Economy: From Recovery to Miracle to Lost Decade Explaining the Economic Miracle

Explaining “stabilization” zStability ≠ stagnation or lack of change zHybrid result: mix of promoting, managing, resisting, change ySCAP mobilizes existing constituencies, shifts balance among them yEffectively: land, labor cases yLess effect: zaibatsu dissolution, education, policing yEconomic recovery also critical

Revival to Miracle [to Lost Decade] Low expectations, and devastation, Economic miracle, 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, bicycles and sewing machines

Toward Recovery : Dodge line Considerable impact on inflation, but no recovery in sight Would 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, % to 70% of all export revenues,

The Record of Growth The high growth miracle: 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 Miracle a 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, Strong GNP: up 55% over the decade Gold leaf sushi wrap Land prices boom

Economy: Japan’s “Lost Decade” The bubble bursts: >