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Economy: From Recovery to Miracle to Lost Decade

Economy: From Recovery to Miracle to Lost Decade. Explaining the Economic Miracle. Explaining “stabilization”. Stability ≠ stagnation or lack of change Hybrid result: mix of promoting, managing, resisting, change SCAP mobilizes existing constituencies, shifts balance among them

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Economy: From Recovery to Miracle to Lost Decade

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

  2. Explaining “stabilization” • Stability ≠ stagnation or lack of change • Hybrid result: mix of promoting, managing, resisting, change • SCAP mobilizes existing constituencies, shifts balance among them • Effectively: land, labor cases • Less effect: zaibatsu dissolution, education, policing • Economic recovery also critical

  3. Revival to Miracle [to Lost Decade] • Low expectations, and devastation, 1945-50 • Economic miracle, 1950-75 • Economic mess [deferred]

  4. 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

  5. Toward Recovery • 1949-50: • Dodge line Program of radical retrenchment Considerable impact on inflation, but no recovery in sight Would it have worked, alone? • 1950 Korean war: gift of gods? "special procurements." Worth 590 million dollars in 1951, 800 million each in 1952, 1953. 60% to 70% of all export revenues, 1951-53

  6. The Record of Growth The high growth miracle: 1950-90 • 10 percent annually, through 1974 • continued moderate, strong growth --> 1990/91

  7. Explaining Growth international factors • high international growth • tripling of international trade • cheap energy • accessible new technologies

  8. Explaining Growth domestic factors • entrepreneurship • human capital-- well-educated • state role: economic bureaucracy • MITI • Ministry of International Trade and Industry

  9. state role: economic bureaucracy MITI Explaining Growth • climate of confidence • protecting/nurturing • bailing out

  10. 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

  11. 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.

  12. Land prices boom Economy: Japan’s “Lost Decade” Prelude: The bubble era, 1985-90 • Strong GNP: up 55% • over the decade • Gold leaf sushi wrap

  13. Economy: Japan’s “Lost Decade” The bubble bursts: 1991-->

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