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Japanese Economy

The Japanese economy in the mid 20th century is often called a miracle. After complete and total physical destruction in the Second World War, the Japanese people rebuilt an economic system from the ground up to spectacular growth within five or six years. Japanese EconomyHowever, the story of the Japanese economy is otherwise similar to that of other nations, replete with periods of growth and contraction.

After initial contact with Europeans in the 16th century, Japan closed its shores to outside influences through the mid-19th century. After the Meiji Restoration (1868), the Japanese economy went through two periods of growth. The first of which lasted until World War II, during which the Japanese economy was rapidly and total transformed by industrialism. This remarkable growth led to the Japanese Empire of the 1930s, as the nation expanded its territory through aggressive militarism.

After World War II, the Japanese economy was characterized by 10 percent annual growth for much of the period from the 1960s to the 1990s. The Japanese economy became famous for its high standard of living and increasingly miniaturized consumer electronics. However, growth in the Japanese economy slowed significantly in the 1990s, largely marked by stagnation, a period known as the “Lost Decade.” Sustained periods of quantitative easing ultimately failed to stop deflation. However, signs of growth in the Japanese economy may be on the horizon.

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