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How did Modern Japan make economic growth in pre-war?

omi9

Cyrus
7 Oct 2004
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I need do a final paper for this topic. Hope can help me.

The period of modern Japan generally defined as 1868 to around 1945. That was the start of Meiji period to the time just before the Second World War. The Meiji restoration aimed in developing the traditional Japan inherited from Tokugawa period by imposing a series of reform to modern industrial Japan, which strengthened Japan from foreign threats. Consequently, the reforms urged by Meiji government boosted the economic growth of Japan.
Economic growth is measured by real GNP, a quantitative expansion of economic size.
Real GNP = Nominal GNP テ base year price index
Current year price index
When a state has reached a critical point, termed 窶徼akeoff窶 by Rostow and the 窶徭tart of modern economic growth窶 termed by Kuznet, there is a tendency for economic growth to accelerate. Generally speaking, Japan窶冱 period of economic growth was dated to the mid 1880s when there was a noticeable increase in real GNP. That means, from 1868 onwards, there was a period of 20 to 30 years for Japan to transit from a feudal state to the starting point of a modern state. The transition was fostered by the reform carried out by Meiji government based on the heritages from Tokugawa period.
From Tokugawa period, factors inherited were:
1. High education level. The presence of Terakoya(temple school) and Hanko for non-samurai and samurai provided an opportunity for larger population to obtain education.
2. Capital accumulated by merchants. At the end of Tokugawa period, the rise of money-based economy and the merchant class provided a source of capital for Meiji government.
3. High technological level of agriculture. New strains of plants and seeds, chemical fertilizers and Western farming were introduced so that the productivity of agricultural products was greatly increased.
4. Reopening of Japan. This opened a way for introduction of the western technology for growth.
5. Infrastructure.
E.g. Sankinkotai system helped the development of transport system.
Policies implemented by Meiji government that directly affected the transition of Japan to industrialized country:
1. Mobility of labour. The shinokosho system and sekisho were abolished and hence improved the mobility of population.
2. Compulsory education. This helped the development of literate labour force which was important for economic growth.
3. Fiscal reform. The importation of land tax paid in money helped to increase the government revenue for investment.
4. Introduction and diffusion of foreign technology.
5. Industrial policy. Meiji government subsidized key industries and factories and sent trained technicians to them to run equipment imported from foreign countries.
6. Infrastructure. The development of telegraph, postal and railroad system helped the spread of technology.
In the following paragraph, I will examine how Japan could get the three factors for growth under the influence of the Tokugawa heritages and the Meiji government窶冱 policies.

1)Labor
Labor is a kind of factors of production used to produce goods and services which contribute to the growth of Gross Domestic Product (GDP). Labor refers to human effort, both mental and physical. Supply of labor is measured by the number of hours of work effort provided by the workers. Its unit is man-hour.
The modern Japan obtained human resources (labor) and achieved rapid economic growth during the pre-war period.
First, the Japanese population at the start of Meiji Period was about 18 million and then rose to about 32 million by the end of the period. Annul growth rate was around 5%, and it increased gradually in the next 5 decades. With a larger population, the work force would be relatively larger. This increase in quantity of labor allowed a larger potential and actual GDP. Hence, the drastic population increase in Japan at that time was favorable to GDP growth.
Second, in addition to the rise in quantity of labor, quality of work force during the modern Japan was improved gradually. During the Edo period, the education level was high due to the widely presented Terakoya (temple schooling) in towns and village. 43% of the male population and 10% of the female population were literate. Therefore, once the Meiji period began, Japan could vigorously introduce foreign technology and civilization. Furthermore, education reform in the Meiji restoration provided universal education. This enabled the workers to absorb new information and adjust to the ever-changing economic and technology circumstances.
Third, during the Tokugawa era, there were four social classes, namely samurai, peasants, artesian and merchants. This Shinokosho class system was rigid and immobile. For examples, peasants could not change its occupation to become samurai. However, with the fall of the Tokugawa regime in 1869, this Shinokosho class system was abolished. As a result, there was surplus of peasant populations in agriculture productions. Many farmers were forced to take up occupation in other industries. Some farmers also carried part time jobs in factories in order to earn more income. This increased labor窶冱 vertical mobility, people could change occupation between classes. Besides, improved domestic transportation also enhanced labor窶冱 geographic mobility. Farmers in countryside could move to urban areas for work. Originally, the early Tokugawa period was characterized by 窶彗 prodigious waste of labor窶 in farming. Only for a few brief periods during the year could the labor force be fully employed; the rest of the time it was unemployed in varying degrees. Yet, with the abolition of the Shinokosho class system; this 窶徭pare labor窶 could now be put to profitable use, in cottage industries. Therefore, GDP increased with this widely and abundantly available human resource.
Fourth, urbanization proceeded steadily since the Tokugawa period. The capital Edo developed into a great urban centre with over one million inhabitants by 1720s. Many towns such as Osaka, Hiroshima, Nagoya, Kanazawa, where the daimyo had castles, developed into large cities. This urbanization process during the Tokugawa period provided the basis for a unified national economy, stimulated the demand for agricultural and other goods produced in rural areas, and hence the demand for human resources (labor). At the same time, concentration of large population in the cities severed as a large pool of labor. This growth of cities during the Tokugawa period provided a firm foundation for Japan窶冱 industrialization and modernization.
During the modern Japan period, not only did the large labor supply favor economic growth, but also the low wages of labor. Capitalists and industrialists at that time could easily employ cheap and skilled labor for production. This enabled them to carry out production more effectively. Economic activities and GDP growth were then enhanced.
Therefore, factors leading to accumulation of human resources included population increase, education reform, removal of social class system and the growth of large cities.

2)Capital
In the Meiji reform, the four classes system was abolished. The feudal rules and regulations restricting economic freedom were removed. The feudal regulations which required merchants to join guilds and which restricted competition were also abolished. It now became possible for any person to start an enterprise. All Japanese were freed to engage in productive activities. During Tokugawa period, merchants and some powerful lords or samurai accumulate a large amount of capital were allowed to invested in the Meiji period. Many of the former daimyo, whose pensions had been paid in a lump sum, also provided capital for investments made in emerging industries. So the capital came from merchants and daimyos became the main source of capital that used in investment and lent to the government for carried out economic activities. After the Meiji reform, some landowners were enriched by the commercialization of agriculture that partly resulted from the Meiji land tax reform. They began to transfer most of their new savings out of agriculture into new industries for economic development.

Since the scale of modern enterprises often required more capital than one merchant or one family could command, a joint-stock company, which pools capital from different people, was promoted as a form of enterprise suitable for new period. In 1871, for the first time, joint-stock company was formed in the fields of transportation, finance, and land reclamation. In manufacturing, the first joint-stock company was established in 1873 for silk-reeling. By the mid-1870s, more and more people became convinced of the value of joint-stock companies. By 1885, there were 1,279 such companies with capital amounting to 50 million yen.

Besides the wealthy merchants provide capital for Japan窶冱 economic growth. Japan government also took an important role. In order to power up Japan, Japan government took an industrial policy. She strongly supported the industries by providing subsidies and low interest loans to many key industries and built modern factories that later sold to private investment. In the period 1880 to1882, 350,000 yen was spent on the low interest loans. She also took a major responsibility for construction of transport and communication system. The huge amount of government investment largely contributed to Japan GNP.

Fiscal reform in the Meiji restoration changed the land tax system from paying by rice to pay by money. All landowners were required to pay uniform tax every year. The land tax revenue made an important contribution to the government budget. The revenue enabled the allocation of funds for the promotion of industry. Increase in the production of tea and cotton made Japan possible to earn the foreign exchange. The more foreign exchange Japan earned, the more she invested in industries and the more she used to purchase foreign machinery and raw materials for further export productions. As a result, the net exports revenue (total exports 窶 total imports) of Japan increased. Over cycle and cycle, credit creation was developed and more and more capital was provided.

Japan was an agriculture society. Its economy was mainly supported by the peasants. Even there was a growth in the population under the peace and stabile society and with the economic development, more and more people moved from the agriculture sector to the non-agriculture sector, with the improvement in the agriculture methods, Japan窶冱 peasants still could produced enough food for its own country. Therefore, Japan government was no need to use any extra money to purchase foreign food to meet the demand. There was no problem of wasting money. If there were not enough domestic food for Japanese to purchase, government had to use its foreign reserve to import foreign food, which would drain the lack of foreign exchange and constrained industrialization. The adequate domestic food supply solved this problem. All its money could be used as capital for investment and other economic activities.

During the First World War, Japan obtained an opportunity for a rapid economic growth. Although Japan joined the Allies and participated in the war, there was no prospect of serious fighting in Asia. Therefore Japan was no need to produce huge amount of weapons and the related products. She could remain concentrations on manufactured goods and became the main supplier of goods for Asian countries while western countries were putting most of their resources on the military, causing a reduction in economic capacity and an overall shortage of goods. The increased in price of western goods favor Japan窶冱 exports and allow Japan to take advantage of the situation. During the period 1914-1918, a surplus of 1,475 million yen was recorded in the trading account. From 1915-1920, a surplus of 2,207 million yen was recorded in the invisible account. The huge amount of profit stimulated the formation of a large numbers of companies and an expanded in the production capacity. The export revenue provided a great amount of capital for economic activities. As a result, the amount of industrial capital increased from 644millon yen to 2,829 million yen between 1913 to1920.

In the later period of Meiji Era, export of raw silk increased and continued to become the major foreign exchange earner until 1920s. Later the export of light industrial goods including cotton textile and silk fabric industries took the dominant position in earning foreign exchange. Garments and rayon fabric succeeded silk exports in 1930s.

3)Technology
In my focus, apart from labor and capital, the final element that contributed to the rapid growth of Japan窶冱 economy is the ever-upgrading technology. Technology is the knowledge, tools, and systems people use to make their lives easier and better. For the Year 1868 to1945, Japan窶冱 technological level has risen in an incredible speed. Most of the technological achievements can be found in the following major areas: agriculture, heavy and strategic industries (eg. shipbuilding, armament production, mining, railway construction), and light industries (eg. woolen, cotton and silk industries). As mentioned before, the foundation for economic changes had already been laid during the time of the Tokugawa; however, technology transfer were rare in the Tokugawa period and the Sakoku-policy restricted the inflow of technology form the West. In such circumstance, how could Japan obtain her technological skills to achieve economic modernization in the Meiji era?

The Meiji Restoration represented a political turning point. Though it was not a turning point of technology, it did pave the way for one. Only after the Meiji Restoration were there suitable conditions in terms of politics and socio-economics to domesticate and develop imported technologies. In 1880, the wealthy merchant families of the late Tokugawa period were unwilling to invest in modern enterprises because of no experience and confidence, thus the Meiji government took the lead in setting up heavy industries, mechanizing light industries and introducing new manufactured products. In order to obtain advanced technology and skilled workers, foreign advisers and engineers were employed to run new industrial undertakings and train native Japanese technicians. In addition, technology could also be obtained through modern education. The education reform was carried out by the government. Therefore, technical schools were set up. Compulsory education was introduced. Once Japanese had been successfully trained to become skilled workers and technicians, they could replace foreign advisers. For instance, from 1871 to 1873, Meiji oligarchs went abroad to study the West 窶 the Iwakura Mission. They examined technology, banking systems, political systems, infrastructures, educational systems, zoos and agricultural techniques and considered what would work in Japan and what would not. Besides, a Translation Bureau was set up to translate subjects like economics and technology.

In fact, the Meiji government had done a lot to initiate the development of industrialization and the technology transfer. For the heavy and strategic industries, many modern shipyards were built at Yokosuka, Nagasaki and Kobe. Large factories for making armament were established. The nationwide network of roads which had been created by Sankin-kotai in Tokugawa era helped the technology transfer within Japan. Moreover, efficient communication and transportation system were developed to support the military industry. One of the examples would be the first railroad from Yokohama to Tokyo was set up in 1870 and in 1880, many major cities were linked by government lines. For the light industries, textile industries, such as woolen mill, cotton industry and silk industry, were developed rapidly. Despite of the trained workers, the advanced machinery was introduced by the private companies, sponsored by the government. For the agricultural sector, new strains of plants and seeds, chemical fertilizers and Western farming were introduced while experimental stations and agricultural colleges were set up. As a result, during the first stage of industrialization, the Meiji government had provided the leadership, framework and encouragement for industries to succeed.

Other factors that contributed to the technology advancement may include the Japanese cultural thinking of adopting foreign elements and making modifications to cope with their situations consequently. Just like the example of the Japanese taking the Chinese language as the major reference to create their own form of language system. Besides, the Japanese spirit of 窶從ever give up窶? their incentive, has led them to the road of success as they had really tried various methods to raise their technological level by correcting many mistakes and errors during the process.

Interaction between the three major factors
After the description of the three main factors, one more important point that should be considered is that the three main factors were not acting alone in the process of economic success; instead, they were mutually affected. For example, the population growth contributed to an increase in the labor force, at the same time with the capital for carrying out the education reform, the labor became skilled and could be available for industrialization and modernization. On the contrary, the advanced technology transfer increased the productivity and quality of various industrial products, thus increasing the amount of exports which bring in large amount of income from foreign countries. As a result, these three factors and other related elements, such as political policies and infrastructure, were interacted each other to achieve economic modernization.

Conclusion
In view of the factors contributed to the economic growth, the three main factors, labor, capital and technology, enabled Japan to gain economic independence with the increase in local and foreign trade. Most important of all, the success came from the right lead of the Meiji government. The government had formulated the right direction of economic modernization, sponsored industrialization and provided the right tactic in both practical and realistic ways. Therefore, it is quite complicated to study all the factors of production for growth in Japan at one time since it links to the back-up provided by the growth of the rest of the economy. However, it would be easier and clearer for us to focus on a few major factors as in this essay.
 
Looks like someone gave you a great outline from which to start...what is you assignment exactly?
 
Maybe I bumped into this thread accidentally but could not help but to scribble a few lines as I am always impressed about the way Japan has made progress since they were almost reduced to ashes once. There have been several sectors where this Asian country can be called the supreme power and it can now be compared to any of the developing nations. The secret lies in their spirit I believe.
 
This is not a mistake, but it is consideration about the tactics of the Meiji government.
It is not written about an important strategy.
The Japanese felt foreign pressure in those days.
"Unequal Treaties" of Tokugawa era
An important aim of the Meiji government is a revision of an unequal treaty.

The thing that is necessary for this revision,
Reform of "law" "economy" "culture" "military affairs"
It was necessary to negotiate equally with American and European countries.
Educational reform of that purpose was the most important.
Fortunately, in Tokugawa era, those basics were established.
Because the samurai regarded Confucianism as basics culture, they were able to read Chinese poetry.
The samurai did required reading of "ナ?Cツ坂?伉図ナスu".
This book seems to have been forgotten in China.
However, it was the book which was important in a Japanese indicator.
Please try to read about this book.
 
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