Japans Rise Flashcards
Reasons for the Japanese Miracle
A. Role of the USA
B. Govt. Intervention
C. Keiretsu system
D. Socio - economic change
E. International developments
Role of US in Japan: Revere Course Plan (1948)
Focus on strengthening Japan:
Retained parts of the wartime structures
Breaking of Zaibatsus scaled down
Grip on trade unions tightened
Dodge Plan 1949; Austerity policy to stave off inflation and fixed the Yen to the USD (360¥-$1)
Role of US in Japan: Economic Reforms
Agricultural; Landlordism was eradicated, rice price reform to safeguard farmers income
Industrial: Reversal of plans to break up Zaibatsus -> Led to creation of Keirestus
Role of USA in Japan: Social Capacity
Educational reforms: made schooling more available; enhancing the Japanese workforce
Land reforms: Landowners forced to sell surplus to the government which was redistributed led to 92% farmers owning their own land -> double digit annual growth in agricultural
Role of USA in Japan: Military protection
1952 US Japan Security Treaty and 1960 Treaty of Mutual Cooperation and Security
Allowed Japan much lower spending on security and Defense, only 1-2%
Role of USA in Japan: Trade and Tech *
- Japans post war recovery depended heavily on USA trade; 65% of X and 85% of M from USA
- USA gave Japan extremely favourable TOT; gave access to US markets while tolerating Japanese protectionism -> contributed to Japans trade surplus
- American companies also encouraged to licence technology to Japanese companies, allowed Japanese to leapfrog in several industries, aiding its industrialisation process, 2000 contracts signed for technical cooperation, 2/3 American
Role of USA in Japan: KW
- Special procurements system: allowed US army to buy supplies locally in Japan; $3.5 billion
- Greatly benefitted companies like Toyota for its trucks and financed expansion into cars.
- Investment began into Zaibatsus: Mitsui and Mitsubishi. Led to boost in production, 114% in 1951
- Intense demand and production laid foundations for high growth by boosting basic industries, manufacturing twice that of post war level
Role of MITI: Promotion of key industries
- Created broad framework for industrial policy in the form of an economic plan
- Identified Key industries for future growth:
+Restructured economy towards capital intensive, high tech production, able to catch-up w others
+Earmarked expected growth areas with largest sustained returns and allocate resources to them
+ Gave cheap loans to these companies and borrowing below market rates - By 1975 three growth industries (steel, shipping, automobiles) constituted a 1/3 of manufacturing and 40% all exports
Role of MITI: Protectionism of key industries
Import restrictions against European cars to protect new industries like Toyota and Nissan
Import controls on technology; could only reach Japan markets by licensing to Jap firms
Encouraged the formation of cartels of domestic firms, lowing for high profits and more growth
Role of MITI: Economic Liberalisation plans
1955 Self Support Five year plan; to achieve self sufficiency, boosted Govt spending on infrastructure, and encouraged cooperation between Govt and firms
1957 plan; sustain and accelerate Japans growth, used Govt policies to stimulate various sectors of the economy and cooperation between business and Govt.
1961 Income doubling plan; goals set to more than double GNP and achieve full employment whilst addressing equity, based on 3 pillars of tax cuts, social security and public investment
1968 Plan for economic structure improvement; contributed to modernisation and diversification of Japans economy, transition from industrial to knowledge based economy.
Role of MITI: Flexibility in meeting challenges
1950s: Japan CA was in low labour costs hence produced labour intensive manufactured goods
1960s: recognises loss of this CA and hence shifting resources to capital intensive sector
1970s: Due to Oil Crisis, changed to highly skilled technical workforce and redirected resources to technological intensive sector
Keirestu System
Large interconnected business groups
Large focus on info sharing and R&D, and placed substantial resources on maintaining edge
Kanban / JIT system to produce and purchase only amounts required and boosted efficiency of these firms
Socio-Economic reasons for the rise of Japan
Life time employment - Resulted in a very low unemployment rate as workers would be employed for life and raised the productivity of firms
Seniority pay - Pay based off length of stay and cultivated loyalty and minimised disruptions
Enterprise Unions - Close consultation between labour and capital, more harmonious r/s
Domestic consumption - Domestic consumers fuelled 90% of all industrial production
