Published by: Shamma AL Marri
Date: December 21 2016
When a country goes through a war it’s usually a very hard time, the economy loses resources and production decreases, so it enters a phase of contraction where unemployment is high and people have no money. And that’s exactly what happened in Japan, it faced the longest stagflation during the 1990s after the second world war.
But when you come to learn about japan now, you notice that it’s doing great, their people are happy, with a flourishing economy. Being the world’s second largest developed country, you can never guess that they went through such a disastrous war. So, what is the secret behind their recovery? How did japan recover from such problem?
Japan was an important lead in the league of nations. During that time countries either signed pacts with each other, allied or went against each other. Those movements stirred a lot of conflicts between nations and created many wars, which got japan involved in the second world war and the cold war. After suffering from the aftermaths of the wars, Japan had a great recovery!
The improvement first happened when the Japanese leaders changed some policies that were focused on the trading industries. Another important factor of such improvement is a group called Keiretsu, which consisted of producers, traders, and banks. They worked together towards a better decision. Also, big corporations and factories aided by guaranteeing employees a lifetime of employment which encouraged people to put in some effort. And this built up a great relation with government workers and the people.
How the government helped.
When the word ‘government’ comes to your mind, the first thing you think of is ‘a system used for controlling a country.’ Basically, the government arranges plans and strategies to keep a nation moving in the right way. And that’s exactly what the Japanese government aimed to achieve after the many lose during the wars. They had achieved such marvellous growth by first putting new policies and focusing on trading. The new policies involved rules and trade barriers that excellently controlled the economy. Concentrating on trade expansion, they could control private sector growth.
First signs of improvement.
After Japan’s economy had fallen, there was one way left to go, which is going back up. Interest rates fell, and this encouraged business owners to borrow loans from the banks. During this time, many companies emerged and competition was high. This allowed companies and business to expand speedily. Private companies that had experienced the war, such as Nissan and Toyota, increased their production and recovered. One of the new companies, Sony, emerged so strongly and produced the best quality and innovation in electronics goods worldwide.
The economy thrived, and nationalism grew stronger than ever!
After the second world war, Japan’s effort was put in the industries. Factories that once produced combat weapons for the war, were no longer needed and had turned into producing needed gear such as sewing machines. The businesses that produced optical weapons, like the gun sight, had turned into producing cameras and eyeglasses. They all focused on producing what’s being demanded.
Japanese companies were all working so hard. Technology was introduced which gave them a chance to upgrade even more. Free trade came along, which created a friendly international environment with other countries, introducing cheap technology and raw goods.
The united states, a friend of japan!
Japan and the U.S were friends and supported each other during the cold war years, the U.S had an advanced economy unlike japan back then, as the Japanese market wasn’t doing great. The U.S encouraged Japan by accepting the exports of Japanese products to the US. This created a trade relationship between both countries. This trading relationship drew another road for japan into expanding. Later, they had created international relationships with other countries and markets that had low tariffs and low prices of raw goods like oil.
Unfortunately, after the war, Japan was forbidden to re-arm, but luckily the U.S had got their back.
Expanding is at no time everlasting and After every boom comes a bust or a recession. The economic growth never lasted but came to downfall due to the bursting of an economic bubble called the Japanese asset price bubble, which was followed by 10 years of the “lost decade” until 2000. With Japan reaching a peak after the cold war, to a recovery a year later, only to drop once again because of that price bubble which ended the same year the gulf war started.