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Economic Development of Japan

Economic Development of Japan. 大正時代. No.6 WW1 and 1920s. Society, Economy, Diplomacy: 1910s-20s. WW1 brought a huge export-led boom to Japan. This solved fiscal and BOP problems (for the moment). The bubble burst in 1920 and a recession period began.

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Economic Development of Japan

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  1. Economic Development of Japan 大正時代 No.6 WW1 and 1920s

  2. Society, Economy, Diplomacy: 1910s-20s • WW1 brought a huge export-led boom to Japan. This solved fiscal and BOP problems (for the moment). • The bubble burst in 1920 and a recession period began. • FDI and import substitution in heavy industries proceeded, and new zaibatsu emerged. • Taisho Democracy and the rise of social movements (labor, farmers, women, “outcasts,” socialism) • Shidehara Diplomacy—use non-military means (diplomacy) to secure trade benefits, Japan-US friendship and Chinese interests.

  3. Real GNE Growth (5-year moving average) 1920s • WW1 Bubble burst and recessionary period begins • Machinery, chemical, heavy industries expands • Electrification (hydraulic power generation) rises WW1 Estimate by Ohkawa, Takamatsu, Yamamoto

  4. PP.100-02 World War I and Export-led Boom • Export-led demand pushed up prices, profits and production—artificial acceleration of import substitution, esp. in machinery and chemicals. • BoP crisis (gold reserve loss) was solved. • Narikin emerged (Suzuki, Ship Narikins). They spent money on big villas, parties, women. Production Trade (bil yen) Ship Narikin Domestic Supply Ratio Industrial production

  5. Major FDI Firms in 1910s-30s Source: S.J.Bytheway (2005), pp.166-169

  6. Major FDI Firms in 1910s-30s (contd.) Compared with Meiji Period, • The number of US FDI increases. • FDI in automobile, electrical, machinery. • Zaibatsu plays key role in FDI partnership or subsequent take-over. At the same time, Japan’s outward FDI begins: • FDI to China: textiles (Shanghai, Qingdao), steel (Anshan) • FDI to Korea: heavy chemical industries Source: S.J.Bytheway (2005), pp.166-169

  7. PP.104-5 New Zaibatsu (Konzern) • Heavy & chemical industries (not banks, textiles, trade) • Backed by political connection and support • Active investment in Korea and Manchuria (NE China)

  8. Full democracy Democratic institution(Form) Showa2 US rule 1960 Now LDP dominanceLack of policy debate 1945-51 ConstitutionLawsParliamentElectionCourt DemocratizationNew constitution Military rises 1931 Democracy movement, Party cabinet 1937 Defeat War Male suffrage 1925 Showa1 Taisho ConstitutionParliament 1889 Fascism 1937-45 Meiji Edo (Content) Political fights Pure dictatorship Reform vs conservatism, big vs small government, other policy debates Political competition

  9. Early Meiji 1881 1889/90 WW1/Taisho 1877 X Japan-China War1894-95 Japan-Russia War1904-05 Externalmilitary campaign Colonize Korea1910 SaigoFormer samurais Export-led boom solves fiscal crisis Fiscal activism & war Top-downindustrial-ization OkuboKurodaOkuma Fiscal crisis Government Expelled Yamagata Spending! ConservativesMilitary ConstitutionParliament Top-downdemocrat- ization Big spenders Ito KidoInoueItagaki Ito Seiyukai Party Hoshi Taisho Democracy OkumaFukuzawa Opposition Bottom-updemocrat-ization ItagakiUeki (Liberty Party)Nakae Tax cuts!

  10. Taisho Democracy – Political Development Anti-partyconservatistsgenro, military, bureaucrats Pro-Constitution 3-Party Cabinet 1924 Yamagata, Katsura X -Universal suffrage, 1925-Army budget cuts-Shidehara Diplomacy Cooperation & fightsAlternating governments Seiyukai PartyBig spending for securing rural votes RikkenSeiyukai Party Saionji, Hara Army’s misuse of power, 1913 Navy’s bribery scandal, 1914 Reform Club Opposed to universal suffrage Rice Riots, 1918 Kenseikai (Minsei Party) Belt-tightening, workers rights 1913 1914 Popular demonstration surrounding Parliament to protect constitution

  11. PP.226-7 Democracy Theory under Meiji Constitution Article 4—The Emperor is the head of the Empire, combining in Himself the rights of sovereignty, and exercises them, according to the provisions of the present Constitution. Article 55--The respective Ministers of State shall give their advice to the Emperor, and be responsible for it. (1) Can Emperor really make decisions or just follow advice?(2) Is party cabinet (“parliamentary system”) possible? Emperor decides Cabinet decides ？ Emperor Emperor ？ Individual advice Collective advice & responsibility -Appointed by Genro? -Party with largest parliament seats? Army Navy PM Individual ministers Cabinet

  12. Prof. Tatsukichi Minobe (1873-1948), Tokyo Univ. <Organ Theory of the Emperor>-The state, as a legal entity, has the sovereignty.-The emperor is the highest organ of the state, and operates under Constitution (not unlimited power)<Justification for party cabinets> (Article 55)-Cabinet must take collective responsibility  Same political party-Imperial orders must have Minister’s signature  Cabinet’s power Prof. Sakuzo Yoshino (1878-1933), Tokyo Univ. Democracy develops in 3 steps to achieve results:(1) Party cabinet where the largest party forms government (2) Universal suffrage, to expand voter base (3) Social policies, to directly improve people’s lives Yoshino proposed minpon shugi民本主義to promote democracy under Meiji Constitution where Emperor had sovereignty.

  13. Other Social Movements in Taisho • Emergence of new middle mass(professionals, salaried workers) • Universal (male) election (1925) • Labor movement and May Day (1920) • Landless farmers’ riots and formation of farmers’ union (1922) • Women’s movement--Seitosha (Blue Stockings Society, 1912), New Women’s Society (1920) • Zenkoku Suiheisha (National Level Society, 1922) to fight discrimination against “outcast” people • Rise of socialism and Marxism Universal suffrage movement Voters/Population

  14. PP.106-9 Shidehara Diplomacy Kijuro Shidehara, 1872-1951Foreign Minister, 1924-27, 1929-31 Prime Minister 1945-46 His policy was more moderate than before or after him • Maintain good relations with US and UK • Respect Washington Naval Disarmament Treaty (1921-22) • Hamaguchi Cabinet signs London Naval Disarmament Treaty despite objection from military (1930) • No military intervention in China; secure Japan’s economic interest through diplomacy and negotiation • When China protests and resists, his diplomacy breaks down • Domestically, criticized as Coward Diplomacy • Failed to stop Manchurian Incident (1931) started by Kantogun (Japanese Army stationed in China)

  15. Japan-US Relationship • Largest trading partner: US share in Japan’s trade—export 44%, import 26% (in 1925) • In China--Japan asserts its “special interests” in China, US wants open door policy (esp. for bank loans) • Immigration Problem 1890sJapanese economic immigrants to US West Coast; Anti-Japanese movement begins 1907 Gentlemen’s Agreement to curb Japanese immigration 1913 Anti-Japanese legislations in California 1924 Ban on Japanese immigration 1942 Japanese Americans are sent to concentration camps Manzanar Camp, California

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