Kavan Choksi– An Overview of Economic Growth and Industrialization in Japan

In this article, we will review some distinctive features of Japan’s economic growth and development through industrialization. We can see that Japan had achieved a commendable growth in per capita income through sustainable growth in the 20^th century. This was achieved through industrialization and strong economic policies. During this period, Western Europe, the United States, Canada, and Australia also attained the highest level of per capita income through the fundamental shift from agrarian-based production to industrialization by producing technological and manufacturing-related products and services. In between, we know how World War II shattered Japan and how they have resurrected from the ashes of it.

Features of Japan’s growth

• Proto-industrial base

At one time, the agricultural productivity of Japan was good enough in urban and rural areas prior to the industrialization of the country. カヴァン・チョクシ also says that this served as a strong base for further economic growth in the country.

• Growth based on investment

 The investment and infrastructure industry domestically remained another strong driving force for the Japanese economic growth. There was a big investment in infrastructure both in the public and private sectors. Japan’s location and national governments had also coordinated the agents for the build-up and growth of infrastructure. However, the investments in manufacturing had been in the private sector in Japan.

• Growth in total factor productivity

On the supply chain side, the growth in total factor productivity is very important. The scale economies with a reduction in the unit cost due to increased outputs have contributed to this growth. We can see that the scale economies come up based on the geographic concentration. Also, the companies that moved down the long curve by reducing unit costs and their cumulative output rose as the demand for products soared.

• Dualism

The segments capital market and the labor market had emerged early in Japan at the beginning of the 20^th century itself. This capital-intensive move had contributed to the high ratio of labor being paid with high wages, and there was also the labor-intensive sector that paid low wages. This is known as dualism, which has created inequality in income and some social unrest. However, in the 1940s, some public reforms by the government addressed this and eradicated the bitterness of dualism.

All these development in Japan’s economic and industrial sectors are closely correlated to the administration and political economy. In Japan, the confederation government system, introduced towards the final decades of the 15^th century, had placed the power in the hands of the feudal elite, daimyo, warlords, and some powers two the shogun, etc. Each of these warlords was ruling a geographical region and was authorized to levy taxes on the peasants and tenants of the village.

After 1700, the growth of industrialization in the urban lands of Japan and further its spread towards the rural areas happened, and this changed the administrative practice across the country. As a result of these, カヴァン・チョクシ says that Japan had further positioned itself to meet the Western challenge in terms of technology and manufacturing.