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This economic development not only prepared for the technology transfer from the West, but also formed the basis of the particular industrialization process which paralleled transplanted industrialization in modern Japan. The collection of papers looks at the industries originating from the Tokugawa-era such as weaving, silk-reeling, and pottery, as well as the newly developed small workshops engaged in manufacturing machinery, soaps, brushes, buttons, bicycles, and small businesses in the tertiary sector.

The studies reveal the role of particular production systems based on the small workshops, while some industries developed the factory system. The household strategy, skill formation, and the organizing capability of the merchants are key factors widely discussed in the volume. The institutional basis of the industrialization such as trade associations, local and central governments, and the regional community are considered.

Keywords: Japan , industrialization , proto-industrialization , economic development , indigenous industry , household strategy , merchant , government , trade association , community. Forgot password? Don't have an account? All Rights Reserved. The development of banking and reliance on bank funding have been at the centre of Japanese economic development at least since the Meiji era.

Carl Mosk, University of Victoria

The Japanese regarded this sphere of influence as a political and economic necessity, preventing foreign states from strangling Japan by blocking its access to raw materials and crucial sea-lanes, as Japan possessed very few natural and mining resources of its own, although it imported large amounts of coal from Korea , Manchukuo , and some regions of occupied China.

Japan's large military force was regarded as essential to the empire's defense. Rapid growth and structural change characterized Japan's two periods of economic development since In the first period, the economy grew only moderately at first and relied heavily on traditional agriculture to finance modern industrial infrastructure. During World War I , Japan used the absence of the war-torn European competitors on the world market to advance its economy, generating a trade surplus for the first time since the isolation in the Edo period. Transportation and communications had developed to sustain heavy industrial development.

Most industrial growth, however, was geared toward expanding the nation's military power. Beginning in with significant land seizures in China, and to a greater extent after , when annexations and invasions across Southeast Asia and the Pacific created the Greater East Asia Co-Prosperity Sphere , the Japanese government sought to acquire and develop critical natural resources in order to secure economic independence.

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Among the natural resources that Japan seized and developed were: coal in China, sugarcane in the Philippines , petroleum from the Dutch East Indies and Burma , and tin and bauxite from the Dutch East Indies and Malaya. Japan also purchased the rice production of Thailand , Burma, and Cochinchina. During the early stages of Japan's expansion, the Japanese economy expanded considerably. Steel production rose from 6,, tonnes to 8,, tonnes over the same time period. In Japanese aircraft industries had the capacity to manufacture 10, aircraft per year.

Much of this economic expansion benefited the " zaibatsu ", large industrial conglomerates.


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Over the course of the Pacific War , the economies of Japan and its occupied territories all suffered severely. Inflation was rampant; Japanese heavy industry, forced to devote nearly all its production to meeting military needs, was unable to meet the commercial requirements of Japan which had previously relied on trade with Western countries for their manufactured goods. Local industries were unable to produce at high enough levels to avoid severe shortfalls. Furthermore, maritime trade, upon which the Empire depended greatly, was sharply curtailed by damage to the Japanese merchant fleet over the course of the war.

By the end of the war, what remained of the Japanese Empire was wracked by shortages, inflation, and currency devaluation.

Japanese Theory of Modernization

Transport was nearly impossible, and industrial production in Japan's shattered cities ground to a halt. The destruction wrought by the war eventually brought the Japanese economy to a virtual standstill. The war wiped out many of the gains which Japan had made since The people were shocked by the devastation and swung into action.

New factories were equipped with the best modern machines, giving Japan an initial competitive advantage over the victor states, who now had older factories. As Japan's second period of economic development began, millions of former soldiers joined a well-disciplined and highly educated work force to rebuild Japan. Japan's colonies were lost as a result of World War II, but since then the Japanese had extended their economic influence throughout Asia and beyond. The United States' occupation of Japan —52 resulted in the rebuilding of the nation and the creation of a democratic nation.

US grant assistance, however, tapered off quickly in the mids. A variety of United States-sponsored measures during the occupation, such as land reform, contributed to the economy's later performance by increasing competition. In particular, the post-war purge of industrial leaders allowed new talent to rise in the management of the nation's rebuilt industries. Finally, the economy benefited from foreign trade because it was able to expand exports rapidly enough to pay for imports of equipment and technology without falling into debt, as had a number of developing nations in the s.

A study, using the synthetic control method whereby Japan is compared to "synthetic Japan" a combination of which are similar to Japan but without the US alliance , found that the US alliance allowed Japan's GDP to "grow much faster" from In the wake of WWII, the Japanese citizenry was suffering from widespread exhaustion and despair from the war, known as " kyodatsu ," causing large-scale dejection and despondency. These gifts referred to the bloodless democratic revolution from above ushered in by US forces that put an end to a socially debilitating war.

One of the first and most significant economic reforms was the division and distribution of rural land to Japanese tenant farmers. Previously, property belonged to landlords and farmers worked on it in a feudal type system. Modern capitalist theory held that this feudal practice did not incentivize growth and the rural landlord class was dissolved. The early post-war years were devoted to rebuilding lost industrial capacity: major investments were made in electric power, coal, steel, and chemicals. By the mids, production matched prewar levels.

Released from the demands of military-dominated government, the economy not only recovered its lost momentum but also surpassed the growth rates of earlier periods. Japan's highly acclaimed post-war education system contributed strongly to the modernizing process. The world's highest literacy rate and high education standards were major reasons for Japan's success in achieving a technologically advanced economy.

Japanese schools also encouraged discipline, another benefit in forming an effective work force.


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  5. The mids ushered in a new type of industrial development as the economy opened itself to international competition in some industries and developed heavy and chemical manufactures. Whereas textiles and light manufactures maintained their profitability internationally, other products, such as automobiles, electronics, ships, and machine tools assumed new importance.

    Japan faced a severe economic challenge in the mids. The oil crisis shocked an economy that had become dependent on imported petroleum. Japan experienced its first post-war decline in industrial production, together with severe price inflation. The recovery that followed the first oil crisis revived the optimism of most business leaders, but the maintenance of industrial growth in the face of high energy costs required shifts in the industrial structure. Changing price conditions favored conservation and alternative sources of industrial energy.

    Although the investment costs were high, many energy-intensive industries successfully reduced their dependence on oil during the late s and s and enhanced their productivity. Advances in microcircuitry and semiconductors in the late s and s led to new growth industries in consumer electronics and computers, and to higher productivity in pre-established industries. The net result of these adjustments was to increase the energy efficiency of manufacturing and to expand knowledge-intensive industries. The service industries expanded in an increasingly postindustrial economy.

    But these rates were remarkable in a world of expensive petroleum and in a nation of few natural resources. Despite more petroleum price increases in , the strength of the Japanese economy was apparent. It expanded without the double-digit inflation that afflicted other industrial nations and that had bothered Japan itself after the first oil crisis in Japan experienced slower growth in the mids, but its demand -sustained economic boom of the late s revived many troubled industries.

    Complex economic and institutional factors affected Japan's post-war growth. First, the nation's prewar experience provided several important legacies. The Tokugawa period — bequeathed a vital commercial sector in burgeoning urban centers, a relatively well-educated elite although one with limited knowledge of European science , a sophisticated government bureaucracy , productive agriculture, a closely unified nation with highly developed financial and marketing systems, and a national infrastructure of roads.

    The buildup of industry during the Meiji period to the point where Japan could vie for world power was an important prelude to post-war growth from to , and provided a pool of experienced labor. Second, and more important, was the level and quality of investment that persisted through the s. Japanese businesses imported the latest technologies to develop the industrial base.

    As a latecomer to modernization , Japan was able to avoid some of the trial and error earlier needed by other nations to develop industrial processes. In the s and s, Japan improved its industrial base through licensing from the US, patent purchases, and imitation and improvement of foreign inventions.

    In the s, industry stepped up its research and development , and many firms became famous for their innovations and creativity.

    The Industrial Revolution (18-19th Century)

    Japan's labor force contributed significantly to economic growth, because of its availability and literacy, and also because of its reasonable wage demands. Before and immediately after World War II, the transfer of numerous agricultural workers to modern industry resulted in rising productivity and only moderate wage increases.

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    As population growth slowed and the nation became increasingly industrialized in the mids, wages rose significantly. However, labor union cooperation generally kept salary increases within the range of gains in productivity. High productivity growth played a key role in post-war economic growth.