UNIVERSITATEA DE STAT DIN MOLDOVA

FACULTATEA DREPT
CATEDRA ECONOMIE, MARKETING I TURISM

Japan economic model

1. Introduction
Despite itsquite small size, Japan is a major economic power in the modern world, it currently
has the 3rd largest economy in the entire world on trailing behind only The USA and The
People`s Republic of China. Japan does not have much suitable land for agriculture but the land
that they do use has a very high yield and most of it stays in country. Its main crop is rice and it
is heavily subsidized so that they are self-sufficient and there are high tariffs on any rice
imported to decrease competition in the market. In this work we will see how the economy of
Japan developed during the XXth century until now. Japan's largest imports are raw materials for
production as well as oil to fuel their machinery and vehicles. Another major import that can not
be forgotten is the foodstuffs that they import, things such as meat and wheat which are vital
because of Japan's lack of suitable agricultural land. Japan's largest import partners are The
United States and The People Republic of China. The main power behind Japan's economy is its
manufacturing industry. They are world renown for being at the forefront in certain industries
technologically.
The theme is actual because it shows us the model of developing and maintaining a high level of
economy. It is a relevant example of how a state can develop thanks to a high level of the
mentality and hard work.
One of our main aim is to find out how was the evolution of the state that after the World War II
was completely destroyed. Another one is to see the usage of resources they have. We will see
some grafics that will show us clearly the tempo of the economic miracle that still has its
influence and make the Japan be in top 3 states on trailing. We will use for our research
interviews and works of native Japanese analogists.
Key words:GDP(gross domestic product), free ride, GNP(gross national product),
inflation,export,import

2.1 Japanese Economic Miracle

Japans economic growth between 1955 and 1973 has often been described as miraculous, as
an industrial expansion of the speed and duration experienced by Japan during this time was
unprecedented internationally. In the late 1950s, Japans gross domestic product (GDP) grew at
an average rate of 9.1% a year; in the 1960s, the real heyday of what is now known as Japans
high-growth era, the figure was over 10%. In the short span of three decades after the end of
World War II, Japan went from being an economic basket-case in the eyes of the world, its
industries largely reduced to rubble by wartime bombing, to being one of the wealthiest nations
on the planet and an exemplary success story of economic development.
This economic miracle was the result of Post-World War II Japan and West Germany benefiting
from the Cold War. It occurred partly due to the aid and assistance of the United States, but
chiefly due to the economic interventionism of the Japanese government. After World War II, the
United States established a significant presence in Japan to slow the expansion of Soviet
influence in the Pacific. The United States was also concerned with the growth of the economy
of Japan because there was a risk after World War II that an unhappy and poor Japanese
population would turn to communism and by doing so ensure that the Soviet Union would
control the Pacific. The same happened in West Germany, and both nations experienced the most
formidable economic growth in the postwar era. But whereas West Germany's GNP increased
28,5x between 1951 and 1980 - compared to 18,7x for France, 12,7x for Britain and only 8x for
the USA, Japan's increased 73x. Scholars have advanced many theories to explain why Japan
was able to grow so quickly and for so long. Much attention has been given to the role of the
powerful central government bureaucracy in Japans economic rise: civil servants in
organizations like the Ministry of International Trade and Industry, it has been argued, worked
closely with the business community to chart strategic plans for economic development and
deftly guide the nations industrial and financial advance. What has been called Japans
developmental state thus quarterbacked Japans high-speed growth through the judicious
application of industrial policy to promote rising sectors like automobiles, chart the decline of
moribund ones like mining, and encourage the export economy. Other observers have traced
Japans rapid growth to favorable international conditions as readily available technology and
open access to international markets some have emphasized Japanese trade policy like the
protection of the domestic market combined with aggressive export drive and a few have
suggested that Japan got a free ride to prosperity by relying on the United States for its military
defense during the tense decades of the Cold War. Recently, more economists have tended to
stress the importance of domestic consumption and rising living standards in Japan as crucial
factors in propelling and sustaining Japans almost twenty-year-long economic boom. The highgrowth era was characterized by noteworthy stability in Japanese politics and patterns of
policymaking. In 1955, the two major conservative parties in Japan merged to form the Liberal
Democratic Party (LDP), an entity often accused by its detractors of being neither very liberal
nor very democratic. Crafting a political dynasty based on strong support in the countryside,
ideological flexibility, and the enthusiastic promotion of economic growth, the LDP was an
electoral powerhouse, claiming a majority in the Diet and a firm holds on the prime ministership
from its founding until the early 1990s. The dominance of the Liberal Democrats at the polls
prompted many critics to question just how democratic postwar Japan actually was; moreover,
many commentators have claimed that policymaking was actually shaped less by the democratic
process than by a complex network of cozy backroom relationships among LDP politicians,
powerful corporate leaders, and leading government bureaucrats. This informal coalition of
elites, often termed the iron triangle, was said to have been responsible for much of the top-

level decision-making in the Japanese state after World War II. Skeptics, however, have noted
that similar constellations of influential elites are hardly uncommon in the industrial democracies
of the West; significantly, it seems that a majority of the Japanese people were content with the
LDP and the iron triangleand particularly the political stability and economic prosperity they
appeared to deliverduring the high-growth decades.
But the Japanese economic miracle didn't owe only to having to reconstruct the country and
mobilizing the entirety of the war's military spending, installations and energy into business.
Although the economy was based on the American liberal system, the government boosted
business by providing low interest loans to sectors designed for growth, and organized the
economy to facilitate development as much as possible. For example, the MITI (Ministry of
International Trade and Industry) pressured iron and steel producers to acquire the license rights
of a new Austrian oxygen furnace together, thus sharing the costs and benefits, while the logic of
Anglo-saxon free-market would have had each company obtain the license individually at much
higher expenditure.
Japanese enterprises borrowed massively from banks, which drew their funds from high
households savings. Inflation made it easy for them to pay them back without difficulty - until
the bubble burst in 1990, which left the banks with innumerable bad loans and brought many to
bankruptcy or need of financial support from the state.
Nominal GNP of Five Major Nations, 1951-1980 (amounts in US$ billion)

Year

Japan

USA

West
Germany

France

Great
Britain

1951

14,2

328,4

28,5

35,1

41,4

1955

22,7

398,4

43,0

49,2

53,9

1960

39,1

503,8

70,7

60,0

71,9

1965

88,8

688,1

115,1

99,2

100,2

1970

203,1

992,7

184,6

145,5

124,0

1975

498,2

1549,2

418,2

339,0

234,5

1980

1040,1

2633,1

816,5

657,1

525,5

Although rapid economic growth was produced primarily by the efforts of the Japanese people,
this is not to say that the economic policies and planning had no role in the process. The policies
and strategies were set forth carefully by the policy-making authorities to protect and sustain the
growth, and therefore the Japanese political system had a major role in its development as well.
There are two major policies that led to Japans rapid growth. The first policy was the Yoshida

Doctrine, in which shaped the postwar economy in Japan to recovery. Prime Minister Yoshida
Shigeru developed this policy during the early period of the Korean War, and he is often called
on as the father of modern Japanese economy. The policy was aimed to set economic
reconstruction and development as the nations immediate goals while saving on military
expenses by leaving defense to the U.S. army. This significant reduction on military spending
has allowed Japan to put all its strength and money solely on reconstructing the economy and it
was very influential to the rapid recovery after the defeat. Also, this policy advocates a pacifistic,
nonmilitary role for Japan and forms the core of its contemporary diplomatic identity.16 In
addition to the Yoshida Doctrine, Ikeda, who is seen to be the most important figure in Japans
rapid growth, implemented the Income Doubling Plan in 1960. As the name of the plan implies,
it was aimed to double the income earned by the Japanese workers and set a high living standard
from the period of 1961 to 1970 by greatly increasing the amount of investments made by the
central government to both private and public firms. To successfully achieve the objective of the
plan, it was also aimed to increase the amount of foreign trade with other countries. However,
due to such a heavy industrialization during the plan, major problem of pollution came to an
issue and it had to be dealt with in the proceeding few years afterwards. Although few problems
arose from heavy industrialization, this plan has contributed greatly to the later half of Japans
rapid growth with an average growth rate of 10.8 percent in the late 1960s and drove the
economy to become the second largest in the world by the year 1968. In addition to policies and
economic planning set forth by leaders of the country, another political factor that greatly
influenced the growth was the role taken by the Ministry of International Trade and Industry
(MITI). MITI, which was regarded as the most powerful government organization during the
time of rapid expansion, was mostly responsible for the industrial growth in Japan. The
Ministrys approach was one of providing encouragement and guidance to the initiatives of
private business: creating a suitable un-level playing field which would give that critical
advantage to industries identified by government as having potential for long-term success. The
main targets that MITI focused for growth were in the industries of steel, shipbuilding,
chemicals, and machinery. These industries were thought of as having large and rapidly growing
world markets and that expanding these industries were the key to entering into the international
markets and helping the economy to grow quicker. Large amount of financial aid and assistance
was given to the companies MITI thought were important for economic growth of the country
and it was somewhat unfair to the companies who were not receiving help. Another role that
MITI had to explain its importance was that they had distributed new technologies to companies
to promote even growth within industries. Therefore, the guidance and distribution of
technologies that MITI gave to specific companies had definitely helped Japan to industrialize as
a whole and their role in the growth was essential

2.2 Japanese Economy

Nowadays
Today the economy of Japan is the third largest in the world by nominal GDP, the fourth largest
by purchasing power parity and is the world's second largest developed economy. According to
the International Monetary Fund, the country's per capita GDP(PPP) was at $36,899, the 22ndhighest in 2013. Japan is a member of the G7. The Japanese economy is forecasted by the
Quarterly Tankan survey of business sentiment conducted by the Bank of Japan. Nikkei
225 presents the monthly report of top Blue chip (stock market) equities on Japan Exchange
Group. Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates
widely. Accounting for these fluctuations through use of the Atlas method, Japan is estimated to
have a GDP per capita of around $38,490.
Japan is the world's third largest automobile manufacturing country, has the largest electronics
goods industry, and is often ranked among the world's most innovative countries leading several
measures of global patent filings Facing increasing competition from China and South Korea,
manufacturing in Japan today now focuses primarily on high-tech and precision goods, such
as optical instruments, hybrid vehicles, and robotics. Besides the Kant region, the Kansai
region is one of the leading industrial clusters and manufacturing centers for the Japanese
economy. Japan is the world's largest creditor nation, generally running an annual trade surplus
and having a considerable net international investment surplus. As of 2010, Japan possesses
13.7% of the world's private financial assets (the second largest in the world) at an estimated
$14.6 trillion. As of 2013, 62 of the Fortune Global 500 companies are based in Japan.
Japan used another technique, somewhat based on Krugman's, called Quantitative easing. As
opposed to flooding the money supply with newly printed money, the Bank of Japan expanded
the money supply internally to raise expectations of inflation. Initially, the policy failed to induce
any growth, but it eventually began to affect inflationary expectations. By late 2005, the
economy finally began what seems to be a sustained recovery. GDP growth for that year was
2.8%, with an annualized fourth quarter expansion of 5.5%, surpassing the growth rates of the
US and European Union during the same period. Unlike previous recovery trends, domestic
consumption has been the dominant factor of growth. Despite having interest rates down near
zero for a long period of time, the Quantitative easing strategy did not succeed in stopping price
deflation. This led some economists, such as Paul Krugman, and some Japanese politicians, to
advocate the generation of higher inflation expectations. In July 2006, the zero-rate policy was
ended. In 2008, the Japanese Central Bank still has the lowest interest rates in the developed
world, deflation has still not been eliminated and the Nikkei 225 has fallen over approximately
50% (between June 2007 and December 2008). However, on April 5, 2013, the Bank of
Japan announced that it would be purchasing 60-70 trillion yen in bonds and securities in an
attempt to eliminate deflation by doubling the money supply in Japan over the course of two
years. Markets around the world have responded positively to the government's current proactive
policies, with the Nikkei 225 adding more than 42% since November 2012.[84] The
Economist has suggested that improvements to bankruptcy law, land transfer law, and tax laws

will aid Japan's economy. In recent years, Japan has been the top export market for almost 15
trading nations worldwide.
We will try to see another features of economy by investigation of the sectors of economy:
Argriculture:
The Japanese agricultural sector accounts for about 1.4% of the total country's GDP.[121] Only
12% of Japan's land is suitable for cultivation. Due to this lack of arable land, a system of
terraces is used to farm in small areas. This results in one of the world's highest levels of crop
yields per unit area, with an overall agricultural self-sufficiency rate of about 50% on fewer than
56,000 km (14 million acres) cultivated. Japan's small agricultural sector, however, is also
highly subsidized and protected, with government regulations that favor small-scale cultivation
instead of large-scale agriculture as practiced in North America. There has been a growing
concern about farming as the current farmers are aging with a difficult time finding successors.
Rice accounts for almost all of Japan's cereal production. Japan is the second-largest agricultural
product importer in the world. Rice, the most protected crop, is subject to tariffs of 777.7%.
Although Japan is usually self-sufficient in rice (except for its use in making rice crackers and
processed foods) and wheat, the country must import about 50% of its requirements of other
grain and fodder crops and relies on imports for half of its supply of meat. Japan imports large
quantities of wheat and soybeans. Japan is the 5th largest market for EU agricultural
exports. Over 90% of mandarin oranges in Japan are grown in Japan. Apples are also grown due
to restrictions on apple imports.
Fishery :
Japan ranked fourth in the world in 1996 in tonnage of fish caught.[132] Japan
captured 4,074,580 metric tons of fish in 2005, down from 4,987,703 tons in
2000, 9,558,615 tons in 1990, 9,864,422 tons in 1980, 8,520,397 tons in
1970, 5,583,796 tons in 1960 and 2,881,855 tons in 1950. In 2003, the total
aquaculture production was predicted at 1,301,437 tonnes. In 2010, Japan's
total fisheries production was 4,762,469 fish. Offshore fisheries accounted for
an average of 50% of the nation's total fish catches in the late 1980s
although they experienced repeated ups and downs during that period.
Coastal fishing by small boats, set nets, or breeding techniques accounts for
about one third of the industry's total production, while offshore fishing by
medium-sized boats makes up for more than half the total production. Deepsea fishing from larger vessels makes up the rest. Among the many species
of seafood caught are sardines, skipjack tuna, crab, shrimp, salmon, pollock,
squid, clams, mackerel, sea bream, sauries, tuna and Japanese amberjack.
Freshwater fishing, including salmon, trout and eel hatcheries and fish
farms, takes up about 30% of Japan's fishing industry. Among the nearly 300
fish species in the rivers of Japan are native varieties of catfish, chub, herring
and goby, as well as such freshwater crustaceans as crabs and
crayfish. Marine and freshwater aquaculture is conducted in all 47
prefectures in Japan. Japan maintains one of the world's largest fishing fleets
and accounts for nearly 15% of the global catch, prompting some claims that

Japan's fishing is leading to depletion in fish stocks such as tuna. Japan has
also sparked controversy by supporting quasi-commercial whaling.

Industry :
Japanese manufacturing and industry is very diversified, with a variety of advanced industries
that are highly successful. Industry accounts for 24% of the nation's GDP. Industry is
concentrated in several regions, with the Kant region surrounding Tokyo, (the Keihin industrial
region) as well as the Kansai region surrounding Osaka (the Hanshin industrial region) and
the Tkai region surrounding Nagoya (the Chukyo-Tokai industrial region) the main industrial
centers. Other industrial centers include the southwestern part of Honsh and
northern Shikoku around the Seto Inland Sea (the Setouchi industrial region); and the northern
part of Kysh (Kitakysh). In addition, a long narrow belt of industrial centers called
the Taiheiy Belt is found between Tokyo and Fukuoka, established by particular industries, that
have developed as mill towns. Japan enjoys high technological development in many fields,
including consumer electronics, automobile
manufacturing, semiconductor manufacturing, optical fibers,optoelectronics, optical
media, facsimile and copy machines, and fermentation processes in food and biochemistry.
However, many Japanese companies are facing emerging rivals from the United States of
America, South Korea, and China.
Automobile manufacturing: Japan is the third biggest producer of automobiles in the
world. Toyota is currently the world largest car maker, and the Japanese car
makers Nissan, Honda, Suzuki, and Mazda also count for some of the largest car makers in the
world.
Services
Japan's service sector accounts for about three-quarters of its total economic output.[121] Banking,
insurance, real estate, retailing,transportation, and telecommunications are all major industries
such as Mitsubishi UFJ, Mizuho, NTT, TEPCO, Nomura, Mitsubishi Estate, ON, Mitsui
Sumitomo, Softbank, JR East, Seven & I, KDDI and Japan Airlines counting as one of the largest

companies in the world. Four of the five most circulated newspapers in the world are Japanese
newspapers. The Koizumi government set Japan Post, one of the country's largest providers of
savings and insurance services for privatization by 2015. The six major keiretsus are
theMitsubishi, Sumitomo, Fuyo, Mitsui, Dai-Ichi Kangyo and Sanwa Groups. Japan is home to
251 companies from the Forbes Global 2000 or 12.55% (as of 2013).
Tourism
In 2012, Japan was the fifth most visited country in Asia and the Pacific, with over 8.3 million
tourists. In 2013, due to the weaker yen and easier visa requirements for southwest Asian
countries, Japan received a record 11.25 million visitors, which was higher than the government's
projected goal of 10 million visitors. The government hopes to attract 20 million visitors a year
by the 2020 Summer Olympics in Tokyo. Some of the most popular visited places include
the Shinjuku, Ginza, Shibuya and Asakusa areas in Tokyo, and the cities
of Osaka, Kobe and Kyoto, as well as Himeji Castle. Hokkaido is also a popular winter
destination for visitors with several ski resorts and luxury hotels being built there.
Mining production and exploration
Japan's mining production has been minimal, and Japan has very little mining deposits However,
massive deposits of rare earths have been found off the coast of Japan. In the 2011 fiscal year,
the domestic yield of crude oil was 820 thousand kiloliters, which was 0.4% of Japan's total
crude processing volume

3. Conclusions
Japan went through an intense history full of changes in the whole social system. Thanks to the
hard work of the Japanese people and a smart supervising of the goods and resources, it became
the third in the world country of the economy development going after the USA and China.
Japan's largest imports are raw materials for production as well as oil to fuel their machinery and
vehicles. Another major import that can not be forgotten is the foodstuffs that they import, things
such as meat and wheat which are vital because of Japan's lack of suitable agricultural land.
Japan's largest import partners are The United States and The People Republic of China.
The main power behind Japan's economy is its manufacturing industry. They are world renown
for being at the forefront in certain industries technologically. We can`t compare the way
Japanese economy is with the Republic`s of Moldova but we still can take as an example the
mentality and the hard work as well as from other fastly developed countries like West Germany
in the last century and China. In this work we tried to figure out the features of it`s economy so
another useful thing we can realize the future economic relations we can establish, especially
because Japanese culture is intense implemented in our country.
So this is a state that prove that people can work and live together by making a system that
increases economy of the whole state, it`s also an example of a well working market made by
Western model but adapted to the Asian needs. Japan proves that new technologies are for sure a
good business that make also an upgrade for all the economic branches beginning with
agriculture and ending up with the services.

4. Bibliography
1) Keizai Koho Sentaa, Japan: An International Comparison
(Tokyo: Keizai Koho Sentaa, (1983), p.5.
2) Allinson, Gary. Japans Postwar History Ithaca: Cornell
University Press, 1997.
3) Van Wolferen, The Enigma of Japanese Power, Vintage, 1990
4) http://www.heritage.org/index/country/japan
5) http://www.economist.com/topics/japanese-economy

Summary
1. Introduction................................................................2
2.1 Japanese Economic Miracle......................................4
2.2 Japanese Economy Nowadays..................................7
3. Conclusions..................................................................11
4. Bibliography.............................................................12