Hiroaki Richard Watanabe - The Japanese Economy

WORLD ECONOMIES

A series of concise modern economic histories of the worlds most important national economies. Each book explains how a countrys economy works, why it has the shape it has, and what distinct challenges it faces. Alongside discussion of familiar indicators of economic growth, the coverage extends to well-being, inequality and corruption, to provide a fresh and more rounded understanding of the wealth of nations.

PUBLISHED

Matthew Gray

THE ECONOMY OF THE GULF STATES

Matthew McCartney

THE INDIAN ECONOMY

Vera Zamagni

THE ITALIAN ECONOMY

Hiroaki Richard Watanabe

THE JAPANESE ECONOMY

Hiroaki Richard Watanabe 2020

This book is copyright under the Berne Convention.

No reproduction without permission.

All rights reserved.

First edition published in 2020 by Agenda Publishing

Agenda Publishing Limited

The Core

Bath Lane

Newcastle Helix

Newcastle upon Tyne

NE4 5TF

www.agendapub.com

ISBN 978-1-78821-050-8 (hardcover)

ISBN 978-1-78821-051-5 (paperback)

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Typeset by Patty Rennie

Printed and bound in the UK by

CPI Group (UK) Ltd, Croydon, CR0 4YY

Contents

After defeat in the Second World War, Japan achieved an economic miracle in the 1960s. Japan also maintained relatively high economic growth in the 1970s despite two oil crises while other industrialized countries such as the United States and major European countries suffered from economic stagnation. Japan even began to threaten the dominant position of the US in the world economy during the 1980s and the Japanese economy was almost unstoppable during the bubble economy in the late 1980s. However, the Japanese economy suddenly decelerated after the collapse of the bubble economy in the early 1990s, when Japans average stock price (Nikkei 225 Stock Price Index) dropped sharply from its highest point of around 40,000 to a low point of less than 20,000 in only a few years. Since then, Japans economic growth has remained low and stagnant most of the time. In 2010, Japan was surpassed by China in terms of GDP size, and today the Chinese economy is more than twice the size of Japans. The Japanese economy has experienced dramatic change, and the key turning point was the collapse of the bubble economy.

Although the change was dramatic and significant, the Japanese economy has also continued to maintain some of its core characteristics. Some of these originated a long time ago, such as its economic nationalism, which originated with the opening-up of an isolated Japan by western powers in the late Edo period. The government promoted industrialization since the Meiji Restoration in 1868 to survive the era of imperialism, with the privatization of some economic industries following later. However, the military government began to intervene in the economy extensively in the 1930s and it is during this period up to the end of the Second World War that Japans quintessential economic characteristics, such as governmentbusiness collaboration led by economic bureaucrats, was institutionalized. With some significant transformation, a close governmentbusiness or statemarket relationship still characterizes the Japanese economy. In this sense, an analysis from a political perspective is essential for examining and understanding the Japanese economy.

This book will examine the main characteristics of the Japanese economy and analyze why they exist in their current form. will review the key political and economic events in Japan in chronological order. The chapter will first introduce readers to the Japanese economy before the Second World War from the end of Japans isolation in the mid-nineteenth century up to the end of the Second World War in order to provide the necessary context for examining the main postwar developments in the Japanese economy. Close attention will be paid to the development of Japanese capitalism since the Meiji Restoration in 1868 in pursuit of imperialism and the extensive intervention in the economy by the military government in the 1930s and 1940s. The chapter will then examine the economic policy of the US occupation force, the economic miracle of the 1960s under the political dominance of the Liberal Democratic Party (LDP), the impact of the oil crises in the 1970s and the USJapan trade disputes and the bubble economy in the 1980s. The main issue examined in this chapter is how and why Japan achieved an economic miracle in the 1960s and an analysis of the statemarket relations in the management of the economy.

will review the Japanese economy since the collapse of the bubble economy in the early 1990s. The chapter will examine Japans economic stagnation in the 1990s and its own financial crisis after the Asian financial crisis of the late 1990s, the structural reform that was initiated by the non-LDP coalition government in 1994 and succeeded by the LDPs Hashimoto administration in the late 1990s, the economic deregulation implemented by the Koizumi administration in the early 2000s, the economic policy implemented by the government of the Democratic Party of Japan (DPJ) between 2009 and 2012, and Abenomics and its revisions by the LDPs Abe administration since December 2012. The chapter will conduct an extensive analysis of Abenomics, among other things, and assess how and why it went well and badly.

measures the key elements of the Japanese economy to provide readers with a macroeconomic picture of Japan. The chapter first measures Japans GDP, GDP growth and GDP per capita in time series and from an international comparative perspective. The chapter then measures Japans inflation rate and labour productivity. In the second section, the chapter examines the international dimension of the Japanese economy such as exports, imports, trade balance and outward and inward FDI. In the third section, the chapter examines the government sector and measures government expenditures on social welfare, local government subsidies, public works, etc., government revenues and its components such as income tax, corporate tax, consumption tax and government bonds, and government deficits and debts, among other things. In the final section, the chapter investigates the elements of the Japanese welfare state, including pensions, healthcare, elderly (long-term) care and unemployment insurance. It will also measure socio-economic phenomena related to the welfare state such as inequality, poverty and aging population.

examines the structure of the Japanese economy in terms of the statemarket relationship, the complementarity among economic institutions such as keiretsu, convergence and diversity among capitalisms under neoliberal globalization, the dual economy, and the impact of regional economic integration on the structure of the economy. The chapter examines, among other things, the core characteristics of the Japanese developmental state, the transformation and continuity of Japanese capitalism, the inefficiency in some economic sectors and the impact of the rise of China on Japans international political economy.

examines the Japanese economy in terms of human resources and the labour market. The chapter first deals with the changes and continuities of Japans quintessential human resource management such as lifetime employment and seniority pay and promotion as well as cooperative industrial relations. The chapter identifies gender discrimination in the labour market and analyzes why it exists. The chapter also investigates the causes of the dual labour market in Japan and how they are changing by examining the diversification of the labour market. The chapter goes on to analyze the negative impacts of labour market deregulation since the late 1990s on working conditions and fertility rates in Japan. In this respect, union response to poor working conditions is discussed. The chapter finally examines the population decline and labour migration (both domestic and international) as a solution to revitalize the local economies.