Factors that Led to Rapid Industrialisation of Japan - Essay Example

Factors that Led to Rapid Industrialisation of Japan 2008 Factors that Led to Rapid Industrialisation of Japan The story of Japan's industrialisation in the late 19th - early 20th century has been one of the most attractive topics for several generations of historians. A waterlocked state, Japan has been isolated from external influence up to the middle of 19th century, which resulted in a very specific society, culture, and economic set-up as compared with western states. However, despite absence of raw materials, technological and industrial backwardness as compared with European countries and the United States, and poverty of citizens Japan managed to become one of the leading economic powers in the world. The industrialisation of Japan played the main role in such striking progress made by the country on the international economic and political scene. The period of Tokugawa-Meiji transition saw Japan becoming the first Asian industrialized nation. While the consequences of rapid development of Japanese industry are obvious, there is no absolute agreement for the key factors that contributed to success of the process. Some praise the traditions and mentality of the Japanese, some believe in the key role of the foreign help, others place emphasis on well-considered governmental policy, etc. Domestic commercial activities and small-scale foreign trade satisfied the economic demand observed in Japan during the Tokugawa period. The period of Meiji rule was characterised by dramatically different requirements, and Meiji rulers employed the concept of a market economy based on the capitalist economy type established in Britain and the United States of that period - free enterprise capitalism. Such innovation in economic approaches found positive response in the private sector which also became an essential factor in successful implementation of the industrial modernization policy (Dolan & Worden, 1994). Reformation of the economic system involved introduction of a unified modern currency (yen), development and restructuring of banking system, improved commercial laws and taxation system, stock exchanges, and improvement of the communications network. Creation of a new institutional framework that would suit the capitalist system was also among the primary task of Meiji government. However, it was not until the early 1890s that this long process was completed, and by that time, the government had almost entirely ceased the practice of direct control over the process of industrialization due to increasing budget deficits due to high cost of modernization (Dolan & Worden, 1994). However, though most of these reforms have also been implemented by various European states their success - and success of the industrialisation process - differed substantially. Evidently, these template reforms had to be undertaken in a favourable environment otherwise the outcome would have hardly been successful. There were several major factors that contributed to rapid and successful industrialisation of Japan. Advanced technologies transferred to Japan from the industrialised Western states such as Britain and the United States played one of the major roles in stimulating early and rapid industrialisation of the country. The essence of that transfer of technologies was the transplantation of factory-based production systems. This approach was promoted by the Meiji government that played the key role in setting up the scene for Japan's rapid industrialisation. Import of the workshop equipped with modern machinery was the central element of Meiji's policy aimed at 'catching up with and overtaking' industrialized western states. The list of industrial sectors targeted by the Meiji government within the framework of its industrialisation policy was large and included not only defence-related (shipbuilding and others), but also a variety of civil industries that produced different goods and products for both the local and overseas market (silk-reeling, cement, glass, cotton spinning, etc). The new factories established by Meiji government in these sectors were equipped with advanced machinery imported from European countries and the United States, were maintained by knowledgeable foreign engineers and skilled workers who instructed and taught Japanese workers how to use the machinery and technologies to achieve the best and most up-to-date results (Tanimoto, 2006). During the 1880s, considerable budget deficits forced the Meiji government sell many of the new factories to the private sector. Some of these factories eventually became major businesses and turned into core units of so-called 'zaibatsu'. The concept of 'zaibatsu', which refer to uniquely Japanese form of corporate organization, was absolutely alien to economic life of Europe and both Americas. The literal meaning of the term 'zaibatsu' is 'financial cliques': large banking and industrial enterprises majority of which emerged during the Meiji period. Names of many zaibatsu are well known all around the world - Mitsui, Mitsubishi, Sumitomo, Sanwa, and Fuyo. This form of corporate organization became so effective that until 1937 four most powerful zaibatsu controlled directly one third of all bank deposits, most of the heavy industries, 30 percent of all foreign trade, and about 50 percent of Japan's shipbuilding and maritime shipping (Morikawa, 1992). The initial involvement of Meiji government provided necessary 'model factories' that facilitated the transition to the new period of economic growth and development. After only two decades of the Meiji period (from 1868), the industrial sector of Japanese economy started to rapidly and steadily grow taking advantage of the advanced technologies and serious Western investments brought about by the government. Such growth stimulated by wars and accurate economic planning continued until about 1920 when after the end of World War I Japan found itself in the position of a major industrial nation together with the United States (Dolan & Worden, 1994). Evidently, if the transfer of technology was the most significant factor in rapid industrialisation, then traditional industries played only a small role. However, despite importance of the technology transfer, the role of small scale and indigenous industry in rapid industrialisation of the country must also be mentioned. Recent studies on Japan's economic history during the period of Tokugawa demonstrate that industrial and economic development had already started before the advanced western technologies were brought to the country. Particularly, the re-coinage undertaken by Tokugawa government in the 1820s reversed the downward trend in prices, and the upward trend continued to the end of Tokugawa period. According to these studies, the re-coinage marked the beginning of sustainable economic development, initiated under the conditions of inflation. The studies of estimated real money balances during the period also support the hypothesis that Japan's economy grew steadily over the first half of 19th century (Hayami, Sait, & Toby, 2004). Therefore, the latest research of Japanese private ventures and some early government enterprises in late 19th - early 20th century postulates that majority of them either completely relied on indigenous technologies or the adopted hybridized versions of western technologies. The underestimation of indigenous industries' role in rapid industrialisation of Japan was largely due to the fact many studies exploring industrial development of the country traditionally focused on industries that relied exclusively on the transferred technologies (e.g. iron and steel industry, cotton spinning industry, chemical industry, etc.) (Tanimoto, 2006). In the 1860s, in the dawn of the industrial breakthrough, the situation in Japan was almost similar to that observed on the eve of the Industrial Revolution in Britain a century earlier. Particularly, a nucleus of skilled workers was available, a tradition of labour discipline was there, and a considerable rural manufacturing industry organised in a similar manner to the 'putting out' or domestic system in pre-industrial England (Brenner, 169). However, Japan also had several unique natural and institutional features that greatly affected the course of country's industrial development. Firstly, by the beginning of industrialisation in the 1960s Japan's population was already huge by any standards. Moreover, the population engaged in the agricultural sector of economy began to decline only in the 1890s, and that decline was very slight. According to the estimates, there was less than one hectare of cropland per one male labourer engaged in agriculture, while the agricultural techniques and methods were rather primitive (Brenner, 1969). Evidently, the potential for improvement was huge, and during only thirty years from 1878 to 1908 the net output of arable land increased by approximately 76 percent, and the net increase in the productivity of farm labour rose by almost 217 percent (Ohkawa, & Rosovsky, 1960). Thus during the last quarter of the 19th the growth of the Japanese industrial sector was paralleled by a fast increase in the surplus of rural labour (Brenner, 1969). In other words, the growing industries had a good supply of labour force they could count on: the role of this factor could hardly be underestimated. However, scarcity of natural resources necessary for industrialisation was another key factor that had strong influence on the industrialisation patterns in Japan. Throughout the whole 19th century, the country heavily depended on the United States and Europe for machinery: absence of adequate coking-coal and ores resources was critical in this regard since the country lagged far behind the western states in iron and steel production. Even when, in the beginning of the 20th century the country finally managed to develop its own iron industry, 'the dependence from neighbouring China and Korea for ores supply remained too significant' (Allen, p. 107). Although Japan remained dependent on the supplies of machinery and natural resources from the neighbouring countries and western states, the availability of a cheap supply of workforce was an apparent benefit. Simultaneously, the influx of people from rural areas of Japan into the towns that were turning into industrial centres was not large enough to immediately result in an increase in the level of labourers' real incomes in either sector of the Japanese economy. Consequently, the Japanese industry did not have other choice but to enter markets overseas instead of reliance upon the domestic demand (Brenner, 1969). Another highly essential factor in rapid industrialisation of Japan might be intangible but not less important that the others. Many authors believe that much of Japan's rapid development was due to specific cultural and social structure cultivated in the country for centuries. Particularly, the determination of leadership, which inherited a country with certain 'political and economic institutions that could be easily adapted to serving the nation in its new role. Her social organisation rooted in a special kind of family system, and the long centuries of feudal discipline, helped to produce a capacity for extreme self-abnegation on the part of individuals and an aptitude for corporate effort which served the country well in a time of rapid social and economic change, and the institution of an Imperial House which by mythology invested with divine attributes provided a focus for patriotic fervour' (Allen, 1969, p. 107). A number of cultural studies are available these days to confirm the importance of this seemingly minor factor. Particularly, Geert Hofstede's model that classifies and measures cross-cultural differences provides a good explanation to the cultural aspect. Instead of listing thousands of distinctions that characterize any culture in the world he outlines five major cultural dimensions: Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI), and Long-Term Orientation (LTO). Each of these dimensions is measured with the help of standard scale designed by Hofstede. Comparison of Hofstede's scores reveals several highly important unique features of Japanese culture: a. Power Distance Index (PDI) - this index demonstrates the degree of equality, or inequality, between people in the country's society. If this index is high, than inequalities of power and wealth are allowed to grow within the society: societies that rank high on this index are more likely to follow a caste system that does not allow considerable upward mobility of citizens. By contrast, if the PDI is low, the society tends to smooth the differences between citizen's power and wealth: equality and opportunity for everyone is particularly important for members of such societies (Hofstede, 2003). Japan scores 54 on this dimension, while, for example, Ireland scores only 28. b. Individualism (IDV) - on this dimension Japan scores 70 out of 100. This index reveals the degree the society reinforces individual or collective achievement and, correspondingly, interpersonal relationships. In case the IDV index is high, individuality and individual rights are stressed within the society: citizens in such societies rely primarily upon themselves, and form a little number of closer relationships. If the IDV is low, the society is characterized by high degree of collectivism and closer relationships between individuals: such societies reinforce extended families and collectives with responsibility being shared between all members (Hofstede, 2003); c. Uncertainty Avoidance Index (UAI) - the UAI shows the level of tolerance for uncertainty and ambiguity within the society. In case the UAI is high, the culture is characterized by a low tolerance for unstructured situations: such societies are always a rule-oriented with a number of strict laws, social rules, regulations, and controls which help reduce the amount of ambiguity. By contrast, if the index is low, the society is much less concerned with potential ambiguity and uncertainty and is characterized by higher tolerance for a unstructured situations: such societies are less rule-oriented, maintain less strict rules and regulations, and readily accepts changes (Hofstede, 2003). Japan scores 92 on this dimension which stresses the dedication to collective values. d. And finally, the Long-Term Orientation (LTO) dimension reveals the degree the culture embraces long-term devotion to traditional values. According to Hofstede the high LTO score shows the society emphasizes the values of long-term commitments and respect for tradition: such cultures are characterized by exceptionally strong work ethic and perception of long-term rewards as an outcome of today's hard work. By contrast, low LTO shows the society does not emphasize long-term, traditional orientation: such societies more accept changes more readily (Hofstede, 2003). Again, Japan scores 80 on this dimension which is exceptionally high as compared with any western country. This brief description suggests that Japanese culture is characterized by overwhelming devotion to traditional norms and values, firmly structured society, collectivism, and high intolerance to uncertainty. Thus, when Japan embarked on the road of industrialisation the country already had those features that were critical for success namely, a politically and economically suitable system and a psychological readiness for long and difficult process. Word Count: 2343 (excluding the Reference section) References Allen, G. C. (1969). A Short Economic History of Modern Japan 1867-1937. London: Allen & Unwin. Brenner, Y. S. (1969). A Short History of Economic Progress: A Course in Economic History. Routledge Dolan, R. E., & Worden, R. L. (eds.) (1994). Japan: A Country Study. Washington: GPO for the Library of Congress. Hayami, A., Sait, O., & Toby, R. (eds.) (2004). Economic History of Modern Japan. Volume1: Emergence of Economic Society. Oxford. Hofstede, Geert (2003), "Cultural Dimensions: Ireland", Geert Hofstede official web site retrieved November 29, 2008, from http://www.geert-hofstede.com/hofstede_japan.shtml Morikawa, H. (1992). Zaibatsu: The Rise and Fall of Family Enterprise Groups in Japan, University of Tokyo Press. Tanimoto, M. (ed.) (2006). The Role of Tradition in Japan's Industrialisation: Another Path to Industrialisation. New York: Oxford University Press. Ohkawa, K., & Rosovsky, H. (1960). 'Japanese economic growth; trend acceleration'. Economic Development and Cultural Change, 9(2), pp. 43-68. Read More