Japan

F

Museums and Libraries

For a country of its size, Japan has a large number of museums, with important collections in virtually every major city. Two of the country’s finest museums are located in Tokyo: the Tokyo National Museum, specializing in traditional Japanese art, and the National Museum of Modern Art, housing both Japanese and foreign art. The Kyōto National Museum, another of Japan’s major museums, contains Chinese and Japanese fine arts, handicrafts, and archaeological items. The great variety of other Japanese museums include archaeological, ethnographic, and ceramics museums. Moreover, many Buddhist temples and Shinto shrines maintain collections of art.

Tokyo outranks all other Japanese cities in number of major libraries. Among the most important is the National Diet Library, Japan’s national library. It serves as an international book exchange and an information center for Japan. Among the important university libraries in Tokyo are the University of Tokyo Library, Meiji University Library, and Nihon University Library. Major collections are housed in the libraries of the provinces, such as the Ōsaka Prefectural Nakanoshima Library and the Kōbe City Library. There are also many important university libraries outside of Tokyo, such as the one at Kyōto University.

The Arts and Culture section of this article was contributed by Paul Varley.

V

Economy

Japan is the world’s second largest economy after the United States. In 2005 Japan’s gross domestic product (GDP) was $4.53 trillion, compared to $12.42 trillion for the United States. Japan also has one of the world’s highest living standards. Economists compare living standards in different countries using a measure called purchasing power parity. This measure takes into account the countries’ differing costs of living. By this measure, Japan’s per capita GDP rose from 21 percent of the U.S. level in 1955 to 56 percent in 1970. By 1992 per capita GDP had reached $19,920, 86 percent of the U.S. level. Despite the overall strength of the Japanese economy, in the late 1990s Japan was mired in its longest recession since World War II. GDP, which had grown slowly in the early 1990s, fell 0.4 percent in 1997 and another 2.8 percent in 1998. This was the first time in the postwar era that Japan’s GDP declined two years in a row. The recession continued into the early 2000s, but economic growth gained strength late in 2005.

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As is typical in a mature economy, services make up the largest part of Japan’s economy. In 2003 services (such as trade, government, and real estate) accounted for 68 percent of Japan’s GDP, while industry (mining, manufacturing, and construction) made up 31 percent, and agriculture (including forestry and fishing) contributed 1 percent.

A

Historical Development

Japan’s economy experienced two periods of rapid development in modern times. The first began in the late 19th century after a long interval of national seclusion, and the second followed the end of World War II in 1945. After recovering from the war, Japan experienced three and a half decades of prosperity and generally steady growth, although problems began to surface in the 1970s. Recession plagued Japan in the 1990s and early 2000s, spurring leaders to reevaluate the structure of the economy.

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1

From the Meiji Restoration to World War II

In 1868 a group of disaffected feudal lords, court aristocrats, and samurai responded to the threat of foreign domination by overthrowing Japan’s military government and replacing it with a new imperial government under the Meiji emperor. The Meiji Restoration, as it came to be known, ended 250 years of self-isolation for Japan and introduced an era of rapid economic change. The country’s new rulers adopted the slogan “Rich Country, Strong Army.” They wanted Japan to become economically and militarily powerful so it could retain its independence. Yet Japan had no modern machinery, steel mills, steam engines, telegraphs, railroads, postal system, or newspapers. It had few natural resources aside from coal and silk. Nor did it have modern business institutions, such as banking and public corporations. Its main resource was a population that was highly literate for a preindustrial country. At that time, 43 percent of boys and 10 percent of girls had some schooling.

The country’s takeoff was explosive. From 1890 through 1938, Japan’s GDP grew 3.3 percent each year, far faster than the United States and the countries of Western Europe at a similar stage of development. Manufacturing grew especially rapidly, soaring from 8 percent of GDP in 1888 to 32 percent by 1938.

Before the Meiji Restoration, Japan had conducted almost no trade. After the restoration, Japan welcomed foreign advisers and sent missions to the United States, Germany, France, and Britain to learn the best techniques in economy and government. Between 1885 and 1900 foreign trade grew to 18 percent of GDP. Still, to avoid dependence, Japan restricted foreign investments and loans.

Initially, the government had to fill the vacuum in promoting industrialization because business was so weak. The government owned few industries, but from 1868 to 1900, government agencies supplied more than one-third of all financial capital and encouraged modern industries. By the turn of the century, business replaced government as the leading economic force. Topping the corporate pyramid were a dozen large corporate groups known as zaibatsu, which were headed by rich families such as Mitsui, Iwasaki (operating under the company name Mitsubishi), and Sumitomo.

The worldwide economic slump of the 1930s, combined with other factors, led Japan to increasingly centralize and militarize its economy. The government passed laws giving itself control over imports, power to direct private bank loans to priority industries and firms, and authority to promote heavy industries needed by the military, such as petroleum, machine tools, aircraft, iron and steel, and automobiles. Industries were organized into cartels (groups of business firms acting in concert to reduce economic competition in a particular market). Heavy industry rose from 35 percent of manufacturing in 1930 to 65 percent by 1940. The legacy of this period was a pattern of corporate organization and government-business relations that remains influential today.

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2

Postwar Devastation and Reconstruction

When World War II ended in 1945, one-quarter of Japan’s buildings lay in ashes. The GDP was only one-third of its prewar level. Riots broke out among people who were barely surviving on 1,000 calories worth of food per day. To get recovery started, the government instituted a “priority production” system, subsidizing the manufacture of basic products such as coal, fertilizer, steel, and electricity. Japan’s economy did not return to its prewar GDP levels until 1955.

The United States, one of Japan’s opponents in the war, occupied Japan militarily and controlled economic policy from 1945 to 1952. At first, the occupation authorities embraced economic democratization as their first priority. They introduced land reform and permitted workers to unionize. They also broke up the zaibatsu, which owned 40 percent of all equity (stock) in Japanese companies. By the late 1950s, however, the zaibatsu were reforming. The groups of affiliated companies were now called keiretsu, and banks, rather than rich families, stood at their core.

The rise of the Cold War in the late 1940s pitted a bloc of countries led by the United States against another bloc led by the Union of Soviet Socialist Republics (USSR). With the new international situation, occupation authorities adopted a new priority: to make Japan into a strong ally for the United States. The change in policy became known as the reverse course. To promote economic growth, the United States provided financial assistance and opened its markets to Japanese goods. In 1950 the Korean War broke out, and the U.S. military began buying supplies from Japan, creating enormous demand for Japanese goods. Economic recovery exploded to 12 percent growth per year from 1950 to 1952. In 1952 Japan regained its sovereignty and the U.S. occupation of Japan ended.

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