1970's Essay

At the end of the Allied Occupation in 1952, Japan ranked as a less--developed country, with per capita consumption a mere one-fifth that of the United States. During the period 1953-1973, the economy grew with unprecedented rapidity (the average growth rate was 8.0% per annum overall and 10.6% during the 1950s). Real output per person in 1970 was 2.5 times higher than in 1960, and, Japan became the world's second largest economy in 1968. This rapid growth resulted in significant changes to Japan's industrial structure. Production system shifted from a reliance on agriculture and light manufacturing to a focus on heavy industry, machineries and, gradually, service sector. Urbanization also progressed rapidly.

The first major economic expansion,

However, focus was gradually shifted to a heavy manufacturing industry located in major coastal industrial complexes: During the 1960s, the iron and steel industry and the shipbuilding industry came to the fore, followed by the chemical industry and in the early 1970s the electronics industry; the automotive industry rose to prominence in the late 1970s. Exports were important, especially for textiles and shipbuilding, which were aided by a rapid increase in world trade throughout the

First, Japanese industry had caught up with the best practices abroad; improving productivity required more resources than in the past. This in turn reduced the profitability of new investment, which fell to a lower level after 1974. The international environment also became less favorable, due mainly to the revaluation of the yen and trade frictions with the United States. The Japan¬ United States textile talks of 1969, a worldwide commodity price boom that culminated in the quadrupling of oil prices during the oil crisis of 1973, and the movement of the yen to a floating rate in 1973, all these factors worked to slow Japanese economic growth.

Even before the October 1973 oil crisis, the government had started to slow the economy in response to rising inflation. Combined with the impact of a quadrupling of oil prices, gross national product (GDP) fell 1.4 percent in 1974, the first actual decline since the 1950s. Growth slowed from the 10 percent level to an average of 3.6 percent during 1974-1979. After the 1985 Plaza Accord, the yen rose sharply in value, reaching y120 to a US dollar in 1988, twice its average 1984 value and three times its 1971 value. As a result, after 1986 the trade surplus gradually