Japanese Economy Between World War One and World War Two:
The Japanese economy was dealt multiple blows between the two world wars. The first was the Showa Financial Crisis in 1927 and the second one was the Showa Depression of 1930-31 (Bank Of Japan). The Showa Financial Crisis of 1927 resulted from continuous economic instability which was because of the unfinished reforms related to commerce and banks, lenders who lent out too much money and were unable to collect it on time. The government transformed the business world via massive tax payer subsidies and consolidated failing banks to ease the burden of debt. The great depression’s impact on Japan was known as the Showa Depression of 1930-31. Japan’s economy was shielded from some of the worst effects of the Great Depression more so than other countries because of “macroeconomic stimulus measures” (Bank of Japan) started by Korekiyo Takahashi, an experienced Finance Minister who took the oath of office in December 1931. Takahashi introduced wide-ranging macroeconomic procedural changes. He adjusted the exchange value of the currency, reformed government spending and adjusted monetary policy. Around the same period of time, the world and Japan stopped basing their economic policy on the gold standard because major financial powers like Britain and its empire stopped using it. Then, the Japanese government established a framework through which Japanese governments were loaned large sums of money with relative ease from the central bank. This led to the Japanese government loosing its traditional sense of budgetary conservatism and fiscal discipline.
Postwar Recovery:
The post war recovery also known as "the economic miracle” had four parts. At first the Japanese economy recovered, then experienced economic growth at rocket speed, then a steady calm and eventually slowed.
Immediately after the end of the war Japan from 1946 to 1954 experienced recovery. Most of Japan’s factories and commerce had been bombed and destroyed. In line with economic theory most countries were going through a mild recession due to the sudden drop in production, as was Japan. Japan’s economy and industry were rebuilt by the United States under the supervision of General Douglas MacArthur (in coordination with Japanese authorities). While in this stage of recovery, leaders paid attention mostly to Japan’s cotton, steel, and coal businesses.
Japan experienced economic growth at rocket speed from 1954 to 1972. As from 1967 to 1971, Japan’s economy encountered record high development judging by Japanese standards. Japan became the most advanced country in North East Asia. Japanese universities were instrumental in providing educated and intelligent graduates to drive Japan’s economy forward. Japan has continued to maintain its high education rates from the seventies into present times.
The Japanese economy grew from 1973 to 1992 at a stable rate (not as fast as previous decades). From 1973 to 1979 the world suffered from high oil prices due to conflicts in the middle east. The Arabs and Israelis fought which stymied oil production and increased the price threefold. Japans economy remained undeterred as the world was suffering from the oil price increase.
The Japanese economy was dealt multiple blows between the two world wars. The first was the Showa Financial Crisis in 1927 and the second one was the Showa Depression of 1930-31 (Bank Of Japan). The Showa Financial Crisis of 1927 resulted from continuous economic instability which was because of the unfinished reforms related to commerce and banks, lenders who lent out too much money and were unable to collect it on time. The government transformed the business world via massive tax payer subsidies and consolidated failing banks to ease the burden of debt. The great depression’s impact on Japan was known as the Showa Depression of 1930-31. Japan’s economy was shielded from some of the worst effects of the Great Depression more so than other countries because of “macroeconomic stimulus measures” (Bank of Japan) started by Korekiyo Takahashi, an experienced Finance Minister who took the oath of office in December 1931. Takahashi introduced wide-ranging macroeconomic procedural changes. He adjusted the exchange value of the currency, reformed government spending and adjusted monetary policy. Around the same period of time, the world and Japan stopped basing their economic policy on the gold standard because major financial powers like Britain and its empire stopped using it. Then, the Japanese government established a framework through which Japanese governments were loaned large sums of money with relative ease from the central bank. This led to the Japanese government loosing its traditional sense of budgetary conservatism and fiscal discipline.
Japanese Children eating during the Showa Depression
Postwar Recovery:
The post war recovery also known as "the economic miracle” had four parts. At first the Japanese economy recovered, then experienced economic growth at rocket speed, then a steady calm and eventually slowed.
Immediately after the end of the war Japan from 1946 to 1954 experienced recovery. Most of Japan’s factories and commerce had been bombed and destroyed. In line with economic theory most countries were going through a mild recession due to the sudden drop in production, as was Japan. Japan’s economy and industry were rebuilt by the United States under the supervision of General Douglas MacArthur (in coordination with Japanese authorities). While in this stage of recovery, leaders paid attention mostly to Japan’s cotton, steel, and coal businesses.
Japan experienced economic growth at rocket speed from 1954 to 1972. As from 1967 to 1971, Japan’s economy encountered record high development judging by Japanese standards. Japan became the most advanced country in North East Asia. Japanese universities were instrumental in providing educated and intelligent graduates to drive Japan’s economy forward. Japan has continued to maintain its high education rates from the seventies into present times.
The Japanese economy grew from 1973 to 1992 at a stable rate (not as fast as previous decades). From 1973 to 1979 the world suffered from high oil prices due to conflicts in the middle east. The Arabs and Israelis fought which stymied oil production and increased the price threefold. Japans economy remained undeterred as the world was suffering from the oil price increase.
From 1992 onwards, Japan’s economic growth slowed because the “economic bubble” in Japan popped and Japan’s economy slid into recession. Much like the older crash in the great depression the overzealous lending policy of Japanese banks created false enthusiasm within Japanese investors. The country first suffered inflation of prices for goods and services and then experienced deflation which weakened the Yen and the Japanese consumers purchasing power.
Graph of Japans Economy
Articles to read:
Rethinking the Japanese Economic Miracle
Into the Showa Financial Depression and the Great Depression
Videos:
Articles to read:
Rethinking the Japanese Economic Miracle
Into the Showa Financial Depression and the Great Depression
Videos: