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Mvwnz¨ Cwîkv HISTORIC PATTERN OF MODERN JAPANESE ECONOMY : FOCUSING ON EXPORT PROMOTION POLICIES IN POST-WORLD WAR II ERA Nashia Zaman1 Abstract Asian miracle Japan covers a unique path of modernization and development since Meiji restoration. State driven growth boosted with the latecomer advantage accelerated the economic development of Japan and uplifted Japan as one of the top economy after US occupation in post-World War II era. After the rapid growth phase, Japan experienced decades of stagnation due to financial crises and bubble economy. After the bubble burst the Abenomics policy emerged as a revitalizing policy for Japan and aimed to mitigate the challenges of Japanese economy in 21st century. Throughout the journey of modernization and economic development of Japan in different phases, trade was enthusiastically emphasized by the government. Export-oriented growth was the engine of Japanese economy. Export promotion and import restriction policies helped to achieve trade surpluses after Second World War. Conventional trade theory named comparative advantage theory of David Ricardo becomes validated in the pattern of Japanese trade. Prioritization of trade and export played a major role in the economic development of modern Japan. This article describes the historic pattern of modern Japanese economy with an emphasis on trade and export oriented policies of Japan after Second World War. Key-words: Japanese business and economy (JBE), export, Comparative advantage (CA) Introduction The historic pattern of modern Japanese economy possesses the unique attribute of being Japanese style. After the end of feudal Japan, the modern era started through Meiji restoration. The incorporation of western ideas, technologies and education in the form of Japanese style mapped Japan as a noteworthy country in world economy 1 Nashia Zaman is Lecturer, Department of Japanese Studies, University of Dhaka. E-mail: [email protected] Social Science Review [The Dhaka University Studies, Part-D], Vol. 36, No. 1, June 2019 118 Zaman (Sumiya, 2000). With the expansion of imperialism Japan aspired to achieve more control over the world. Japan as devastated and occupied by allied forces of United States after Second World War (WWII). The revitalization of Japanese economy under the direct supervision of state made developed Japan as one of the top economy of the world. This development was possible notably with the direct supervision of state and prioritization of some selected sectors (Matsushita, &Schoenbaum, 1989). Japan became uniquely developed being a low resource country to a massive one in the era of post-world war II. The miraculous growth of Japanese business and economy became possible for different factors with trade playing as a major one. The pattern of trade of Japan follows the conventional trade theories to a great extent. Though traditional theories possess limitations, in case of Japan, the pattern of trade comprises reflections of conventional comparative advantage theory of trade. From Meiji period to present period, the pattern of trade experienced by Japan has become lessons for many other countries like Bangladesh, which are in the path of development. In post-world war II, the rapid growth phase of 1970 was experienced because of many factors like modernization of agricultural and SME (Small and Medium Enterprises) sectors and expansion of manufacturing exports. Conventional theories of trade exceptionally became effective in the composition of the pattern of trade in Japan (Flath, 2014). The trade policies of Japan acted as a means of growth of Japanese business and economy .Under the umbrella of MITI (Ministry of International Trade and Industry) and METI (Ministry of Economy, Trade and Industry) civil service acted an influential role behind the miraculous growth. From ashes to one of the richest countries of world, Japan experienced an amazing path of development when trade acted a key role. The trade policies of Japan are worth of following for today‟s developing countries to experience growth in future (Sumiya, 2000). From isolation to expansion of trade, from exporting raw silk and tea to leading manufacturing export country, from leading import oriented country to leading export oriented country, from labour intensive country to a capital intensive country, Japan has experienced a unique path of trade for the development and growth of economy (Matsushita, &Schoenbaum, 1989). The historic pattern of trade of Japan is an example of effectiveness of conventional trade theories and other countries by following the pattern can gain positive output in their development path. Bangladesh is not an exception. In order to keep pace to development targets to become a developed country by 2041 and to comply with SDG (Sustainable Development Historic Pattern of Modern Japanese Economy 119 Goals) targets and Second perspective plan, the policymakers of Bangladesh can take lessons from Japan‟s trade pattern. Like Japan in the post-war period, Bangladesh is epic in labour-intensive technology (textile industry) and in order to move forward with capital-intensive technology, Japan is an example of pertaining lessons in this regard (Flath, 2014). This paper presents the pattern of Japanese economy with the identification of key- factors and challenges. This paper aims to show that the conventional trade theory got well-reflected in the trade pattern of Japan. The pattern imparts lessons for other developing countries to achieve development in trade scenario. Literature Review With the end of feudal Japan, the modern Japan started through Meiji restoration in 1868 (Mikami & Hirota, 2000). With the initiation of national currency yen, land reform, increased enrollment in school, establishment of modern physical infrastructure, incorporation of western technology and abolishment of feudal society, Japan started its journey towards modernization through Meiji restoration. In the pathway of modern Japan, the role of state is enormous. The active participation of government officials in policy making and implementations fueled the rapid growth and development. Yamazawa (1990) stated that due to the relation between changes in trade structures and industrialization, economic development was taking place in Japan since Meiji period (1868-1912) and continued for more than a century. The ability to change and massive industrialization acted as the main reasons of economic development of Japan. Japan was lacking natural resources, however, the way they imported raw materials and exported finished products led Japan to the appropriate growth path. This export-oriented growth policy of Japan was appreciated and appropriate as well. One unit increase in manufacturing production leads to less than a unit increase in import of raw materials, thus contribution to trade surplus occurs and economic development takes place (Yamazawa, 1990). Boltho (1996) found that, the century old Japanese economic development and growth was induced by export to a great extent. Performing various tests on data of different time periods, he showed that, export-led growth plated catalytic role in the rapid growth phase of Japan during the period of 1952-1973. Export-led growth accelerated Japanese economic development (Rosovsky, 1973). Domestic growth of Japan and international trade structures were interacted. Deardorff (2011) validated the comparative advantage theory in many-commodity model in presence of trade 120 Zaman barriers. Though there are limitations of the theory when applied in case of one-two commodities model. MacDougall (1975) conducted a study on the export of UK and USA using the theory of comparative advantage and considering the comparative cost almost all the products follows the general theory of Comparative advantage. The study Balassa (1965) concluded that trade and growth are linked and countries having industries with comparative advantage play role in the economic growth. Dowlinga & Cheang (2000) found that Japan was the driving force of Asian success. Due to the existence of the comparative advantage, Japan produced high-tech products using the raw materials of newly industrialized countries and exported to those countries. Bernhofen & Brown (2005) performed an empirical assessment on historical data of trade flows in order to determine the gain of Japan from comparative advantage compared to autarky period from 1851 to 1853 and found a positive gain in real GDP due to comparative advantage in the trade of Japan. The study of Widodo (2008) showed the existence of the pattern of flying geese on East Asian countries. The three patterns of flying geese model - importing, production and exporting – were strongly validated in case of Japan and then in other East Asian countries (Ozawa, 2007). Being a country with low-resource settings, Japan had to import fundamental food items and raw materials. In order to meet up the import cost, Japan emphasized on export and thus produced finished goods using imported raw materials and exported to other countries for earning foreign exchange. This export- driven growth got emphasized in Japanese trade and developmental policies especially after the Second World War and this helped to develop trade surplus with major trade partner countries during the period of 1970 in post-world war II era. Historically Japanese economy and state emphasized trade in its national policy and conventional trade theories have direct role on the Japanese modernization and economic development of Japan (Sumiya, 2000). Methodology
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