Economic Development of Japan after World War II - Essay Example

Japan after the Second World War Japan is among the world’s largest economies. The country enjoys a rapidly growing economy with various multinational companies setting up in the country. Japan constitutes a substantial market that offers lucrative opportunity to the various multinational companies. However, the country was among the few countries that suffered the brunt of the Second World War. The atomic bombs that hit Japan’s cities of Hiroshima and Nagasaki did not just leave rubbles but also typified the effect of the war in the country. After the war, Japan experienced a rapid economic boom commonly known as the Japanese post war economic miracle. The country’s economy expanded rapidly owing to the effective economic and foreign relation policies the government formulated and implemented within the period as the discussion below portrays. Soon after the war, the Japanese government implemented effective foreign relation policies, which enhanced the country’s interaction with various countries. Key among the countries was the United States. The expenses of the war threatened to cripple the economy of Japan. The post war inflation coupled with its inherent unemployment threatened the stability of the country. However, the United States formed friendly ties with the country by setting base in the country with the view to maintaining the spreading influence of the Soviet Union. Under the Supreme Commander of the Allied Powers (SCAP), the United States set up auspices and maintained intensive economic engagement with the government thus sustaining the liquidity of the economy. Such measures helped mitigate against the undesirable effects of the war such as the rising unemployment and the post war inflation. The Korean military maintained hostilities with Japan especially over the Korean peninsula. The hostilities threatened to plunge the country back into war. As such, the United State provided the country with colossal amounts of money to help it restock and reinforce its military thus protect its borders from the Korean aggression. The money revamped economic activity in the country as the country made large-scale purchase of military equipment from both local and foreign companies. Such government spending enhanced the liquidity of the economy thus cushioning the country from the post war inflation. The friendship between Japan and the United States heightened thus resulting with the United States facilitating the inclusion of Japan into the GATT though as a temporary member. The inclusion in the elite association set Japan in a different league and enhanced its relationship with numerous other western countries such as Britain, Germany and France among others. Another equally important contributor to the post war economic boom in Japan was the high productivity experienced in the country even after the war. Before the war, the Economy of Japan had begun growing. Productivity heightened in the country with various automation technologies enhancing productivity in the country. Fortunately, the high productivity persisted even after the war. The agricultural sector experienced a boom owing to the mechanization of the sector. The use of fertilizers, tractors, combined harvesters, pesticides and high yield crops were among the factors that enhanced the high productivity in the agricultural sector. The boom in the sector safeguarded the country’s food security besides heightening economic activities. Japan’s large and homogeneous population offered market for the products “the Japanese population has remained remarkably homogeneous over the centuries” (Borthwick, 9). The heightened economic activities enhanced the growth and creation of new sectors. Such sectors as aviation became vital in enhancing trade among countries. Aviation and mass communication became vital in the economic boom. Such sectors created new opportunities for the population. The Japanese government continued to encourage foreign investment in the country a feature that enhanced international trade. The cordial relationship the country enjoyed with the United States among other large western economies enhanced the growth of the aviation industry among many others all of which contributed to the growth of the country’s economy after the war. Japan’s economy continued to grow even after the American Supreme Commander of the Allied Powers (SCAP) program had left the country. This portrayed the extent of the efforts by the Japanese government to foster the economic growth. The Japanese government sought to create a conducive environment that sustained the economic growth. The government stimulated the growth of the private sector. The government formulated and implemented policies that liberated the Japan’s market economy thus creating a conducive playing ground for the private sector. The private sector expanded thus creating new jobs for the discerning youths a feature that overturned the anticipated post war inflation and unemployment. The government instituted effective taxation laws that enabled the growth of the private sector. The competition arising from the operation of the numerous companies pacified any form of irrational price increase. Additionally, the Japanese government formulated policies that protected the industry players and the economy from various financial crises. The government later concentrated on expanding trade thus creating a conducive environment for international trade as Japan bean exporting and importing specific products. Such factors fostered the economic boom especially after the world war that destroyed the country’s economy. However, the country’s economy began stagnating and remained lower than many other emerging economies globally. The economy realized limited growth as from the 1970s and stagnated for several decades to follow. Currently, Japan’s economy continues to stagnate as new leading economies continue to emerge even from the region. China for example is among the economies in the region that continue to grow and have successfully overpowered the Japanese economy. The stagnation arose from specific factors and economic predicament that the country took long to recover from thus having long lasting effects. Key among the economic crises was the Bretton Woods system in 1971. The system had provided Japan with a reliable financial backup since the country would borrow immense amounts of money, which it used in sustaining its economic growth. The collapse of the system therefore left the country vulnerable to the various economic shocks. The oil crisis in 1973 was yet another fundamental factor that sled the rapidly developing economy. The economy of Japan relied on oil, which supplanted coal in numerous machineries in the country. The oil crisis resulted in the unprecedented rise in the cost of oil, which was often characterized by the scarcity of the products. This resulted in the closure of numerous companies that operated on oil “the oil crisis caused increase in the prices of products in the country coupled with massive job loses as companies closed” (Holcombe, 288). Such factors compelled the country to undergo an undesirable economic experience that did not only stall the favorable development pattern but also had lasting effects the country has not recovered from to this day. The 1973/74 crash of the stock market was yet another undesirable economic occurrence that stalled the Japanese economy. Recovering from the economic setbacks was a daunting task that took long for the county to recover. In fact, the country continues to witness an economic stagnation owing to the effects of some of the crises above. The effects of the above crises were widespread and severe. They stalled the country’s economy and required immense capital for the country to recover. Unfortunately, Japan lacked the adequate resources and political stability to foster the regrowth of the economy. As the country strived to recover from the crises, other economies in the region were picking up. China became an economic powerhouse and a preferred investment destination for most of the multinational corporations that had previously operated in Japan. As the multinational corporations fled the harsh economic factors in Japan, the country’s economy continued to stagnate. The government could not formulate more desirable policies capable of enticing both foreign and local investors to tap the market thus try to facilitate the recovery process. Works cited Borthwick, Mark. Pacific Century: The Emergence of Modern Pacific Asia. , 2014. Print. Holcombe, Charles. A History of East Asia: From the Origins of Civilization to the Twenty-First Century. Cambridge: Cambridge University Press, 2011. Print. Read More