Lecture 3 - Economic Transformation and the Role of Political Will Flashcards
Define Industrialisation
Industrialisation refers to the process by which an economy shifts from agrarian production to industrial and manufacturing outputs
Give some historic examples of industrialization
1- Britain’s Industrial Revolution (1760-1840): The world’s first industrialisation case driven by innovation, coal, and textile manufacturing
2- Japan’s Meiji restoration (1868-1912): A radical transformation where Japan shifted from a feudal society to a modern industrial economy
What are the 3 steps of industrialization?
1- Technological progress: Industrialization requires technological innovation (eg. Steam engines, mechanized looms). Japan adopted western technologies such as railways and telegraph systems
2- Capital accumulation: Investment in machinery, factories and infrastructure. Japan’s government played an active role in funding initial industrial projects
3- Timing: Early adopters of industrialization gained competitive advantages. Japan successfully industrialized later but quickly caught up by learning from western economies
What are some economic theories of industrialization?
1- Malthusian Trap
2- Solow Growth Model
3- Structural Transformation
What is the Malthusian Trap?
Pre-industrial economies often experienced stagnation due to population growth cancelling out productivity gains. Japan broke out of this trap by rapidly industrializing and increasing per capita GDP
What is the Solow Growth Model?
The Solow Growth Model states that Capital accumulation and technological advancement are key drivers of sustained economic growth. Japan’s modernization after 1868 exemplified this as they enhanced infrastructure and capital investments
What is structural transformation?
Structural Transformation occurs when Industrialization leads to a decline in the agricultural sector’s share of GDP while industry and services expand. Japan’s transformation from an agricultural economy to a manufacturing powerhouse reflected this shift
What are some common drawbacks of Industrialization?
1- Over-reliance on agriculture: Many countries struggle to shift from agrarian economies lacking diversification in industry. Japan reduced its reliance on agriculture through a national strategy for industrial development
2- Weak institutions: Corruption, poor governance and lack of property rights hinder industrial growth. Japan’s new governance under Emperor Meiji created stable institutions and legal reforms supporting industrialization
3- Debt and dependency: Many developing nations rely heavily on foreign loans and aid, which can stifle independent industrial development. Japan avoided this by pursuing self-funded industrialization with state-led initiatives
Explain Japan’s Meiji Reforms
- Pre 1868 Japan: Feudal, isolated, primarily agricultural and technologically backward
- Meiji restoration (1868): Emperor Mutsuhito (Meiji emperor) became the symbolic figurehead of Japan’s transition to modernity despite limited economic understanding. The key political leaders, the Meiji oligarchs drove the reforms
What were the 3 key goals of the Meiji Leadership?
1- Modernize the military to strengthen national defense
2- Adopt western technology to accelerate economic development
3- Reform institutions to create a centralized modern state
How did the Meiji Leadership bring about economic transformation? (6 policies)
1- State-led Industrialization: The Japanese government played a central role in promoting industrialization through state-owned enterprises (SOEs) and infrastructure development. Strategic sectors like shipbuilding, textiles and armaments received direct state investment
2- Zaibatsu and Private sector: The government supported the formation of Zaibatsu (powerful family-owned conglomerates) to drive industrial growth. Early zaibatsu included Mitsubishi which became industrial giants
3- Land and Tax reforms: Introduction of the Land Tax Reform (1873) which provided the government with reliable revenues by taxing landowners. This revenue was crucial for funding infrastructure projects such as railroads and modern factories
4- Education Reform: Universal education was introduced to build a skilled labour force necessary for industrialization. Technical schools and universities were established to train engineers and industrial managers
5- Military Modernization: A modern conscript army was developed replacing the traditional samurai system. Military power combined with economic growth enabled Japan to emerge as a regional power, evident in victories over China (1895) and Russia (1905)
6- Political Centralization: A new constitution was enacted in 1889, centralising political power under the emperor, which helped enforce a national vision for economic transformation
Explain the role of political will in Meiji Japan’s Success
Leadership and Vision: The Meiji oligarchs demonstrated strong political will, setting a clear national agenda for modernization and industrialization
Adaptation of Western Ideas: Political leaders selectively adopted Western practices in technology, law and governance without compromising Japan’s cultural identity
Rapid, Decisive Reforms: The speed at which the government enacted reforms from education to military to industry was critical in transforming Japan into a global power
What are some reasons as to why not all countries can industrialize?
- Lack of political will: Without strong leadership, countries often fail to set a clear industrialization strategy
- Institutional weakness: Corruption and lack of rule of law hinder efforts to industrialize
- Resource curse: Countries rich in natural resources often face stagnation as they rely heavily on resource exports rather than diversifying into manufacturing
- Global market dependence: Some countries are unable to industrialize due to external pressures, including debt dependency and exploitation by foreign powers
