Japan Stats Flashcards

1
Q

Stats for US post-war governance

A

Supreme Commander of Allied Powers (SCAP)
Reforms and optimise economics
Dodge Plan 1949 control inflation, fix low yen-dollar rate
Cheap exports - P competitive, can import raw materials and tech

92% owned land after Land reforms
2 billion injected into Japan economy

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2
Q

US favourable trading terms

A

Free trade access to US markets - Japan no arable land - depend on imported FOP

Good: 65% of exports and 85% of imports
closed technological gap by 1960 with over 2000 contracts for US patented tech and infrastructure
1968 trade surplus

Bad:
1981 Voluntary Export Restrictions (VER) on Japanese Cars max 1.68 million cars imported
1987 retaliation 100% tariffs on over $300 million worth of Japanese exports

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3
Q

International developments

A

Special Procurements during Korean War
No need to involve Pentagon to buy Japanese products

Good:
Korean War Vietnam War: Special procurements 3billion (Marshall Aid equivalent) 27% of Japanese exports
Toyota profits from military trucks expand into consumer cars
9% growth per annum
GDP increased up to Britain+France (13% of world)

Bad:
Plaza 1985 and Louvre 1987 accords apreciate yen loss of comparative advantage
Oil shocks 73 - GNP decrease 1.4% - first negative since post-war
Oil shocks 79 - GDP down 0.4% but mitigated by MITI
Opening up - protected economies could not compete

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4
Q

Keiretsus

A

Large interconnected
Manufacture and non-manufacturing companies
Synergy > rapid advancements
Adapted and improved on tech quickly

Kanban system - as and when needed - cut cost, efficient - 33% faster with 27% less defects
Stability and long term focus: can overlook short term losses/costs for the bigger picture
1949-1963: 2000 contracts for patented processes (70% from US)
1960s sticking to self-sufficiency - dominated global market in 1980s

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5
Q

MITI

A

Ministry of international trade and industry
Knack of identifying growth areas
Bold move towards industry and capital instead of CA of cheap labour
Allocate resources to growth areas to promote rapid growth through discounted credit rates and tax deduction to stimulate entry into growth areas

Good: MITI identify growth industries - BOJ credit rates 2% lower than market rate
dollar value of exports up 25x
10% GDP growth rate
most efficient car and shipmakers by 1970
70% of all tv and radio production in 1976
1980: 50% of market share of semiconductors

Bad:
inefficiency in later stages - took decades to shut down steel plants due to pressure from voting leverage

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6
Q

Plaza and Lourve Accord, Nixon shocks

A

Plaza Accord and Louvre Accord :
appreciation of yen > loss of export competitiveness > search for international opportunities > 6 billion in 1984 to 44 biilion by 1990

Nixon shocks and oil crisis:
Japan heavily dependent on cheap imported oil - 1.4% decrease in GNP (first since end of WW2)
But MITI intense restructuring towards information industry subsidise R&D
0.4% decrease in GDP only for 2nd crisis, by 1976 70% of all TV and radio made in Japan
1980s Japan surpass US in semiconductor and consumer electronics

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7
Q

US trade deficit

A

Persistent deficit against Japan sustained up till 1980s politically unacceptable > US deficit greater year after year > started with 1960 Japan “one dollar blouse” > prompted protectionism against TV, steel
1981 Reagan administration VER for max quota of 1.6 million Japanese cars imported annually
US 1987 100% tariffs on $300million worth of Japanese product after Japan reacted minimally to requests to open markets

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8
Q

Government mismanagement

A

Value of yen appreciated greatly in the 70s - assets in yen became more lucrative + worsened by stimulated domestic demand after Plaza Accord 1985 where the MOF increased money supply and reduced interest rates to 2.5% to raise demand
Paired with increasing financial liberalisation, domestic banks lost their monopoly on credit, making them more willing to lend meet competition of foreign banks. People then channeled borrowed funds into assets like stocks and property, causing a surge in price (300% in Tokyo) and formation of an asset bubble. Japanese land was overvalued by 1990 (up to 50% greater value than all land globally). Bubble finally burst when BOJ increased interest rates up to 6% in 1989 and property prices value dropped by over 50%
Many lost money and could not pay loans

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9
Q

Why floating exchange rate bad for JP

A

JP esp vulnerable as it was
1. Lone floater
2. Trade and finance and bonds in USD
3. Industries low exr pass-through and high domestic value-added contents - when yen overvalued, JP output and investments stagnate, suppress wage and prices, creating financial strain

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10
Q

Protectionism

A

MITI aggressive import restrictions on Eu cars during 1950s to protect Toyota, Nissan (domestic companies)
1960s import controls on US technology > can only remain in Japanese markets by licensing patents to Jap firms and joint ventures.

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11
Q

Iron Triangle

A

Close symbiotic relationship between business and government
Industrial policies have preferential treatment in lending
Mutually beneficial - business leaders earn profit and politicians earned support that came with prosperity
Allowed firms to take short-term costs
Administrative guidance for price-setting agreements eg construction firms bought cement exclusively from domestic cartels

Stats:
One of biggest producer of ships, cameras, TVs, cars by 1960s
Aggressive transition to semiconductors > 1980s dominance by NEC and Fujitsu

CA: Later bred inefficiency and misallocation into unproductive industries
Protected sunset industries to please businessmen who exploited personal r/s and donations
Kept protective price setting from 60s to 1984: even though JP steel lost P competitiveness by 70s, automakers still forced to accept high steel prices

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12
Q

Japan leaders

A

Supportive leadership
- [H] PMs overwhelmingly focused national efforts on econ development, limiting defense to less than 1% of GNP

(1) Shigeru Yoshida (1948-54)
- [H] Emphasised econ recovery and reliance on US for military protection at the expense of independence in foreign affairs
-> [H] Yoshida Doctrine: (1) Econ rehabilitation as national goal, (2) Lightly armed, minimise involvement in intl issues, (3) Provide bases for US military

(2) Ikeda Hayato (1960-4)
- [H] Income Doubling Plan + Politics of patience and reconciliation: Emphasised econ dev of JP while minimising societal conflict
- [H] GNP first ideology: (1) Growth at all costs, (2) Goal of 7.8% annual growth from 1961-70, (3) Lowered i/r and taxes to private players to motivate spending
=> [I] Achieved phenomenal GNP growth rates of 10.4% per annum from 60s, overtaking FR, UK and DE
=> [I] Real national income actually tripled by late 60s

(3) Eisaku Sato (1964-72)
- [H] Built on same principles as Hayato and Yoshida

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