Economy: From Recovery to Miracle to Lost Decade

Explaining the Economic Miracle

Explaining “stabilization”

Stability ≠ stagnation or lack of changeHybrid result: mix of promoting,

managing, resisting, change SCAP mobilizes existing constituencies,

shifts balance among them Effectively: land, labor cases Less effect: zaibatsu dissolution,

education, policing Economic recovery also critical

Revival to Miracle [to Lost Decade]

•Low expectations, and devastation, 1945-50

•Economic miracle, 1950-75

•Economic mess [deferred]

The Record of Growth

Bleak era through 1947; modest gains at best through 1950

•priority production: one harbinger of recovery1947, targets iron/steel & coal

•light machinery: cameras, watches, radios, bicyclesand sewing machines

Toward Recovery

•1949-50:Dodge line

Considerable impact on inflation, but no recovery in sightWould it have worked, alone?

Program of radical retrenchment

•1950 Korean war: gift of gods?"special procurements." Worth 590 million dollars in 1951, 800 million each in 1952, 1953. 60% to 70% of all export revenues, 1951-53

The Record of GrowthThe high growth miracle: 1950-90

•10 percent annually, through 1974

•continued moderate, strong growth --> 1990/91

Explaining Growth

international factors

•high international growth

•tripling of international trade

•cheap energy

•accessible new technologies

Explaining Growth

domestic factors

•entrepreneurship

•human capital-- well-educated

•state role: economic bureaucracy MITI Ministry of International Trade and Industry

Explaining Growth

•climate of confidence

•protecting/nurturing

•bailing out

•state role: economic bureaucracy MITI

The Record of Growth

•state role: economic bureaucracy MITI

example: iron and steel industry

•targeting

•capital access

•Joint development and cost sharing:example of BOF license

The Record of Growth

Sum up: the Managed Miraclea convergence of factors

•favorable international environment: US sponsorship and global growth.

•domestic endowments: human capital, entrepreneurship

•and an activist but not oppressively interventionist state, as orchestrator.

Economy: Japan’s “Lost Decade”

Prelude: The bubble era, 1985-90

•Strong GNP: up 55% over the decade

•Gold leaf sushi wrap

•Land prices boom

Economy: Japan’s “Lost Decade”

The bubble bursts: 1991-->