Academic journal article Journal of East Asian Studies

America's Role in the Making of Japan's Economic Miracle

Academic journal article Journal of East Asian Studies

America's Role in the Making of Japan's Economic Miracle

Article excerpt


Japan's remarkable postwar growth spurt in the 1960s would not have been possible without Japan's alliance with the United States. Policy makers, political scientists, economists, historians, and journalists on both sides of the Pacific have made this claim, but no study has yet tested it with modern statistical methods. In this article, we compare the economic growth trajectories of Japan and a statistically constructed "synthetic" Japan, which had a similar profile until the late 1950s but did not experience the consolidation of the US-Japan alliance, a process that began in 1958 and culminated with the signing of a formal defense pact in January 1960. We find that Japan's per capita gross domestic product (GDP) grew much faster than the synthetic Japan's from 1958 to 1968. We substantiate these results with in-depth historical analyses on how the United States facilitated Japan's economic miracle.


economic growth, US-Japan relations, synthetic control, Japan


The postwar rise of Japan is one of the most dramatic cases of rapid economic development in modern history. Only a decade after suffering total military defeat, Japan returned to its pre-war standard of living. More remarkable, Japan's growth accelerated after this initial recovery period. The average growth rate from 1945 to 1958 was 7.1 percent, whereas it was 9.5 percent from 1959 to 1970, according to the most widely used comparative and historical data on GDP (Bolt and Van Zanden 2014). (1) The official data published by Japan's Cabinet Office also show that the real GDP growth rate was 6.8 percent in 1956, 8.1 percent in 1957, and 6.6 percent in 1958. Then, it sharply increased to 11.2 percent in 1959, 12.0 percent in 1960, 11.7 percent in 1961, and so on. From 1959 to 1970, the growth rate was above 10 percent in eight (out of 12) years. (2) As a result of this growth spurt, by 1970 Japan boasted the third largest economy and ranked among the most developed countries in the world. As Babones (2011, 81) points out, Japan is the only large country with a diversified economy that has risen from a below-average level of development to the upper tier of the world economy.

Why did Japan experience such a remarkable growth spurt? (3) Numerous economists, political scientists and historians have examined Japan's economic growth, in particular its growth acceleration, and have stressed different factors, but the bulk of the literature tells some version of the following story (e.g. Amsden 2001; Calder 1988; Denison 1976; Dower 1979; Gao 2001; Johnson 1982; Kosai 1986; Nakamura 1995; Nishimizu and Hulten 1978; Samuels 1987; World Bank 1993). In the 1950s and 1960s, a coalition of Japanese bureaucrats and businesspersons set Japan on a path of export-led growth, buoyed by massive domestic investment, foreign technology acquisition, protectionist barriers, and well-designed industrial policies. As a result of these far-sighted policies, economic growth accelerated dramatically and Japan ascended to the heights of the world economy.

On the other hand, some scholars argue that this conventional wisdom is incomplete (e.g., Forsberg 2000; LaFeber 1997; Miller 2012; Pempel 1999; Schaller 1997; Shimizu 2001). According to these scholars, the success of Japan's economic policies depended on Japan's close alliance with the most powerful country in the world--the United States. Specifically, high investment rates required an abundance of capital, export-oriented growth required dedicated buyers, and technology-acquisition and protectionist policies necessitated a tolerant international community. Japanese policymakers could not take any of these growth ingredients for granted. Fortunately for them, American leaders were both willing and able to provide Japan with such advantages, because US foreign policy during the early Cold War prioritized the cultivation of strong anti-communist allies. …

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