Japan is one of the countries that were hugely affected by the impact of the Second World War. The country lost around 3 million people with a quarter of the national wealth destroyed. At the end of the Second World War, Japan resurrected its economy and went through a period of rapid economic growth.
One of the reasons that influenced the growth of Japan includes socio-political stability. At the end of World War II, Japan became very stable under the SCAP. The culturally homogenous society had no stalled internal rebellions such as the Korean or Chinese Civil Wars. Japan’s labor markets were the most stable in the globe with permanent employment and strong unions. Post War democratization and stability also resulted in the strong economic growth that the country experienced. Until 1952, the land was occupied by Allied forces. The country was democratized during this time. In 1947, the New Japanese Constitution was enforced, and the empire was subsequently dissolved. Several pre-war leaders were convicted and most of them prosecuted. During the postwar period, Japan undertook various institutional changes such as the abolition of the secret police, the creation of fundamental laws of education, and allowing the participation of women in politics.
The demilitarization process was also a huge factor in play in the economic growth of Japan. The complete demilitarization helped the country release various economic surplus which was directly shifted towards nation building. During the Meiji Restoration, Japan used the entire demilitarization strategy to break up the Tokugawa military. This enabled the release of numerous military personnel, scientists, engineers, and ordinary workers employed by the military factories. After the period of demilitarization, the Japanese per capita GDP increased by around 8.3% every year until 1973.
The international strategic alliance, particularly with the United States played a crucial role in building the economy of Japan. Japan signed the San Francisco and Security Treaty with the US. She renounced its land claims and allowed to be part of collective security agreements and defend itself. The strong alliance formed by the US and Japan was used as a base for fighting communist aggression in Korea. The strategic aid in defense made the Japanese government shift its focus and resources on other economic activities. Their expenditure of defense was as low as 1% under the protection of the US.
During the prewar era, Japan had numerous companies that were already established. When the war ended, many of the wartime corporations and a lot of technology applied during the war were shifted to peaceful economic development. The government and the banking sector worked together to ensure improvement in Japan’s economic growth. Prime Minister Hayato Ikeda pursued a policy of massive industrializatioIkedan with interest rates lowered. The policy led to the emergence of a lot of loans where the Bank of Japan provided loans to many city banks. Because of the shortage of capital during this time, conglomerate heavily borrowed from the banks to enable them to run their businesses. The liberal banking approach led to the formation of Keiretsu. Japan’s labor force also effectively contributed to the economic growth of the country because of the reasonable wage demand and its availability and literacy level.
In conclusion, Japan’s rapid economic growth after suffering hugely from the impacts of the Second World War was facilitated by aspects such as demilitarization, alliance with the US, socio-political stability, the role of government and banking, and the availability of labor force.