MITI and the Japanese miracle

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One

The Japanese "Miracle"

By common agreement among the Japanese, the "miracle" first appeared to them during 1962. In its issues of September 1 and 8, 1962, the

Economist

of London published a long two-part essay entitled "Consider Japan," which it later brought out as a book that was promptly translated and published in Tokyo as

Odorokubeki Nihon

(Amazing Japan). Up to this time most Japanese simply did not believe the rate of economic growth they were achievinga rate unprecedented in Japanese historyand their pundits and economists were writing cautionary articles about how the boom would fail, about the crises to come, and about the irrationality of government policy.

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Yet where the Japanese had been seeing irresponsible budgets, ''over-loans," and tremendous domestic needs, the

Economist

saw expansion of demand, high productivity, comparatively serene labor relations, and a very high rate of savings. Thus began the praise, domestic and foreign, of the postwar Japanese economyand the search for the cause of the "miracle."

First, some details on the miracle itself. Table 1 presents indices of industrial production for the entire period of this study, 1925 to 1975, with 1975 as 100. It reveals several interesting things. The miracle was actually only beginning in 1962, when production was just a third of what it would be by 1975. Fully half of Japan's amazing economic strength was to be manifested after 1966. The table also shows clearly the "recessions" of 1954, 1965, and 1974 that spurred the government to new and even more creative economic initiatives; and it demonstrates the ability of the Japanese economy to come back even more strongly from these periods of adversity. Intersectoral shifts are also recorded: the decline of mining as coal gave way to oil and the move-