Japan achieved sustained growing in per capita income between the 1880s and 1970 through industrialisation. Traveling along an income growing flight through enlargement of fabrication is barely alone. Indeed Western Europe. Canada. Australia and the United States all attained high degrees of income per capita by switching from agrarian-based production to fabrication and technologically sophisticated service sector activity. Still. there are four typical characteristics of Japan’s development through industrialisation that merit treatment:

The proto-industrial base

Japan’s agricultural productiveness was high plenty to prolong significant trade ( proto-industrial ) production in both rural and urban countries of the state prior to industrialisation.

Investment-led growing

Domestic investing in industry and substructure was the drive force behind growing in Nipponese end product. Both private and public sectors invested in substructure. national and local authoritiess functioning as organizing agents for substructure build-up. * Investment in fabricating capacity was mostly left to the private sector. * Rising domestic nest eggs made increasing capital accretion possible. * Nipponese growing was investment-led. non export-led.

Entire factor productiveness growing — accomplishing more end product per unit of input — was rapid. On the supply side. entire factor productiveness growing was highly of import. Scale economic systems — the decrease in per unit costs due to increased degrees of end product — contributed to entire factor productiveness growing. Scale economic systems existed due to geographic concentration. to growing of the national economic system. and to growing in the end product of single companies. In add-on. companies moved down the “learning curve. ” cut downing unit costs as their cumulative end product rose and demand for their merchandise soared. The societal capacity for importing and accommodating foreign engineering improved and this contributed to entire factor productiveness growing: * At the family degree. puting in instruction of kids improved societal capableness.

* At the steadfast degree. making internalized labour markets that bound houses to workers and workers to houses. thereby giving workers a strong inducement to flexibly accommodate to new engineering. improved societal capableness. * At the authorities degree. industrial policy that reduced the cost to private houses of procuring foreign engineering enhanced societal capacity. Switching out of low-productivity agribusiness into high productiveness fabrication. excavation. and building contributed to entire factor productiveness growing.

Dualism

Aggressively segmented labour and capital markets emerged in Japan after the 1910s. The capital intensive sector basking high ratios of capital to labour paid comparatively high rewards. and the labour intensive sector paid comparatively low rewards. Dualism contributed to income inequality and hence to domestic societal agitation. After 1945 a series of public policy reforms addressed inequality and erased much of the societal resentment around dualism that ravaged Japan prior to World War II. The balance of this article will spread out on a figure of the subjects mentioned above. The appendix reappraisals quantitative grounds refering these points. The decision of the article lists mentions that provide a wealth of elaborate grounds back uping the points above. which this article can merely get down to research. The Legacy of Autarky and the Proto-Industrial Economy: Accomplishments of Tokugawa Japan ( 1600-1868 )

Why Japan?

Given the comparatively hapless record of states outside the European cultural country — few accomplishing the sort of “catch-up” growing Japan managed between 1880 and 1970 – the inquiry of course arises: why Japan? After all. when the United States forcibly “opened Japan” in the 1850s and Japan was forced to yield extra-territorial rights to a figure of Western states as had China earlier in the 1840s. many Westerners and Nipponese likewise thought Japan’s chances seemed subdued so.

Tokugawa accomplishments: urbanisation. route webs. rice cultivation. trade production In replying this inquiry. Mosk ( 2001 ) . Minami ( 1994 ) and Ohkawa and Rosovsky ( 1973 ) stress the accomplishments of Tokugawa Japan ( 1600-1868 ) during a long period of “closed country” autarchy between the mid-seventeenth century and the 1850s: a high degree of urbanisation ; good developed route webs ; the channeling of river H2O flow with embankments and the extended amplification of irrigation ditches that supported and encouraged the polish of rice cultivation based upon bettering seed assortments. fertilisers and seting methods particularly in the Southwest with its comparatively long turning season ; the development of proto-industrial ( trade ) production by merchandiser houses in the major metropoliss like Osaka and Edo ( now called Tokyo ) and its diffusion to rural countries after 1700 ; and the publicity of instruction and population control among both the military elite ( the samurai ) and the comfortable peasantry in the eighteenth and early 19th centuries. Tokugawa political economic system: daimyo and shogun

These developments were inseparable from the political economic system of Japan. The system of alliance authorities introduced at the terminal of the 15th century placed certain powers in the custodies of feudal warlords. daimyo. and certain powers in the custodies of the shogun. the most powerful of the warlords. Each daimyo — and the shogun — was assigned a geographic part. a sphere. being given revenue enhancement authorization over the provincials shacking in the small towns of the sphere. Intercourse with foreign powers was monopolized by the shogun. thereby forestalling daimyo from cementing confederations with other states in an attempt to subvert the cardinal authorities. The samurai military considerations of thedaimyo were forced to abandon rice agriculture and reside in the castle town central offices of their daimyo master.

In exchange. samurai received rice stipends from the rice revenue enhancements collected from the small towns of their sphere. By removingsamurai from the countryside — by demilitarising rural countries — struggles over local H2O rights were mostly made a thing of the past. As a consequence irrigation ditches were extended throughout the vales. and riversides were shored up with rock embankments. easing conveyance and forestalling implosion therapy. The sustained growing of proto-industrialization in urban Japan. and its widespread diffusion to small towns after 1700 was besides inseparable from the productiveness growing in paddy rice production and the growth of industrial harvests like tea. fruit. mulberry works turning ( that sustained the elevation of silk cocoons ) and cotton. Indeed. Smith ( 1988 ) has given pride of topographic point to these “domestic sources” of Japan’s future industrial success.

Readiness to emulate the West

As a consequence of these domestic progresss. Japan was good positioned to take up the Western challenge. It harnessed its substructure. its high degree of literacy. and its proto-industrial distribution webs to the undertaking of emulating Western organisational signifiers and Western techniques in energy production. first and first recruitment inorganic energy beginnings like coal and the other fossil fuels to bring forth steam power. Having intensively developed the organic economic system depending upon natural energy flows like air current. H2O and fire. Nipponese were rather prepared to get the hang inorganic production after the Black Ships of the Americans forced Japan to jettison its long-standing autarchy.

From Balanced to Dualistic Growth. 1887-1938: Infrastructure and Manufacturing Expand Fukoku Kyohei

After the Tokugawa authorities collapsed in 1868. a new Meiji authorities committed to the duplicate policies of fukoku kyohei ( affluent country/strong military ) took up the challenge of renegociating its pacts with the Western powers. It created substructure that facilitated industrialisation. It built a modern naval forces and ground forces that could maintain the Western powers at bay and set up a protective buffer zone in North East Asia that finally formed the footing for a burgeoning Nipponese imperium in Asia and the Pacific. Cardinal authorities reforms in instruction. finance and transit Jettisoning the alliance manner authorities of the Tokugawa epoch. the new leaders of the new Meiji authorities fashioned a unitary province with powerful ministries consolidating authorization in the capital. Tokyo.

The newly minted Ministry of Education promoted mandatory primary schooling for the multitudes and elect university instruction aimed at intensifying technology and scientific cognition. The Ministry of Finance created the Bank of Japan in 1882. puting the foundations for a private banking system backed up a loaner of last resort. The authorities began constructing a steam railway bole line arming the four major islands. promoting private companies to take part in the undertaking. In peculiar. the national authorities committed itself to building a Tokaido line linking the Tokyo/Yokohama part to the Osaka/Kobe urban sprawl along the Pacific coastline of the chief island of Honshu. and to making deepwater seaports at Yokohama and Kobe that could suit deep-hulled steamers. Not surprisingly. the merchandisers in Osaka. the merchandiser capital of Tokugawa Japan. already good versed in proto-industrial production. turned to tackling steam and coal. puting to a great extent in incorporate spinning and weaving steam-driven fabric Millss during the 1880s.

Diffusion of best-practice agribusiness

At the same clip. the abolishment of the three hundred or so feudal feoffs that were the anchor of alliance style-Tokugawa regulation and their consolidation into politically weak prefectures. under a strong national authorities that virtually monopolized revenue enhancement authorization. gave a strong push to the diffusion of best pattern agricultural technique. The countrywide diffusion of seed assortments developed in the Southwest feoff of Tokugawa Japan spearheaded a significant betterment in agricultural productiveness particularly in the Northeast. Simultaneously. enlargement of agribusiness utilizing traditional Nipponese engineering agribusiness and fabrication utilizing imported Western engineering resulted.

Balanced growing

Growth at the stopping point of the 19th century was balanced in the sense that traditional and modern engineering utilizing sectors grew at approximately equal rates. and labour — particularly immature misss recruited out of farm families to labour in the steam utilizing fabric Millss — flowed back and Forth between rural and urban Japan at rewards that were approximately equal in industrial and agricultural chases.

Geographic economic systems of graduated table in the Tokaido belt

Concentration of industrial production foremost in Osaka and later throughout the Tokaido belt fostered powerful geographic graduated table economic systems ( the ability to cut down per unit costs as end product degrees addition ) . cut downing the costs of procuring energy. natural stuffs and entree to planetary markets for endeavors located in the great seaport cities stretching from the monolithic Osaka/Kobe complex due north to the pullulating Tokyo/Yokohama urban sprawl. Between 1904 and 1911. electrification chiefly due to the proliferation of intercity electrical railwaies created economic systems of graduated table in the nascent industrial belt confronting outward onto the Pacific. The consolidation of two immense hydroelectric power grids during the 1920s — one service Tokyo/Yokohama. the other Osaka and Kobe — farther solidified the comparative advantage of the Tokaido industrial belt in mill production. Finally. the broadening and pavement during the 1920s of roads that could manage coachs and trucks was besides pioneered by the great cities of the Tokaido. which farther bolstered their comparative advantage in per capita substructure.

Organizational economic systems of graduated table — zaibatsu

In add-on to geographic scale economic systems. organisational graduated table economic systems besides became progressively of import in the late 19th centuries. The formation of the zaibatsu ( “financial cliques” ) . which bit by bit evolved into diversified industrial combines tied together through cardinal keeping companies. is a instance in point. By the 1910s these had evolved into extremely diversified combines. adhering together endeavors in banking and insurance. trading companies. excavation concerns. fabrics. Fe and steel workss. and machinery industries. By imparting net incomes from older industries into new lines of activity like electrical machinery fabrication. the zaibatsu signifier of organisation generated scale economic systems in finance. trade and fabrication. drastically cut downing information-gathering and minutess costs. By pulling comparatively scare managerial and entrepreneurial endowment. the zaibatsu format economized on human resources.

Electrification

The push into electrical machinery production during the 1920s had a radical impact on fabrication. Effective development of steam power required the usage of big cardinal steam engines at the same time driving a big figure of machines — power looms and mules in a spinning/weaving works for case – throughout a mill. Small endeavors did non mechanise in the steam epoch. But with electrification the “unit drive” system of mechanisation spread. Each machine could be powered up independently of one another. Mechanization spread quickly to the smallest mill.

Emergence of the Manichaean economic system

With the thrust into heavy industries — chemicals. Fe and steel. machinery — the demand for skilled labour that would flexibly react to rapid alterations in technique soared. Large houses in these industries began offering premium rewards and warrants of employment in good times and bad as a manner of motivation and keeping onto valuable workers. A Manichaean economic system emerged during the 1910s. Small houses. light industry and agribusiness offered comparatively low rewards. Large endeavors in the heavy industries offered much more favourable wage. widening paternalistic benefits like company lodging and company public assistance plans to their “internal labour markets. ” As a consequence a broadening gulf opened up between the great metropolitan centres of the Tokaido and rural Japan. Income per caput was far higher in the great industrial centres than in the backwoods.

Colliding urban/rural and landlord/tenant involvements

The economic strains of emergent dualism were amplified by the decelerating down of technological advancement in the agricultural sector. which had thoroughly reaped the benefits due to regional diffusion from the Southwest to the Northeast of best pattern Tokugawa rice cultivation. Landlords — about 45 % of the arable rice Paddy land in Japan was held in some signifier of occupancy at the beginning of the 20th century — who had played a important function in advancing the diffusion of traditional best pattern techniques now lost involvement in rural personal businesss and turned their attending to industrial activities.

Tenants besides found their involvements disregarded by the national governments in Tokyo. who were progressively focused on providing inexpensive groceries to the burgeoning industrial belt by advancing agricultural production within the imperium that it was piecing through military triumphs. Japan secured Taiwan from China in 1895. and officially brought Korea under its imperial regulation in 1910 upon the heels of its successful war against Russia in 1904-05. Tenant brotherhoods reacted to this indurate discourtesy of their demands through force. Landlord/tenant disputes broke out in the early 1920s. and continued to blight Japan politically throughout the 1930s. calls for land reform and bureaucratic proposals for reform being rejected by a Diet ( Japan’s legislative assembly ) politically dominated by landlords.

Japan’s military enlargement

Japan’s push to imperial enlargement was inflamed by the turning instability of the geopolitical and international trade government of the ulterior 1920s and early 1930s. The comparative diminution of the United Kingdom as an economic power doomed a gilded criterion government tied to the British lb. The United States was going a possible rival to the United Kingdom as the angel of a gilded criterion government but its long history of high duties and isolationism deterred it from taking over leading in advancing planetary trade openness. Germany and the Soviet Union were progressively going industrial and military giants on the Eurasiatic land mass committed to political orientations hostile to the broad democracy championed by the United Kingdom and the United States. It was against this international background that Japan began sharply venturing out its claim to being the dominant military power in East Asia and the Pacific. thereby conveying it into struggle with the United States and the United Kingdom in the Asiatic and Pacific theatres after the universe slipped into planetary warfare in 1939.

Reform and Reconstruction in a New International Economic Order. Japan after World War II Postwar business: economic and institutional restructuring Surrendering to the United States and its Alliess in 1945. Japan’s economic system and substructure was revamped under the S. C. A. P ( Supreme Commander of the Allied Powers ) Occupation enduring through 1951. As Nakamura ( 1995 ) points out. a assortment of Occupation-sponsored reforms transformed the institutional environment conditioning economic public presentation in Japan.

The major zaibatsu were liquidated by the Holding Company Liquidation Commission set up under the Occupation ( they were revamped as keiretsu corporate groups chiefly tied together through cross-shareholding of stock in the wake of the Occupation ) ; land reform wiped out landlordism and gave a strong push to agricultural productiveness through mechanisation of rice cultivation ; and corporate bargaining. mostly illegal under the Peace Preservation Act that was used to stamp down brotherhood forming during the interwar period. was given the sanction of constitutional legality. Finally. instruction was opened up. partially through doing in-between school compulsory. partially through the creative activity of national universities in each of Japan’s 46 prefectures.

Improvement in the societal capableness for economic growing

In short. from a domestic point of position. the societal capableness for importing and accommodating foreign engineering was improved with the reforms in instruction and the bonus to competition given by the disintegration of the zaibatsu. Deciding tenseness between rural and urban Japan through land reform and the constitution of a rice monetary value support plan — that guaranteed husbandmans incomes comparable to blue collar industrial workers — besides contributed to the societal capacity to absorb foreign engineering by stamp downing the political divisions between metropolitan and hinterland Japan that plagued the state during the interwar old ages.

Japan and the postwar international order

The revamped international economic order contributed to the societal capableness of importation and accommodating foreign engineering. The instability of the 1920s and 1930s was replaced with replaced with a comparatively predictable bipolar universe in which the United States and the Soviet Union opposed each other in both geopolitical and ideological spheres. The United States became an designer of many-sided architecture designed to promote trade through its sponsorship of the United Nations. the World Bank. the International Monetary Fund and the General Agreement on Tariffs and Trade ( the predecessor to the World Trade Organization ) . Under the logic of constructing military confederations to incorporate Eurasiatic Communism. the United States brought Japan under its “nuclear umbrella” with a bilateral security pact. American companies were encouraged to licence engineering to Nipponese companies in the new international environment. Japan redirected its trade off from the countries that had been incorporated into the Nipponese Empire before 1945. and towards the immense and spread outing American market.

Miracle Growth: Soaring Domestic Investment and Export Growth. 1953-1970 Its substructure revitalized through the Occupation period reforms. its capacity to import and export enhanced by the new international economic order. and its entree to American engineering bolstered through its security treaty with the United States. Japan experienced the dramatic “Miracle Growth” between 1953 and the early 1970s whose beginnings have been cogently analyzed by Denison and Chung ( 1976 ) . Particularly striking in the Miracle Growth period was the singular addition in the rate of domestic fixed capital formation. the rise in the investing proportion being matched by a lifting nest egg rate whose secular addition — particularly that of private family nest eggs – has been good documented and analyzed by Horioka ( 1991 ) . While Japan continued to shut the spread in income per capita between itself and the United States after the early 1970s. most bookmans believe that big Nipponese fabrication endeavors had by and big go internationally competitory by the early 1970s. In this sense it can be said that Japan had completed its nine decennary long convergence to international fight through industrialisation by the early 1970s.

MITI

There is small uncertainty that the societal capacity to import and accommodate foreign engineering was immensely improved in the wake of the Pacific War. Making societal consensus with Land Reform and agricultural subsidies reduced political divisiveness. widening mandatory instruction and interrupting up the zaibatsu had a positive impact. Fashioning the Ministry of International Trade and Industry ( M. I. T. I. ) that took duty for supervising industrial policy is besides viewed as easing Japan’s societal capableness. There is no uncertainty that M. I. T. I. drove down the cost of procuring foreign engineering. By step ining between Nipponese houses and foreign companies. it acted as a individual purchaser of engineering. playing off viing American and European endeavors in order to cut down the royalties Nipponese concerns had to pay on engineering licences. By maintaining domestic patent periods short. M. I. T. I. encouraged rapid diffusion of engineering.

And in some instances — the experience of International Business Machines ( I. B. M. ) . basking a practical monopoly in planetary mainframe computing machine markets during the 1950s and early sixtiess. is a classical instance — M. I. T. I. made it a status of entry into the Nipponese market ( through the creative activity of a subordinate Japan I. B. M. in the instance of I. B. M. ) that foreign companies portion many of their technological secrets with possible Nipponese rivals. How of import industrial policy was for Miracle Growth remains controversial. nevertheless. The position of Johnson ( 1982 ) . who hails industrial policy as a pillar of the Nipponese Development State ( authorities advancing economic growing through province policies ) has been criticized and revised by subsequent bookmans. The book by Uriu ( 1996 ) is a instance in point. Internal labour markets. just-in-time stock list and quality control circles Fostering the internalisation of labour markets — the premium rewards and long-run employment warrants mostly restricted to white collar workers were extended to blue collar workers with the legalisation of brotherhoods and corporate bargaining after 1945 — besides raised the societal capableness of accommodating foreign engineering.

Internalizing labour created a extremely flexible labour force in post-1950 Japan. As a consequence. Nipponese workers embraced many of the cardinal thoughts of Just-in-Time stock list control and Quality Control circles in assembly industries. larning how to make rapid machine apparatuss as portion and package of an attempt to bring forth constituents “just-in-time” and without defect. Ironically. the constructs of just-in-time and quality control were originally developed in the United States. just-in-time methods being pioneered by supermarkets and quality control by efficiency experts like W. Edwards Deming. Yet it was in Japan that these constructs were unrelentingly pursued to revolutionise assembly line industries during the 1950s and 1960s.

Ultimate causes of the Nipponese economic “miracle”

Miracle Growth was the completion of a drawn-out historical procedure affecting heightening human capital. monolithic accretion of physical capital including substructure and private fabrication capacity. the importing and version of foreign engineering. and the creative activity of scale economic systems. which took decennaries and decennaries to recognize. Dub a miracle. it is best seen as the reaping of a big crop whose seeds were fastidiously planted in the six decennaries between 1880 and 1938. In the class of the nine decennaries between the 1880s and 1970. Japan amassed and lost a straggling imperium. reorienting its trade and geopolitical stance through the turns and bends of history. While the ultimate beginnings of growing can be ferreted out through some signifier of statistical accounting. the specific manner these beginnings were marshaled in pattern is inseparable from the history of Japan itself and of the planetary environment within which it has realized its industrial fate.

Appendix: Beginnings of Growth Accounting and Quantitative Aspects of Japan’s Modern Economic Development One of the attractive forces of analyzing Japan’s post-1880 economic development is the copiousness of quantitative informations documenting Japan’s growing. Estimates of Nipponese income and end product by sector. capital stock and labour force extend back to the eightiess. a period when Nipponese income per capita was low. Consequently statistical probing of Japan’s long-term growing from comparative poorness to copiousness is possible.

The balance of this appendix is devoted to presenting the reader to the huge literature on quantitative analysis of Japan’s economic development from the 1880s until 1970. a nine decennary period during which Nipponese income per capita converged towards income per capita degrees in Western Europe. As the reader will see. this treatment confirms the importance of factors discussed at the beginning of this article. Our initial standard is the first-class “sources of growth” accounting analysis carried out by Denison and Chung ( 1976 ) on Japan’s growing between 1953 and 1971. Imputing growing in national income in growing of inputs. the factors of production — capital and labour — and growing in end product per unit of the two inputs combined ( entire factor productiveness ) along the undermentioned lines: G ( Y ) = { a G ( K ) + [ 1-a ] G ( L ) } + G ( A )

where G ( Y ) is the ( one-year ) growing of national end product. g ( K ) is the growing rate of capital services. G ( L ) is the growing rate of labour services. a is capital’s portion in national income ( the portion of income accruing to proprietors of capital ) . and G ( A ) is the growing of entire factor productiveness. is a standard attack used to come close the beginnings of growing of income. Using a discrepancy of this type of decomposition that takes into history betterments in the quality of capital and labour. estimations of scale economic systems and accommodations for structural alteration ( switching labour out of agribusiness helps explicate why entire factor productiveness grows ) . Denison and Chung ( 1976 ) bring forth a utile set of estimations for Japan’s Miracle Growth epoch.

Operating with this “sources of growth” attack and continuing under a assortment of plausible premises. Denison and Chung ( 1976 ) estimation that of Japan’s mean one-year existent national income growing of 8. 77 % over 1953-71. input growing accounted for 3. 95 % ( accounting for 45 % of entire growing ) and growing in end product per unit of input contributed 4. 82 % ( accounting for 55 % of entire growing ) . To be certain. the precise premises and techniques they use can be criticized. The precise numerical consequences they arrive at can be argued over. Still. their general point — that Japan’s growing was the consequence of betterments in the quality of factor inputs — wellness and instruction for workers. for case — and betterments in the manner these inputs are utilized in production — due to technological and organisational alteration. reallocation of resources from agribusiness to non-agriculture. and scale economic systems. is defendable.

Notes: [ a ] Maddison ( 2000 ) provides estimations of existent income that take into history the buying power of national currencies. [ B ] Ohkawa ( 1979 ) gives estimations for the “N” sector that is defined as fabrication and excavation ( Ma ) plus building plus facilitating industry ( conveyance. communications and public-service corporations ) . It should be noted that the construct of an “N” sector is non standard in the field of economic sciences. [ c ] The estimations of trade are obtained by adding ware imports to ware exports. Trade openness is estimated by taking the ratio of entire ( ware ) trade to national end product. the latter defined as Gross Domestic Product ( G. D. P. ) .

The trade figures include trade with Japan’s imperium ( Korea. Taiwan. Manchuria. etc. ) ; the income figures for Japan exclude income generated in the imperium. [ 500 ] The Human Development Index is a composite variable formed by adding together indices for educational attainment. for wellness ( utilizing life anticipation that is reciprocally related to the degree of the infant mortality rate. the IMR ) . and for existent per capita income. For a elaborate treatment of this index see United Nations Development Programme ( 2000 ) . [ vitamin E ] Electrical coevals is measured in million kW generated and supplied. For 1970. the figures on NHK endorsers are for telecasting endorsers. The symbol n. a. = non available. Beginnings: The figures in this tabular array are taken from assorted pages and tabular arraies in Japan Statistical Association ( 1987 ) . Maddison ( 2000 ) . Minami ( 1994 ) . and Ohkawa ( 1979 ) .

Flowing from this tabular array are a figure of points that bear lessons of the Denison and Chung ( 1976 ) decomposition. One bunch of points bears upon the timing of Japan’s income per capita growing and the relationship of fabricating enlargement to income growing. Another high spot betterments in the quality of the labour input. Yet another points to the overruling importance of domestic investing in fabrication and the lesser significance of trade demand. A 4th group suggests that substructure has been of import to economic growing and industrial enlargement in Japan. as exemplified by the figures on electricity bring forthing capacity and the mass diffusion of communications in the signifier of wireless and telecasting broadcast medium. Several parts of Table 1 point to industrialisation. defined as an addition in the proportion of end product ( and labour force ) attributable to fabrication and excavation. as the driving force in explicating Japan’s income per capita growing. Noteworthy in Panels A and B of the tabular array is that the spread between Nipponese and American income per capita closed most resolutely during the 1910s. the 1930s. and the sixtiess. exactly the periods when fabricating enlargement was the most vigorous.

Equally notable of the jets of the 1910s. 1930s and the 1960s is the overruling importance of gross domestic fixed capital formation. that is investing. for growing in demand. By contrast. trade seems much less of import to growing in demand during these critical decennaries. a point emphasized by both Minami ( 1994 ) and by Ohkawa and Rosovsky ( 1973 ) . The impression that Nipponese growing was “export led” during the nine decennaries between 1880 and 1970 when Japan caught up technologically with the taking Western states is non defendable. Rather. domestic capital investing seems to be the drive force behind aggregative demand enlargement. The periods of particularly intense capital formation were besides the periods when fabricating production soared. Capital formation in fabrication. or in substructure back uping fabricating enlargement. is the chief agent forcing long-term income per capita growing.

Why? As Ohkawa and Rosovsky ( 1973 ) argue. jets in fabricating capital formation were associated with the import and version of foreign engineering. particularly from the United States These investing jets were besides associated with displacements of labour force out of agribusiness and into fabrication. building and facilitating sectors where labour productiveness was far higher than it was in labour-intensive agriculture centered around labour-intensive rice cultivation. The logic of productiveness addition due to more efficient allotment of labour resources is evident from the right manus column of Panel A in Table 1. Finally. Panel C of Table 1 suggests that substructure investing that facilitated wellness and educational attainment ( combined populace and private outgo on sanitation. schools and research research labs ) . and public/private investing in physical substructure including dikes and hydroelectric power grids helped fuel the enlargement of fabrication by bettering human capital and by cut downing the costs of transit. communications and energy supply faced by private mills.

Mosk ( 2001 ) argues that investings in human-capital-enhancing ( medical specialty. public wellness and instruction ) . fiscal ( banking ) and physical substructure ( seaports. roads. power grids. railwaies and communications ) laid the basis for industrial enlargements. Indeed. the “social capableness for importing and accommodating foreign technology” emphasized by Ohkawa and Rosovsky ( 1973 ) can be mostly explained by an infrastructure-driven growing hypothesis like that given by Mosk ( 2001 ) . In amount. Denison and Chung ( 1976 ) argue that a combination of input factor betterment and growing in end product per combined factor inputs account for Japan’s most rapid jet of economic growing. Table 1 suggests that labour quality improved because wellness was enhanced and educational attainment increased ; that investing in fabrication was of import non merely because it increased capital stock itself but besides because it reduced dependance on agribusiness and went manus in baseball mitt with betterments in cognition ; and that the societal capacity to absorb and accommodate Western engineering that fueled betterments in cognition was associated with substructure investing.

Mentions

Denison. Edward and William Chung. “Economic Growth and Its Beginnings. ” In Asia’s Next Giant: How the Nipponese Economy Works. edited by Hugh Patrick and Henry Rosovsky. 63-151. Washington. DC: Brookings Institution. 1976. Horioka. Charles Y. “Future Trends in Japan’s Savings Rate and the Implications Thereof for Japan’s External Imbalance. ”Japan and the World Economy 3 ( 1991 ) : 307-330. Japan Statistical Association. Historical Statistics of Japan [ Five Volumes ] . Tokyo: Japan Statistical Association. 1987. Johnson. Chalmers. MITI and the Nipponese Miracle: The Growth of Industrial Policy. 1925-1975. Stanford: Stanford University Press. 1982. Maddison. Angus. Monitoring the World Economy. 1820-1992. Paris: Organization for Economic Co-operation and Development. 2000. Minami. Ryoshin. Economic Development of Japan: A Quantitative Study. [ Second edition ] . Houndmills. Basingstoke. Hampshire: Macmillan Press. 1994. Mitchell. Brian. International Historical Statisticss: Africa and Asia. New York: New York University Press. 1982. Mosk. Carl. Nipponese Industrial History: Technology. Urbanization. and Economic Growth. Armonk. New York: M. E. Sharpe. 2001. Nakamura. Takafusa. The Postwar Nipponese Economy: Its Development and Structure. 1937-1994. Tokyo: University of Tokyo Press. 1995. Ohkawa. Kazushi. “Production Structure. ” In Patterns of Nipponese Economic Development: A Quantitative Appraisal. edited by Kazushi Ohkawa and Miyohei Shinohara with Larry Meissner. 34-58. New Haven: Yale University
Imperativeness. 1979. Ohkawa. Kazushi and Henry Rosovsky. Nipponese Economic Growth: Swerve Acceleration in the Twentieth Century. Stanford. Calcium: Stanford University Press. 1973. Smith. Thomas. Native Beginnings of Nipponese Industrialization. 1750-1920. Berkeley: University of California Press. 1988. Uriu. Robert. Troubled Industries: Confronting Economic Challenge in Japan. Ithaca: Cornell University Press. 1996. United Nations Development Programme. Human Development Report. 2000. New York: Oxford University Press. 2000. Citation: Mosk. Carl. “Japan. Industrialization and Economic Growth” . EH. Net Encyclopedia. edited by Robert Whaples. January 18. 2004. URL hypertext transfer protocol: //eh. net/encyclopedia/article/mosk. Japan. concluding