Japanese Economic Growth and Stagnation Between 1950 and 1990

Following the ending of the second Sino-Japanese War and the Pacific War, also known as World War II, Japan experienced an unusual amount of economic success. This success may be partially attributed to the aid of American soldiers in rebuilding decimated Japanese cities, during American occupation which spanned from 1945 - 1952. However, the majority of Japanese economic achievement can be attributed to pure Japanese ingenuity, hard work, organization, and a positive group mentality, characteristic of Asian societies (Murphey, 2009, p. 404). Newly built industrial plants led to an upward growth in production and quality of Japanese products such as cars, cameras and other technology which was exported to fellow Asian countries as well as to Western countries for a significant profit to Japanese businesses (Murphey, 2009, p. 405).

However, Japanese economic success during the post war period of 1950 to 1990 is not only attributed to what the Japanese produced or possessed, but also to what the Japanese lacked, a strong heavily armed military. Under Article 9 of the constitution drafted by the Supreme Commander Allied Powers (SCAP), Japan was forbidden to have "any armed forces except for police and denied it the right to go to war" (Murphey, 2009, p. 403). These provisions actually served the Japanese well, since the lack of a strong military freed Japan from the hefty economic burden of maintaining it, a burden that was present in all other prominent nations during the time (Murphey, 2009, p. 405). This left a significant portion of the Japanese government's funds free to invest in other areas of need, such as education, technology, jobs, and social services (Murphey, 2009, p. 405).

Similarly, the increased funds for education and the disappearance of traditional aristocratic social structure allowed more Japanese people to be better educated. Subsequently, more skilled citizens were able to climb the ladder of social and economic success and contribute their skills and knowledge to the growth of their country. Additionally, the high education rate and significant economic growth, "largely eliminated poverty and unemployment," which in turn produced some of the lowest crime, violence, and drug usage rates any country had ever seen (Murphey, 2009, p. 405).

However, such economic success and growth could not be continually maintained and by the 1990s Japan began to experience economic stagnation. This can be explained by a number of reasons, but one of the biggest reasons may be that growth and economic success occurred so quickly in Japan, and that kind of quick rise cannot possibly be sustained forever. Many countries experience a natural cycle of economic success and stagnation. Similarly, big business areas such as real estate and the stock market faced a downturn in the 1990s that affected the economy and brought the booming country to a financial standstill. Governmental policy mismanagement only further injured the economy and while fluctuating exchange rate issues regarding the Yen, the Japanese currency, also caused the Japanese financial market to struggle.

It is most likely that continued poor decisions and policies put in place by the Japanese government may be partially responsible for the slow recovery from this economic downturn. Another reason for the slow recovery may be the relatively low returns Japan experienced on its hefty investments or assets held abroad (Okimoto, 1999). Ultimately, the reasons for such slow recovery are debatable and can be attributed to a varied number of reasons both within and outside of Japan. Factors such as the globalization play a big part in a country's financial success or lack thereof.

Murphey, R. (2009). A History of Asia, 6^th Ed. N.Y.: Pearson Longman.

Okimoto, D. I. (1999). Causes of Japan's Economic Stagnation. The Walter H. Shorenstein Asia-Pacific Research Center. Retrieved October 12, 2009, from http://aparc.stanford.edu/research/causes_of_japans_economic_stagnation/.