The Rise and fall of Japanese Miracle History Essay

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The Rise and fall of Japanese Miracle
Introduction
The economic miracle of Japan was the tremendous economic growth in two decades that happened between the post-World War II period and the Cold War era. Japan became the world’s economic superpower second to the USA before its experienced demographic stagnation with no expanding workforce despite high per-worker productivity. The economic Miracle arose in Japan as a result of the benefits of Post-World War II Japan and West Germany from the Cold War. The rise in the economy happened due to the economic interventions of the Japanese government and aid from the USA Marshall Plan. The latter expansion of the USA in Japan was to slow the expansion of the Soviet influence in the Pacific and to resolve the risk of developing a feud with the Japanese citizens who would turn to the communism after the nuclear bombing of Hiroshima and Nagasaki. Thus, the miracle economic rise in Japan featured cooperation of manufacturers, distributors, suppliers and the banks that worked together in coupled with the powerful enterprise unions with the help of government bureaucrats and guaranteed lifetime employment.
The Rapid Economic Miracle Growth of Japan
The downturn and the devastated Japanese economy rose quickly after the WWII, and by 1956 the real per capita GDP had overtaken the pre-war GDP of the 1940s. The recovery period between 1945 and1956 ensured an annual growth rate of GDP at 7.1 percent before the rapid growth era. Japan began to re-image its relationship with the West at a speed exceeding the pre-war relationships it had achieved before the WWII. The tremendous rise in economic growth enabled Japan to achieve 98 percent GDP per capita of Britain and 69 percent of the USA. Such climax of economic growth happened in 1973 before the famous bubble economy where the GDP per capita was 120 percent (Rosovsky 10).
The significant increase of the Japanese economy in post-WWII and the Cold War era of 1945 to 1993 happened in four stages. The recovery that occurred from 1946 to 1954, the high increase of 195 to 1972, the steady increase from 1972 to 1992 and the low increase from 1992 to date. Irrespective of the economic downturn after the nuclear bombing of Hiroshima and Nagasaki, Japan strived to become an economic superpower after the USA as in the 1960s (Rosovsky 10). Nevertheless, the nation began experiencing an economic recession in its growth after two decades due to the USA sanctions regarding the economic protection policy to oppress the production of Japan as well as to block the appreciation of the Japanese yen. However, Japan managed to improve on its technological advancement to raise the value of its currency to avoid the risks of depression that would affect its trade affairs. The increased performance of yen as the Japanese currency ensured the significant economic recession in the 1980s could help with the alleviation of the influences of recession as Japan imposed various economic and financial policies to stimulate its domestic demands. Separately, Japan experienced economic challenges in the 1980s and part of the 1990s due to the bubble economy that resulted in deflationary policy. The aftermath of the deflationary policy ensured that Japan experienced a low economic increase to the current date (Katz 13).
The recovery stage of 1946 to 1954 was crucial for Japan since the nation lost its resources after the WWII. Therefore, the government developed economic reforms after the WWII, especially the Inclined Production Mode that focused on the production of raw materials such as steel, cotton, and coal. The cotton production boosted the textile industry that occupied more than 23 percent of the total industrial production. Besides, the government of Japan provided incentives for the new recruitment of labor especially the female. Thus, Japan could recover from the destruction of the cotton sector. Moreover, the recruitment process captured the restriction on regional recruitment as well as the relocation of workers coupled with a ban on direct recruitment of new school leavers. On the same note, the government ensured the recruitment of non-school leavers under the regulations of the Ministry of Labor (Rosovsky 10).
Japanese rapid economic recovery also happened because of the Korean War. The war meant that the Special Procurement would favor Japan. The Korean Peninsula, where the war occurred was adjacent to the US territory, and Japan provided the logistical operations which became a problem at the time. Besides, Japan benefitted from the production of firearms during the war as the USA ordered mass firearms which stimulated the economy of Japan for the recovery (Rosovsky 10).
The high increase stage of 1954 to 1972 came after Japan gained support from USA and achievement of its domestic economic reforms. Moreover, the nation had completed all its process and was ready for industrialization becoming one of the developed nations in East Asia. The Japanese government policies of the Hayato Ikeda administration ensured high consumption and vast export of the Japanese products in the global market resulting in a high economic increase.
The government pursued the heavy industrialization policy that led to over-loaning whereby the Bank of Japan provided loans to city banks that provided loans to the industrial conglomerates. The industrial conglomerates borrowed beyond their repayment capacity, enabling the city banks to borrow more. Thus, the National Bank of Japan controlled all the dependent local banks. Moreover, the over-loaning and the relaxation of government over the anti-monopoly laws led to the emergence of the conglomerate groups that allocated resources to ensure competition at the global level. Furthermore, the conglomerates had generous lending, which developed the cross-shareholding in various sectors, resulting in horizontal and vertical integration for the foreign companies from Japanese industries. Besides, the close association of the conglomerates with the Ministry of International Trade and Industry (MITI) led to cross-placement of shares that ensured protection from foreign takeover. Thus, more than 80 percent of the finance from the Development Bank in Japan went to shipbuilding, coal, electric power and steel production (Chalmers 6).
Lastly, Ikeda Administration developed the Foreign Exchange Allocation Policy that controlled imports to prevent the flooding of Japan’s market by the foreign products. The MITI used the policy to stimulate the economy of Japan through the promotion of exports, monitoring production capacity and managing the investment. Moreover, MITI revised the Foreign Exchange Allocation Policy to promote the domestic industries as well as increasing the incentives for exports through the development of an export-link system to prevent dumping (Chalmers 6).
The vast consumption strategy ensured that Japan improved on recreation rather than survival. After the completion of the industrialization process, the Japanese people improved in their living standards with a significant increase in consumption where the consumption of urban dwellers doubled with a change in the proportions of consumption. Contrarily, the consumption of clothing, food, and footwear were reduced while the consumption of entertainment, recreation, and goods increased, especially on communication, transportation, reading, and furniture (Chalmers 6). Therefore, the high increase in consumption led to growth in GDP. Moreover, the rapid economic growth in 1955 and 1961 enabled the Japanese economic miracle to occur in the second decade. The nominal GDP was at $ 91 billion as at 1965 while it soared to $ 1.065 trillion in 1980.
Furthermore, the high rise in GDP per capita occurred due to the reallocation of the basic factors of production. Initially, the government of Japan adopted the priority allocation of financial resources to the war industries and government bonds. The massive fund-raising and allocation replaced the direct financing that supported economic development before the war. The indirect financial aid through bank savings and postal savings gave the financial foundation for rapid economic growth (Chalmers 6).
Separately, the Japanese government embraced the income-doubling plan whereby Prime Minister Ikeda lowered the interest rates and the taxes to private e...