Economic Model of Japan in Post Second World War

Question: Write about theEconomic Model of Japan in Post Second World War. Answer: Japan was the most affected country in the Second World War. Hiroshima and Nagasaki was the most devastated but whole Japan was afflicted for this war. A considerable proportionate of industrial buildings and the machineries along them were destroyed. There were huge social consequences after this war such as starvation, chaos and unemployment. More than half of the housing accommodation of Japan was demolished. The allied powers tried to heal this devastating condition. Inspite of such devastation Japan was able to regain rand reconstruct its economic condition. This only happened due to the experiences obtained by the Japan during the war and also learning, and seeking about the economic model from rest of the world. The outline of this essay is about the characteristics and features of Japans post world war economic model. In this paragraph there is an in detail description about the sufferings of the people of Japan. The prime and foremost problem was unemployment. There were 7.6 million troops, which were demobilized. So, for this cause 4 million people became unemployed in military field. Moreover, 13.5 million people from outside of Japan were dismissed from the foreign countries and over all 13.1 million people lost their jobs. There was also curtailment in food and energy. The shortage of energy occurs due to the unavailability of coal because Koreans and Chinese people who worked in the coalmines did not want to continue further. The production of rice that was also limited and thus people have to starve for their staple food. The Japanese people became horrified, as there was no source of food and energy and panicked that they would die by the year 1946. Therefore, the people themselves started to work in the agriculture field and the coalmines (Capalbo Antle ed. , 2015). Another significant issue was inflation that is increase in expenses of important things. This has mainly happened because huge resources which were allocated for military purpose was circulated due to compensation purpose, advance payment, demobilized troops and others. Moreover, huge amount of money was spent on the war. This war was solved to an extent after the implementation of the Dodge Plan in 1948. After this, there started the process of Japans economic reconstruction. General Douglas Mac. Arthur who was the supreme commander of the Allied powers launched some reform policies, which disbanded the use of military troops. Thus, there was the establishment of the constitution in Japan in 1949 in which Japan surrendered his military rights and totally depended on U.S.A for its protection (Barnhart, 2013). After the post world war there started another war that is the Cold war between USA and USSR. The war was an ideological one. U.S.A supported the Capitalism ideology and USSR supported the Communist one. USA also feared that Chinas Communist would influence Japan and for this reason, USA supported Japan for solving their economic problems. The U.S. organized commercial treaties for Japan with countries like Philippines and others. In this paragraph, there are the three measures for which the Japans economy rose into prominence. The Dodge Plan in 1948, which was initiated by Joseph Dodge who was the president of the Detroit Bank, was mainly formulated to make Japan strong and self- dependent so that it did not have to take support from USA regarding military purpose. Dodge established three measures and policies to bring back the stability of Japan and to reduce inflation in Japan. These three measures were: a balanced and moderate budget, the adjournment of new loans from the Reconstruction Finance Bank and third measure was the curtailment and abolition of state subsidies. It was becoming impossible for Japan to regenerate its economy by following these principles but at that juncture, the beginning of the Korean War accelerated the economy of Japan. The Korean War totally changed the fate of Japan. The period of the Korean War was from 1950- 1951. Due to the onset of this war 34 % of world trade increased and many countries, including Japan was benefitted due to this. Japanese business a reached its boom due to 70 percent increases in production in different business firms. USAs military attainment deluged and it ordered Japan for production of military amenities that amounted to $2 billion in the years 1951-1953. Japans economy extraordinarily reached into the highest point (Welfield, 2013). Japans gross domestic product (GDP) in the late 1950s grew and developed at an average rate of 9.1% per year. Whereas in the 1960s the average rate of GDP was over 10 percent. On the other hand, the Korean War had accelerated the innovation in technology and in equipment industry. Japan was still lagging behind in implementing this type of technology, so they imported this knowledge of technology and increased the quantity of production and its scope. Hence, the overall growth in production stimulated the economic condition of Japan from a positive aspect. Finally Japan became independent from the interference of all the Allied Powers with the signing of the Japanese- American- Security Pact Act in 1958. There are certain factors for which Japan grew so fast in terms of economy. The first factor is the powerful Central Government Bureaucracy. The Civil servants who worked in the Ministry of International Trade and Industry ( MITI) worked collaboratively with business organizations and also motivated the people of this country to progress and advance financially. There was implementation of certain industrial policies to foster new industries like automobile industry and plotted out certain schemes for the declining industries like mining. The experts in Business also concentrated on the export economy. The third important factor was the availability of new technologies, which the Japanese people applied for productions and there was no restriction regarding the accessibility of this knowledge resource (Flath ,2014) . The fourth factor is the Japans trading policy, which safeguarded the interests of the domestic market, and there was encroaching export move which enhanced the growth o f the economy (Nakamura, 2015). The fifth most important factor is sustaining Japanese politics and policymaking. Democracy did not mould Japans politics; Liberal Democrats did not change the fate of economy of Japan ( DeGrasse, 2016 ). Rather this Liberal Democrat worked along with the eminent corporate leaders and bureaucrats. The sixth factor is the Iron- Triangle which enabled Japan to make exact decisions and measures for securing the unstable condition of Japan ( Francks Francks, 2015) . Another important feature was that the military security obtained by Japan from the USA. Japans Gross National Product was boosted 73 times from 1951 to 1980. The currency rate Yen of Japan was deliberately kept subsided but it was tripled in the 1980s. There were certain important strategies for which Japan was not only able to recover itself from such a worst condition rather the nation changed its destiny after the post world war. The Japanese government upgraded the business by facilitating loans of low rates to the financial sectors and firms for the improvement in the financial condition of the country (Sugimoto, 2014).The Japanese corporate organizations rented huge amount of money from the banks and the banks fetched this money from the domiciliary savings. MITI tried to bring together all the small companies so that it forms a huge company that can challenge Toyota and Nissan (Choucri, 2013). Japan also snatched credit of founding the Sony Corporation, which has now become a multinational corporation (Lockwood, 2015). The Americans consider Japan as free-rider. The main reason behind this was America spent 5 to 6 percent. of its Gross National Product for the military purpose whereas Japan promised that its military expense would be restricted to only 1 percent. The United States of America would safeguard Japan from military aggression of outside. It is true that after the horrible consequences of this post world war Japan was able to reclaim its economic circumstance due to the combative protection from the USA. However, it does not mean that this was the only cause for Japans prosperity because the people of Japan had enough potential to bounce back the situation (Tsurumi, 2015). Furthermore, USA extended its support for Japan so that the Japanese did not support the Communist ideology (Hook Spanier, 2015). In the end, it can conclude that Japan itself has become a role model for all the countries who have faced or facing social or economic instability. The interesting factor is that USA who had ravaged the whole nation later made an alliance with Japan. This was one of the strategies of the USA to secure its position in the world politics. Japanese people were very much aware of their crisis and they themselves took the responsibility to cure the condition. The Japanese government, the bureaucrats worked earnestly for financial regeneration of the country. The Banks of Japan played a huge role in improving the overall situation of Japan. The Cold War between USA and USSR, which led to the Korean War, also stimulated the monetary explosion of Japan. From the year 1950 to 1980 Japanese companies also manufactured big Corporations which have now become world famous. Inspite of all these achievements, Japan faced critical setback in the 1990s. The period of recession began in the year 1990 and the stock market totally declined. This also occurred due to the rising competitors of four Asian tigers namely Taiwan, South Korea, Hong Kong and Singapore. Reference Barnhart, M. A. (2013).Japan prepares for total war: The search for economic security, 19191941. Cornell University Press. Capalbo, S. M., Antle, J. M. (Eds.). (2015).Agricultural productivity: measurement and explanation. Routledge. Choucri, N. (2013).Challenge of Japan Before World War II(Vol. 6). Routledge. DeGrasse, R. W. (2016).Military Expansion, Economic Decline: Impact of Military Spending on United States Economic Performance. Routledge. Flath, D. (2014).The Japanese Economy. OUP Oxford. Francks, P., Francks, P. (2015).Japanese economic development: theory and practice. 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