Japan

Question 1

directly after WWII stats

Answer 1

13.1 million unemployed, economy and infrastructure in shambles, 3 million war dead

Question 2

rise stats

Answer 2

2nd biggest economy in the world
8/10 of the largest global banks = Jap
GDP growth rate 9.1% in late 50s, 11% in 60s

Question 3

why did it rise?

Answer 3

Japan Inc.

• -> government dedicated to promoting growth
• -> businesses with great advantages
• -> culture of workers

Question 4

government

Answer 4

political stability, with LDP as ruling party throughout (liberal democrats)

goals to have ‘rapid, export-based economic growth’ and ‘close cooperation w the US in foreign and defense policies’

• -> eg MITI Ministry of International Trade and Industry worked with the business community to guide the economic situation
• -> eg Ikeda’s Income Doubling Plan 1960 which cut taxes, increased welfare, farm prices, down income inequality
• -> Izanagi boom Nov 1965 - July 1970

Question 5

businesses

Answer 5

cheap imitation ++, where they stole ideas from other countries but also adapted and improved it

• -> Toyota Land Cruiser vs WWII Jeep
• -> mark of quality: soon Japanese automobile industry was overtaking companies like GM in their own markets
• -> electronics eg Sony Walkman

monozukiri “thing making”

• -> cheap labour
• -> first Barbie doll was made in Japan

focus on R&D
–> adaptability in oil crisis

kanban system/just in time
–> supplying parts only as and when they were needed, no need to buffer stocks

keiretsu
–> protectionism pals, insulate from stock market fluctuations and enabling LT planning due to increased stability and certainty

Question 6

culture

Answer 6

sarariman and lifetime employment

• -> great services for workers tons of loyalty to the company
• -> management solidarity through Nenko system (seniority promotions) and extensive consultation and decision by consensus
• -> contrast with militant USUK trade unions

savings rose from 16.5% of GNP to 31.9%, compared to US which was 15.8%

Question 7

however, not all were internal duh

Answer 7

favourable economic environment

• -> golden years
• -> joined GATT in 1955, IMF in 1952

US

• -> SCAP effectively wrote the first constitution, broke up the zaibatsu
• -> Japanese Marshall Plan “Japan should be allowed to export its way out of trouble, and given the tools to do so”
• -> patronage at 2billion USD, making up 60-70% of Japan’s exports

Question 8

it all changed when the fire nation attacked

aka plaza accord

Answer 8

the Plaza Accord, 1985

• -> pressure from US to strengthen the yen
• -> recession, export and GDP growth essentially halted in the first half of ‘86
• -> sizeable macroeconomic stimulus package which REALLY fricked shit up
• -> 200 yen per dollar to 135 yen per dollar in 1990

Question 9

falling stats

Answer 9

GDP growth rate reached 0.9% per year 1990-2011
compared to 4% at least before the bubble popped

overtaken by others in terms of Y: Singapore, Taiwan

Nikkei fell from 39000 in 1989 to 15000 in 1998

Unemployment doubled

Question 10

what made japan’s fall so dramatic? [govt failure]

Answer 10

failure of government

• -> government tried to stimulate growth by decreasing i/r by 3 points but easy availability of credit ended up fuelling the bubble
• -> hakomono/white elephants/roads to nowhere eg Hagi-Iwami Airport $250 million, 2 flights a day
• -> did not force inefficient banks and companies to shut down

Question 11

what made japan’s fall so dramatic? [banking crisis, business failure, political instability]

Answer 11

banking crisis

• -> Nikkei and land collapsed, banks left holding bad debt they wanted to hide
• -> liquidity crisis
• -> slow, inefficient, tangled web of corruption

failure of businesses

• -> invested in Nikkei and property instead of R&D and etc
• -> forced to drag on ‘zombie firms’ in their keiretsu
• -> rise of digital revolution
• -> unable to borrow to invest due to liquidity crisis

political instability
–> 7 different PMs in the 1990s