The Sign of the Times: Japan Inc. (1955–1974)

Abstract

MITI’s long-term industrial policies concentrated on the development of the heavy industries, namely the petrochemical industry and other energy-intensive industries such as aluminum and plastics. Between 1955 and 1973, Japan’s annual GDP increased almost six times to 11.5 percent. The MOF, MITI and the Economic Planning Agency’s (EPA) policies were considered to be the drivers of this rapid economic growth. Nevertheless, it is difficult to quantify the extent to which ministerial policy actually drove the economy. Besides SCAP’s ‘reverse reforms’ other factors should also be considered:

• 1. Joseph Dodge, the chairman of Detroit Bank, was SCAP’s economic adviser who planned policies to stabilize Japan’s economy. Known as the Dodge Line, the yen was set at the cheap rate of ¥360 per dollar to assist Japanese exports and to promote Japan’s economic revitalization.

• 2. Mercantile policies.

• 3. America’s open markets.

• 4. Access to cheap technologies, especially from the US.

• 5. Prime Minister Hayato Ikeda (1960–64) whose ‘double income’ economic policies focused on the development of the heavy industries as opposed to small businesses.

• 6. Low military spending (Yoshida Doctrine).

• 7. High savings rate.

• 8. Consistent support for policies from the National Diet and business community.

• 9. Industriousness of a literate workforce.