "Policy Concerning Industrial Rationalization" (1950) that coordinated efforts by industries to counteract the effects of SCAP’s deflationary regulations. In this way, MITI formalized cooperation between the Japanese government and private industry. The extent of the policy was such that if MITI wished to “double steel production, the neo-zaibatsu already has the capital, the construction assets, the makers of...
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