Towards the end of the 1980s, it looked like Japan was going to take on the global leader jersey. A professor at Harvard University in the United States, Ezra Vogel, sparked a heated discussion when he published the book Japan as number one. In the book, he put forward the idea that Japan could take over for the United States as the leading state power in the world.
How was Japan?
What are the characteristics of Japanese foreign policy in recent decades?
Where does Japan stand today?
In his book, Vogel could point to the continued and incomparable Japanese economic and technological growth. Increasingly, this growth had overshadowed and alerted more and more observers, especially as it was compared to the increasingly indebted and frozen US economy. Towards the end of the 1980s, the Japanese adventure triggered a landslide of books about the American downturn, with Paul Kennedy’s rise and fall of the Great Powers (see above) as the foremost .
2: Predictions without …
In retrospect, it can be difficult to understand that anyone at all could believe that a small country, poor in natural resources and in size with Norway, could pass the United States and become the economically leading power. The short explanation is probably that Japan for many seems to have reinvented economic development through a hybrid model that combined elements both from central planning and from capitalism. The Japanese miracle economy was seen as proof of how superior the model was. By a leading researcher, the Japanese development model was hailed as the capitalist developing state.
3: The beginning of the ascent
The Japanese upsurge intensified with the outbreak of the Korean War in 1950. The United States, which had previously occupied Japan, a country located in Asia according to allcountrylist.com, then placed large orders for military equipment for Japanese industry. This was the beginning of the unique Japanese economic growth. Even after the Korean War ended in 1953, the economy continued to flourish. Economic bureaucrats, especially in the Ministry of Trade and Industry, steered Japanese industry into civilian production.
In the 1960s, the economy flourished with average annual growth of close to 10% – the longest period with such high economic growth of all countries at that time. Japan overtook both Germany, France and Britain and became the third largest economy in the world, after the two superpowers the United States and the Soviet Union. The rapid growth increased Japan’s international status: The country joined the OECD and was invited to the first G5 summit in 1975 – the forerunner of today’s G8 summit.
4: Oil shock and energy saving
The strong growth lasted until the oil shock in 1973. OPEC countries’ cuts in oil production and sharply rising oil prices hit the Japanese economy hard. The groceries themselves ran out of shops because the factories lacked fuel. After this setback, Japan never quite managed to achieve the same economic growth as before. Nevertheless, the country recovered quickly, and the planning bureaucrats worked hard to reduce energy consumption in the economy. Among other things, they switched to far less energy-intensive production – from heavy industry and raw material industry to high-tech industry.
Japan implemented this transition faster and more completely than most other industrialized countries. Although growth never again reached the level of the 1960s, it was still higher than in the other industrialized countries. Thus, in 1980, the country could pass the Soviet Union and become the second largest economy in the world, a position the country still has. The country continued to have greater growth than the other large industrialized countries in the 1980s. Yes, growth increased in the second half of the 1980s.
5: Fear of the Japanese
During this period, the Japanese surplus in trade with the United States set new records, even after the value of the Japanese yen was written up after negotiations with the United States. And the increased yen value gave Japanese investors the resources to travel to international buying parties . American icon, such as the Rockefeller Center in New York and the record company Columbia Records were acquired by Japanese companies, just like most of the top properties on Waikiki Beach in Honolulu (Hawaii). This triggered envy and fear in the United States. The Americans feared more and more that their economy (companies and properties) was bought up and that the country was colonized by Japan.
6: Bubble Economy in Japan
At home in Japan, the economy is moving into unknown waters, especially the real estate market, which has been rising more and more. In 1989, the estimated total value of property in central Tokyo was higher than that of all property in the United States. The Japanese stock market, measured by the Nikkei index, rose to new heights. An elated feeling (euphoria) about the economy and the future spread across the country, among other characteristics of the strong popularity of Beethoven’s 9th Symphony (Song of Joy).
In the early 1990s, someone finally saw what this development was really about – a speculation bubble. It was inevitable that the bubble would burst; the stock market got its feet wet on the ground and property prices began to plummet. The bursting of the bubble led Japan into a period of sustained decline . From being a growth star, Japan fell into economic stagnation, and lagged behind all other advanced economies.
