Contemporary Models of Development and Underdevelopment
Case Study: Japan
Lecturer : Faishal Fadli, S.E., M.E., Ph.D.
Course / Class: Development Economics / JA
FACULTY OF ECONOMICS & BUSINESS
UNIVERSITAS BRAWIJAYA
MALANG
2022
Japan’s Economy Framework
Japan becomes one of the world's largest and most developed economies. It has a well-educated, and hardworking workforce. Moreover, it has a big affluent population, making it one of the world's most important consumer markets. From 1968 to 2010, Japan's economy was the world's second-largest (behind the United States), until China surpassed it. Its GDP is expected to be USD 4.7 trillion in 2016, and its population of 126.9 million enjoys a high standard of living, with a per capita GDP of just under USD 40,000 in 2015. From the 1960s to the 1980s, Japan had one of the world's fastest economic growth rates. This expansion was driven by high investment rates in productive plants and equipment; the use of efficient industrial techniques; a high level of education; positive labor-management relations: ready access to cutting-edge technologies and significant investment in R&D; large domestic market of discerning consumers, gives Japanese businesses a competitive advantage in terms of operations scale; and also more open global trades framework. Recently, economic reformations and trade liberalization purposed at making the economy more open and flexible will be crucial in assisting Japan in dealing with its challenges. Former Prime Minister of Japan, Shinzo Abe pursued a reformist agenda dubbed 'Abenomics,' implementing fiscal and monetary expansion and structural reform elements that could liberalize the Japanese economy.
Difficulties on Japan's Economy Growth
Geography Difficulties
In many ways, a country's geography influences the development of its society and culture. Its geographical location influences intercultural influences; its size influences demography, the development of social structures, and its position in the international community.
Japan’s geography comprises islands located along the Pacific Rim to the east of China and across the Sea of Japan (East Sea) from the Korean Peninsula. The islands' tall mountains are the result of volcanic activity. It doesn’t wonder us, because Japan’s archipelago is a place where several plates meet, such as the Pacific Plate, Philippine Plate, and the Eurasian Plate. Furthermore, many of the volcanoes, including Mount Fuji, are active. Earthquakes caused by shifted plates and volcano activity can cause widespread damage and destruction. A massive earthquake struck the Tokyo area in 1923, killing an estimated 143,000 people. An earthquake near Kobe in 1995 killed approximately 5,500 people and injured another 26,000 others.
Although the world is more impressed by their country's beauty and wealth than. its geography presents challenges, tsunamis, typhoons, and other severe weather that cause significant damage to human life and society in Japan, which is considered one of the world's leading disaster areas.
Population Declining
The declining marriage rate, an increase in the average age of those marrying, economic burden, later child-bearing, and infertility are all factors contributing to Japan's declining birthrate. The low birth rate in the country is largely due to factors shared by most wealthy countries, such as access to birth control and abortion. Japan has far fewer diverse cultures from various parts of the world. In Japan, the average age of first marriage is now 30, and one-third of the population sees no point in getting married at all. Japanese couples appear to have sex less often than their counterparts in other countries, which appears to be related to the pressures of life in Japan.
Look at developed countries nowadays, fertility tends to be higher in countries where women's employment rates are higher. This implies that Japan's family and other public policies should prioritize the well-being and welfare of couples and families, rather than the country's overall concern about low fertility. Only when society stops pressuring women to choose between work and family life will Japan's fertility rate begin to recover, resulting in a slower aging of the population and a halt to population decline.
After World War II
Following the loss of World War II, Japan was forced to look elsewhere for raw materials. Extensive trade networks were established to supply the materials required by the rapidly expanding manufacturing sector. Japan began to industrialize and build its economic and military power by first utilizing Japan's limited resources. The road to industrialization moved quickly because it was already semi-urban and had an organized social order with skilled artisan traditions. In the late 19th and early 20th centuries, Japan needed raw materials and expanded to take over the island of Formosa (Taiwan) and the Korean Peninsula. Japan was rapidly becoming a colonial power. They grew to control the southern part of Sakhalin Island from Russia and a portion of Manchuria (Northeast China) from the Chinese. Japanese industries grew as they put the locals they had subjugated to work and extracted the raw materials they required from their newly conquered colonies.
Does the Big Push Happen in Japan?
According to Rosenstein Rodan, the big push represents how market failures can lead the concerted economy-wide and likely public-policy-led effort to kickstart or accelerate the long process of economic development. Looking back at Japan’s circumstances, the Big Push is real and gained success, especially from the effect of Meiji’s Restoration. In the late nineteenth and early twentieth centuries, Japan's Meiji government organized a big push. The government capitalized and subsidized numerous state-owned enterprises (SOEs) in the late nineteenth century. As the nineteenth century came to a close, Japan embarked on a massive privatization program to restore public finances. Japan then entered its high-growth era.
Meiji Restoration
When the Meiji Emperor was re-established as Emperor of Japan in 1868, the country was militarily weak, primarily agricultural, and had little technological development. Meiji Restoration brought several things to do for sake of a better Japan. It started with establishing a national educational system and a constitution, as well as an elected legislature known as the Diet. They did this to create a favorable environment for national growth, gain Western respect, and build support for the modern state. Popular education had spread rapidly during the Tokugawa period, and in 1872 the government established a national system to educate the entire population. By the end of the Meiji period, almost everyone had completed at least six years of free public schooling. The government closely monitored the schools, ensuring that, in addition to basic skills like mathematics and reading, all students received "moral training," emphasizing the importance of their responsibilities to the emperor, the country, and their families.
Millions of people were suddenly free to choose their occupations and move around freely. The government enabled investment in new industries and technologies by creating a new political and financial security environment. The government is constructing railway and shipping lines, telegraph and telephone networks, three shipyards, ten mines, five munitions works, and 53 consumer industries (making sugar, glass, textiles, cement, chemicals, and other important products). However, this was very costly and strained government finances, so in 1880 the government decided to sell most of these industries to private investors, subsequently encouraging such activity through subsidies and other incentives.
The Meiji Restoration is regarded as a successful big push, a government-coordinated expansion of interdependent industries that avoided bottlenecks. It is undeniable that Japan accelerated its integration into the modern world. The Meiji Restoration occurred in 1868, and by the end of World War I, Japan had developed an industrial economy comparable to that of much of Europe. However, the majority of its major push was most likely not coordinated by the government. Rather, Japan's economic history suggests that, in certain circumstances, a big push can succeed, despite bleak evidence to the contrary. The state, in particular, gives an initial push, marginalizing traditional elites, reforming basic institutions, and possibly even subsidizing technology imports, before withdrawing its hand. This withdrawal examines government failure issues.
Japan Economic Miracle
The Japanese economic miracle refers to Japan's unprecedented period of economic growth from the end of WWII to the beginning of the 1990s. The economic miracle is divided into four stages: recovery (1946-1954), high increase (1955-1972), steady increase (1972-1992), and low increase (1992-2017).
Following the end of World War II, the Japanese economy was in ruins. Every country experienced some postwar industrial growth, but those that experienced a significant drop in industrial output, such as Japan, West Germany, and Italy, recovered the fastest. In Japan, industrial production fell to 27.6% in 1946, but recovered in 1951 and reached 350% in 1960. The outbreak of the Korean War contributed to Japan's quick recovery from WWII. Textile production accounted for more than 23.9% of total industrial output. Japan's industry quickly supplied the necessary munitions and logistics to the American forces fighting in Korea. Demand stimulated the Japanese economy, allowing it to recover quickly from the effects of WWII.
Japan's economy was able to soar from the 1950s to the 1970s after gaining US support and implementing domestic economic reform. Furthermore, Japan completed its industrialization process and became East Asia's first developed nation. From 1967 to 1971, the Japanese Economic Yearbooks showed a significant increase. According to the yearbook in 1967, the Japanese economy advanced faster than expected in 1966. The reasons for Japan's complete industrialization are also complicated, and the major feature of this time is the influence of the Hayato Ikeda administration's governmental policies, vast consumption, and vast export.
Concluding Remarks
In the late nineteenth century, Japan's Meiji government organized a major push to privatize state-owned enterprises. Almost everyone had completed at least six years of free public schooling by the end of the Meiji period. They did this to foster national growth, gain Western respect, and strengthen support for the modern state. The Meiji Restoration is regarded as a successful big push, with the government coordinating the expansion of interdependent industries to avoid bottlenecks. In 1880, the government decided to sell most of these industries to private investors, and subsequent subsidies and other incentives were used to encourage such activity.
Japan had developed an industrial economy comparable to that of much of Europe by the end of World War I. Following domestic economic reform, Japan's economy was able to soar from the 1950s to the 1970s. Japan completed its industrialization process and became the first developed nation in East Asia.
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