Postwar Japan — here defined as the period between the end of the Allied Occupation of Japan in and the death of the Showa Emperor Hirohito in — was a period of extraordinary change in Japan. Complicating the issue was the question of whether the quality of life in Japan should be compared to others countries, or held to a more perfect, and perhaps unattainable, standard.
At the height of its influence, it effectively ran much of Japanese industrial policy, funding research and directing investment Ito,p. Today Japan has the second largest economy in the world and its growth is the envy of most of the world.
After the Second World War, Japan underwent a recovery and then experienced a period of extremely high economic growth.
In fact, Japanese economy increased fifty five fold in the post war period from to Johnson,p. Because of the conception that Japan has a bureaucracy that dominates decision making, and the belief that the Ministry of International Trade and Industry MITI actually devised and directed the economic miracle.
Others were skeptical on the almost mythical power of foresight attributed to industrial policy of the MITI Okimoto, Further, some counterarguments will be discussed in this essay. The main aim of this government-controlled agency is to protect new industries from foreign competition by using various policies to drive exports.
They are and have been able to do this in particular by controlling exchange rates. The exchange rates were artificially kept low in order to encourage low-priced exports, therefore increasing demand that resulted in high industrial growth Okabe, Facilitating technology imports MITI served as an architect of industrial policy, an arbiter on industrial problems and disputes, and a regulator.
Formulating industrial policies The close relationship between MITI and Japanese industry has led to foreign trade policy in an effort to strengthen domestic manufacturing interests. MITI facilitated the early development of nearly all major industries by providing protection from import competition, technological intelligence, help in licensing foreign technology, access to foreign exchange, and assistance in mergers.
Integrate conflicting policies Furthermore, MITI was responsible not only in the areas of exports and imports but also for all domestic industries and businesses not specifically covered by other ministries in the areas of investment in plant and equipment, pollution control, energy and power, some aspects of foreign economic assistance, and consumer complaints.
This span has allowed MITI to integrate conflicting policies, such as those on pollution control and export competitiveness, to minimize damage to export industries. Discriminatory Tariffs MITI helped Japan achieve a high growth rate by selectively looking for tariffs and other industrial policies to favor particular industries.
Tariff and non-tariff barriers against foreign product, though temporary, ensure a domestic market for producers. MITI then favors cartels if competition within a particular sector becomes intense, which can be considered helpful in promotion industries to gain a comparative advantage, as the government actively determines which companies within a particular industry in their domestic market are funded by the government and are therefore finally able to compete globally.
This ensures that industrial growth in newly developing industries can increase without external influences and can develop a comparative advantage before having to compete globally e. Industrial policy faces the same knowledge problem as socialist planning: Attempts at industrial planning are likely to hinder development by promoting incorrect industries.
MITI was no exception. Moreover, the notion that industrial policy is primarily responsible for economic success in Japan is disputable.
Steel and oil—two of the many industries that have received financial support from MITI—are largely viewed as a drag on the Japanese economy. MITI actively discouraged Honda from getting into the automobile business and Sony from getting into the consumer electronics business. In the s, MITI attempted to prevent a small firm from acquiring manufacturing rights from Western Electric to produce semiconductors.
The firm persisted and was finally allowed to acquire the technology.
That firm, Sony, went on to become a highly successful consumer electronics company. MITI also attempted to prevent firms in the auto industry from entering the export market and tried to force ten firms in this industry to merge into two: Although some industries previously promoted by MITI are profitable today, that alone does not show them to be good investments.
Rigging the market process allows some companies to bid away resources that would have gone to other industries if the market had operated unencumbered Powell, Indeed, savings and investment were crucial to the growth process, and the technological innovations in the modernization of the Japanese, along with the process of catching up with the advanced nations, increased the overall capacity to which the economy could absorb the available capital Savage-Morton, n.
MITI control of the economy was important in generating growth has stimulated some provocative research on Japan, but the argument has basic problems. The Japanese economy has borne significant cost in the form of allocative inefficiency and diversion of competition into costly non-price forms.
Thus, policy failure is often shown to have occurred in the form of mistaken policies, these were further compounded by a lack of action to correct the fault, even when the course of action was decided.
This would have cost resources, led to delays and produced inefficiencies. Regardless of why the economic results were good, it could be argued that without such flawed decisions it could have been better.
However, it would appear that there were a number of factors that contributed to the high speed growth in the Japanese economy. Rapid growth was achieved on the basis of the special system and behavioral style. Therefore, it is safe to say that it was not the MITI that manufactured the high economic growth; instead it was a combination of factors that contributed to the Japanese economic miracle.
Choose Type of service.Introduction To The Japanese Economy Economics Essay. Print Reference this. Published Japan's economy is getting well improved beyond the year of s but the ration of inflation yet still illustrates a depression.
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Africa essay paper Economy in Japan Japan Economy Japan On. Boulder: Westview Press, A concise exposition of the connections between Japan’s economic power and its international responsibilities.
Katz, Richard. Japan, the System that Soured: The Rise and Fall of the Japanese Economic Miracle. Armonk, N.Y.: M. E. Sharpe, A journalist’s careful account of when and how the Japanese miracle faded. The Japanese economic miracle is so termed because of Japan’s phenomenal economic growth rates after World War 2, from s to early s, where in the s to s, 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, , and within two decades, Japan progressed from a . The post-war Japanese political scene was characterized by a domination of the Liberal Democratic Party (LDP), fights and shoving matches in the Diet (the Japanese parliament), and a debate between left-wingers proud of Japan's pacifist status and right-wingers who wanted Japan to be an economic superpower and regain its military strength.