The economic success of Japan, also referred to as the Japanese economic miracle, has received widespread attention from scholars interested in understanding the phenomenon from economic, social, political, and cultural standpoints (Hurtado & Mukherji 14). Many scholars are in agreement that the Japanese government, under the auspices of the Ministry of International Trade and Industry (MITI) and subsequent agencies, was at the core of the so called economic miracle with the view to assisting the country enhance its economic and political outlook following World War II (Johnson 11-13; Takada 3). The present paper analyses and synthesises available literature to demonstrate how the government’s role affected the Japanese economic miracle.
To commence the paper, is important to note that the relevance of this topic is deeply rooted in understanding the economic history and experiences of Japan with the view to gaining deeper insights into how the country has performed economically over the years. Japan is an influential country in the political and economic outlook of Asia and internationally, hence its choice.
Available literature demonstrates that “Japan’s economic miracle took place in the period from 1965 to 1990” (Hurtado & Mukherji 14). In particular, economic trends from the mid-1960s to 1991 show that Japan experienced very high growth rates in its gross national product (GNP) and also in specific industries such as steel production, automobile, and manufacturing (Richardson 2-3).
While this paper is not interested in discussing the post-economic miracle era, it notes that plummeting property prices formed the underlying reason why the miracle collapsed (Hurtado & Mukherji 14), implying that economic growth was a central pillar of the miracle. But while many scholars have associated the rapid economic growth to a multiplicity of factors including market forces, Japanese management methodologies, special structural characteristics and unique cultural traits, it is evident that the Japanese government played a critical role in placing the economy as a top priority for the country and also in developing excellently trained MITI bureaucrats to drive the economic agenda forward (Johnson 11). Consequently, it can be justifiably argued that the government provided the needed human resources and technocratic advisors responsible for skilfully balancing the benefits of planning with the efficiencies of the competitive national and international market to make the economic miracle a reality.
Additionally, it is evident that without an effective government, the Japanese people could not have been able to emulate and apply the knowledge, expertise, and technologies transferred from Western economic powerhouses to play a significant role in the attainment of the economic miracle. Indeed, one researcher argues that the “economic policies and strategies carried out by political characters greatly influenced and accelerated the economy” (Takada 3).
This view is consistent with the observation that the Japanese government was instrumental in initiating “market-following” strategies that enabled strong government-business cooperation and subsequent economic expansion (Richardson 1). These assertions, in my view, locate the Japanese government at the core of the economic miracle in terms of not only enabling an effective and efficient operating environment for various industries to flourish, but also in developing and implementing market-friendly policies and strategies for uptake by other industries and sectors.
Moving on, there are scholars who view “Japanese economic policy as an arena of government-private sector negotiation and some view government inputs as secondary in importance to private sector behaviour as a driver of the economy” (Richardson 1). In my view, this perception is limited in scope and context since it is almost impossible for the private sector to flourish in the absence of supportive government machinery. The Japanese government may not have had a strong, directive role in guiding or influencing the country’s economy; however, it certainly availed the building blocks for a successful economic takeover by making use of MITI bureaucrats and providing an enabling environment for knowledge and skills transfer to occur (Johnson 11-13).
Lastly, the Japanese government played a critical role in the provision of bank credit, tax inducements, trade protection, and other business incentives that provided the impetus needed to realise modernisation and growth (Richardson 4). In particular, these incentives and subsidies provided local businesses with the muscle to compete favourably with other multinationals particularly in entering international markets to secure markets and growth opportunities. In my own considered opinion, it is evident that companies like Toyota, Bridgestone, Daihatsu and Fuji Electric easily became global brands due to government-sanctioned internalisation capabilities.
Overall, there are many views and perceptions relating to the Japanese economic miracle. However, what is clear is that the government played a critical role in facilitating the economic takeover. Following the analysis, synthesis and personal opinion, it is evident that the Japanese government influenced the economic miracle in terms of providing superbly trained human resources to drive the economic agenda forward, implementing “market-following” policies and strategies, liaising with the private sector to drive growth, and providing local businesses with the much needed bank credit, tax inducements, trade protection, and other business-related incentives.
Works Cited
Hurtado, Pedro S. and Ananda Mukherji. “Recovering the Cultural Dimensions of Structural Competitive Advantage in the Japanese Model.” Advances in Competitiveness Research. 22.1/2 (2014): 14-24. Business Source Premier. Web.
Johnson, Chalmers. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. Stanford, California: Stanford University Press, 1982. Print.
Richardson, Bradley M. The Political Economy of Japan. 1993. Web.
Takada, Masahiro. Japan’s Economic Miracle: Underlying Factors and Strategies for the Growth. 1999. Web.