FISNet Casual Conversation by Trishit
Within 25
years since the end of WWII, Japan had occupied the world as its second largest
economy, only behind the United States. The period between 1945 and 1973 marks
the exponential growth of Japan and its establishment as a modern world power.
“Japan
was the famous high economic growth country,” says Mr. Suzuki, Vice-President,
FIDEA Holdings as he looks back at Japan’s post-war economic growth. In his
casual conversation session with students from Tohoku University, he discussed
the period between 1945 and 1973 and comparing it with the Chinese growth in
the 21st century.
The
period between 1945 and 1965 was tiresome. Initially, Post-WWII Japan was
governed by the General Headquarters (GHQ) from US. The GHQ brought about
several agrarian reforms and initiated the process for dissolution of
conglomerates. Mr. Suzuki remarks the example of dissolution of Yasuda Bank
under this policy and the subsequent formation of Fuji Bank. He also remarks
the unification of Mitsui and Sumitomo groups and the breakdown of the holding
company that had held Mitsubishi and Nippon Ship Holding together.
In 1949,
Joseph Dodge introduced the stabilisation policy which included a balanced
budget and fixed the exchange rate at 360 JPY to 1 USD as a standard. With the
formation of People’s Republic of China in 1949, the policy was changed so as
to combat the rise of a communist
country. The idea of ‘No need to grow more’ for Japan collapsed eventually.
By the
end of the Korean War in 1950, there was special procurement for Japan which
re-established its production levels to the pre-war times. Japan was introduced
to capitalism by the US and the capital assets were divided between the
companies. Yet, since the capital ratio in US and Europe was higher at 40-50%
in a contrast to Japan’s 20-30%, the former was safer. Enhancing one’s capital
meant more time and lending was easier. This is the point where the Japanese
bubble economy began to take shape.
Japanese
economy grew at a remarkable 9.7% between 1952 and 1972. The Ikeda cabinet
introduced the ‘National Economy Doubling Plan’ in 1960 and 3 sacred imperial
treasures for people became clear: Monochrome TV, Washing Machine and
Refrigerator. A similar approach has been recently adopted by China.
By the
time 1964 arrived, Olympics was the new feather in the hat. With the
introduction of Tokaido Bullet Train (Though it brought its own exhaust gas and
smog problems), Japan entered the Izanagi Economic Boom in the period of
1965-1970. This was the longest economic boom period. There was a weight shift
from light to heavy industries and the new 3 sacred imperial treasures stood
at: My Car, Colour TV Set, Air Conditioner. The demands of the people were
indicative of Japan’s exponential growth.
By 1972,
Japan planned to remodel the archipelago. It wanted to eliminate the gap
between central and local cities. A framework to sustain high economic growth
was introduced at the same time. Low labour cost, introduction of technology
from western countries, undervalued fixed exchange rate, indirect financing
with low exchange rate, abundant and low cost labour force, high saving ratio,
higher education attainment, etc. were some of the key factors included.
“Smooth
transfer of skills from one employee to another was highly encouraged and
incentivised,” said Mr. Suzuki. On Japanese style employment system he remarks,
“Lifetime employment, On-the-job training and accumulation of company-specific
skills are some of the key features.”
Late
comers were held advantageous on several occasions. Import of foreign
technology with subsequent improvement was given high priority. Companies could
effectively avoid market risks associated with new business operations. Sales
success was marked with quality products, non-price competitiveness,
productivity enhancement, etc.
Yet,
everything was not rosy at the same time. The perils of an advanced economy
began to show up soon. Cities became overly crowded and depopulation in local
areas followed. Environmental pollution, traffic congestion and waste
management posed as key challenges. At the same time, focus shifted to light
industries such as IT, service, automobile, electronics, robotics, factory
automation, etc. There was a sharp change in lifestyle and a consumption boom
followed. The end to the Japanese high economic growth followed by a stable
growth.
In 1973,
an oil crisis occurred. The economic growth settled at -1.2% in 1974 for Japan.
This turned out to be an opportunity for improvising energy efficiency. The
concept of ‘streamlined management’ became increasingly popular and
knowledge-intensive industries were being focussed upon. The growth rate was
restored at 3-5%.
“The lost
decade is yet to follow,” remarks Mr. Suzuki. He adds, “Unfortunately, this is
the fate of all advanced economies.”
When
asked about centralisation of economy in Tokyo, he comments, “It is more
convenient as all major institutions have settled there. Yet, things are
diversifying. As an example, the Cancer Research Institute has been moved from
Tokyo already and decentralisation is a slow yet a progressive process.”
Today,
new graduates earn ￥250,000
per month as compared to ￥30,000
in 1972. Japan aims to keep the growth rate at -1.2% and is working on
weakening of yen. It has already introduced a negative interest rate and is
constantly working towards economic revival.
“I don’t
see another economic boom for Japan,” comments Mr. Suzuki who has seen Japan
grow. Indeed, there are many lessons to be learnt as we see the rise of China
and other economies in the modern world.
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| by Trishit, TUFSA member |
Hosted by TUIF Pre-event team, the Movie Night event on May 15 in the Multi-Purpose area of the Sendai International Centre Subway Station. It was flagged off with Naomi Hadisumarto, an Applied Marine Biology Student at Tohoku University by presenting a talk on YSEALI (Young South East Asian Leaders Initiative) Generations: Oceans where she put forward the challenges that our oceans face today and how people (especially youth) can contribute to addressing of such challenges. This project has been introduced in ASEAN Countries by President Obama to involve the next generation in key leadership roles.
This was followed by Kiya Okhlopkova presenting ‘Nankin Tamaso Dare’, a traditional Japanese Performing Art as she took the audience on a ride through her performance around the very spirit of Japan through the Soba restaurant in Sendai, Amida Nyorai, Nagoya and Rainbow Bridge amongst many others.
The choice of this 2009 documentary directed by Kaspar Astrup Schröder was essential as the innovative ideas of Dr. Nakamatsu has undoubtedly revolutionised the way people see their daily lives. From floppy disks to pen that writes under water, these inventions have simplified the daily lives. It inculcates a sense of scientific temper and makes us realise the very foundation of why science is necessary.
