Chapter 6: Japan's Alternating Phases of Growth and Future Outlook
Edited by D. S.P. Rao and Bart van Ark
Japan’s economic history since the Meiji Restoration of 1868 is characterised by alternating phases of less conspicuous growth performance in pre-war times, phenomenal growth of the 1955–73 period, and marked deceleration thereafter. The first two phases are the period of industrialisation and the third was that of rapid de-industrialisation and a rise of the service economy. This chapter reviews issues and evidence concerning her growth performance in the century-long period of industrialisation, and places the recent decades of slowdown and the prospect for the future in the long-term historical context. The issues to be examined may be grouped under the following headings: the Gerschenkronian effects (which include not only the transplanting of the factory and other western systems in early stages but also technology transfer through FDI and licensing in later periods); changing international environments (in both commodity and capital markets, which in turn were influenced by changing global power balances); the role of industrial and economic policies, investment in infrastructure and human capital; and the distinct mode of skill formation. The chapter identifies a set of factors that contributed to enhancing productivity of the manufacturing sector in the industrialisation period (placing greater emphasis on saving ratios, human capital investment and a distinct mode of skill formation within the firm, than on government policies). Then it turns to the new phase of de-industrialisation and the rise of a service economy from 1973 on, asking if a new regime of productivitygrowth has emerged in the rapidly expanding service economy.
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