Japan's Economy
Japan's Postwar Miracle
How Japan rebuilt after 1945 and grew at extraordinary speed until the 1970s, and the role of exports, savings and industrial policy.
In 1945, Japan’s economy lay in ruins. Within three decades, it became the world’s second-largest economy.
Growth rates
From the mid-1950s to the early 1970s, Japan’s economy grew around 9 to 10 percent a year on average.
What drove it
- High savings and investment.
- Educated workers.
- Technology imported and improved.
- Exports of steel, ships, cars and electronics.
- Industrial policy: the Ministry of International Trade and Industry (MITI) guided firms towards priority industries.
- Cheap yen: fixed at 360 yen per dollar until 1971, helping exports.
- US support during the Cold War, including demand during the Korean War.
Famous companies
Toyota, Sony, Honda, Panasonic and others became global brands.
The debate on MITI
Some credit MITI’s guidance; others argue firms succeeded through competition and that MITI made mistakes, like trying to limit car companies.
Slowing down
Growth slowed after the 1973 oil shock, but remained solid through the 1980s.
In the 1950s, Sony licensed transistor technology from the US and made small, cheap radios that sold worldwide, a symbol of Japan's rise.
Savings, education, competition and exports all mattered.
- Japan grew around 9 to 10 percent a year from the 1950s to early 1970s.
- High savings, education, technology and exports drove growth.
- MITI's industrial policy played a debated role.
- The fixed, cheap yen helped exports.
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