The Japanese economic miracle is so termed because of Japan’s phenomenal economic growth rates after World War 2, from 1950s to early 1990s, where in the 1950s to 1970s, Japan achieved one of the highest economic growth rates in the world. Although ravaged by the war, Japan’s gross national product returned to its pre-war levels in just six years, 1951, and within two decades, Japan progressed from a ‘less-developed country’ to a ‘developed’ one. The economic miracle can be attributed to American input brought about by its security requirements; but it would not be the main driver of Japan’s growth, because its impact on Japan’s economy decreased over the years. The reason why Japan manage to undergo sustained growth over the few decades, would then be due to the effectiveness of the Japanese government, who had the ability to direct the trajectory of economic growth through the policies it implements.
The Japanese economic miracle is certainly partly attributed to American security requirements, because it can be seen as a catalyst that ignited growth. The global context during Japan’s phenomenal revival was the Cold War rivalry between USA and USSR, and thus USA had lots of security requirements globally in a bid to contain communism and safeguard themselves and their allies. Japan benefitted from USA’s security requirements, because both countries’ rivalry turned from Europe to Asia at the start of 1950s, and Japan was precisely located in Asia. In a bid to defend its perimeter against USSR, USA treated Japan as a forward base, and stationed more than a few hundred thousand troops there. Undoubtedly, this played a part in driving the economic growth, because because the soldiers spent and increased consumption levels, thereby bringing much needed business to the Japanese firms. Furthermore, because of the need to defend its perimeter of influence, USA signed military treaties with Japan in 1951 and 1960, such that USA undertook the defence of Japan and that Japan was placed under the nuclear umbrella. This arrangement increased investors’ confidence of stability, and thus brought more investments from countries like USA, and also freed Japan the burden of spending on military expenses, which enabled resources to be used for economic growth instead. Thus USA’s security requirements in the need to defend Japan certainly had some part to play in the forming of the Japanese economic miracle.
On top of fortifying Japan, USA’s security requirements in the context of Cold War meant that USA did not want Japan to turn to communism, which sounded rather attractive, but instead follow the American ideology. Therefore, USA did not want a poor country, but instead a strong and wealthy one, and they believed that encouraging economic recovery would help achieve it. To accomplish such an aim, USA pursued a series of policies. By the end of 1940s, USA abandoned reparation requirements, and this removed damaging claims on the Japan budget that discouraged domestic savings, investments and entrepreneurial activities. The Dodge Plan was adopted, and this helped balanced the Japanese government’s budget, which then helped to end inflation. There were also agricultural reforms and industrial restructuring, whereby landlordism was eradicated and mechanisation introduced, and American management and production experts were employed to help teach the most advanced methods of assembly-line and production techniques. USA even opened their domestic markets to Japanese goods, while allowing Japan to adopt protectionist policies targeted imports. With such a treatment by USA, the Japan benefited immensely, because its manufacturing output leapt by almost 50 per cent between 1950 and 1951, and by 1952, living standards were estimated to have returned to their 1941 levels. American assistance did not stop after that, but continued to pour to the point where the Japanese recovery became self-sustaining. Therefore it can be said that the...
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