Factors Contributing to Japans High Rate of Postwar Economic Growth A number of theories have been put forward by both

Japanese and foreign observers as to why Japan was able to achieve such a high rate of economic growth following the 2nd World War. Dr. Edwin O. Reischauer, a scholar long interested in Japan who observed the reconstruction and development of Japans economy both as a historian and U.S ambassador to Japan, gives a number of reasons for the countries remarkable economic growth in his book, The United States and Japan. These can be summarized as follows: <1> The hard-work ethic of the Japanese, their high levels of education and technical skills and their ability to maintain political and financial stability. <2> The concentrated effort of the Japanese people to rebuild their industries by pouring almost all of their capital into industrial facilities. <3> The fact that Japan obtained access to greatly expanded energy resources as it became able to import large quantities of high-grade coal and petroleum. <4> The existence of a major export market for Japanese goods in the United States where very few restrictions were placed on Japanese imports from the very beginning. <5> The fact that Japan had lost its territorial possessions in the war and could therefore divert money that would otherwise have been necessary for the defense of colonies to stimulating the rapid growth of domestic industry. <6> The opportunity for a new start with modern factories that resulted from destruction of productive facilities during the war. <7> The low level of defense expenditures due partly to the peoples general disgust with militarism and partly to the nations assurance of security under its continuing agreement with the United States. <8> The delicate balance attained between free enterprise and government guidance and control. Of these reasons, Dr. Reischauer puts primary emphasis on the first one, i.e. on the qualities of the Japanese people themselves. By way of comparison, it is interesting to note the comments of the late Dr. Kamekichi Takahashi, one of Japans leading commentators on economic affairs, who in his book titled Fundamental Reasons for Japans Remarkable Postwar Economic Development (1975) attributes Japans rapid economic progress largely to the development of its heavy and chemical industries.

Dr. Takahashi believes that this development was made possible by the postwar elimination of factors that restricted development before the war and it is on this assumption that he conducts his search for the specific underlying causes. He concludes that there is one set of causes related to changes external to japan and another set of internal causes related to the highly effective manner in which Japan was able to adapt itself to the external changes. (1) Geographical shifts in raw material supply sources which made it possible for Japan to obtain the raw material it needed for development of its heavy and chemical industries, thus eliminating one of the greatest defects of the prewar economy and reversing Japans position to one of relative advantage. (2) The revolutionary advances in technology made throughout the world during and following the war which Japan, having had the major part of its productive facilities destroyed, was able to absorb with relative ease. (3) The fact that, contrary to what might have been expected, Japans defeat and occupation became positive factors which promoted rather than hindered the nations economic growth. (For example, by being forced to totally disarm and to give up its territories, the Japanese government was substantially relieved from the burden of maintenance of military forces and the duties of postwar administration and was freed to put its full effort into development of the heavy and chemical industries. Or again, dissolution of the zaibatsu and the removal of wartime leaders from public office generated fresh competition that opened the way for a new generation of able men and created a spirit of bold enterprise.) As internal causes, he gives these: 1. The abundance of labor, the national character, the traditional system of business management, the unique form of business organization, the harmony between government and business, the system of financing businesses with borrowed funds, and other characteristic aspects of Japans socioeconomic structure. 2. Natural attributes of the country such as its good harbors and abundant water resources.