Monday, 28 January 2013

Reason For Japanese Economy's Astronomical Growth


Economy

The Industrial Revolution in Japan occurred during the Meiji period.
There were at least two reasons for the speed of Japan's modernization: the employment of more than 3,000 foreign experts (called o-yatoi gaikokujin or 'hired foreigners') in a variety of specialist fields such as teaching English, science, engineering, the army and navy, among others; and the dispatch of many Japanese students overseas to Europe and America, based on the fifth and last article of the Charter Oath of 1868: 'Knowledge shall be sought throughout the world so as to strengthen the foundations of Imperial rule.' This process of modernization was closely monitored and heavily subsidized by the Meiji government, enhancing the power of the great zaibatsu firms such as Mitsui and Mitsubishi.
Hand in hand, the zaibatsu and government guided the nation, borrowing technology from the West. Japan gradually took control of much of Asia's market for manufactured goods, beginning with textiles. The economic structure became very mercantilistic, importing raw materials and exporting finished products—a reflection of Japan's relative poverty in raw materials.
Japan emerged from the TokugawaTennō (Keiō-Meiji) transition in 1868 as the first Asian industrialized nation. Domestic commercial activities and limited foreign trade had met the demands for material culture until the Keiō period, but the modernized Meiji period had radically different requirements. From the onset, the Meiji rulers embraced the concept of a market economy and adopted British and North American forms of free enterprise capitalism. The private sector—in a nation with an abundance of aggressive entrepreneurs—welcomed such change.
Economic reforms included a unified modern currency based on the yen, banking, commercial and tax laws, stock exchanges, and a communications network. Establishment of a modern institutional framework conducive to an advanced capitalist economy took time, but was completed by the 1890s. By this time, the government had largely relinquished direct control of the modernization process, primarily for budgetary reasons.
Many of the former daimyo, whose pensions had been paid in a lump sum, benefited greatly through investments they made in emerging industries. Those who had been informally involved in foreign trade before the Meiji Restoration also flourished. Old bakufu-serving firms that clung to their traditional ways failed in the new business environment.
The government initially was involved in economic modernization, providing a number of "model factories" to facilitate the transition to the modern period. After the first twenty years of the Meiji period, the industrial economy expanded rapidly until about 1920 with inputs of advanced Western technology and large private investments. Stimulated by wars and through cautious economic planning, Japan emerged from World War I as a major industrial nation.

http://en.wikipedia.org/wiki/Meiji_period

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