Past, Present and Future
Edited by D. S.P. Rao and Bart van Ark
Chapter 6: Japan's Alternating Phases of Growth and Future Outlook
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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