Simon Kuznets, Six Lectures on Economic Growth (1959)
Four Major Characteristics of MEG (Modern Economic Growth)
1. Application of Modern Scientific thought and technology to industry.
2. A sustained and rapid rise in real product per capita, usually combined with high-rates of population growth.
3. Rapid rates in the transformation of the industrial structure, essentially the movement of capital, workers and entrepreneurship out of agriculture and into manufacturing and services.
4. MEG takes place in the context of international trade.
Japan provided a stable, strong central government to provide a framework and a legitimizing framework--fukoku-kyohei, etc.
Dismantled feudal class structure, opened ip new occupations
Created new tax and fiscal structure and a stable currency and banking system so...
ERAS:
1. 1868-1878 = establishing stability
1876-1885 - some serious shocks--compulsory commutation of samurai pensions, Satsuma Rebellion --42 million yen--->inflation----->MATSUKATA DEFLATION, balanced the budget
1881-1885 prices fell by 50%
Government Investment helped to jump started development ofCommunications, RR, Telegraphs, Mining. Shipyards, Construction related factories like Cement, Glass, Bricks;
Don't forget Military Ordnance--rifles, ammo, gunpowder, canons, etc.
2. 1886-1905 Initial MEG
3. 1905-1945 MEG --Textile Manufacturing = the key; also, Beer, glass, paper, Sugar, chemical fertilizer, Pharmaceuticals == Light Industry
W.W. Rostow, The Stages of Economic Growth (1965)
1. Traditional Society
2. Preconditions for take-off
a. appearence of modern science
b. spread of idea that economic progress is possible
c. scope of commerce widens, banks and other institutions appear
d. politically, an effective, centralized national state is constructed
3. The Take-Off
a. new industries expand rapidly
b. factory workers increase as do services to support them
c. a new class of entrepreneurs expands
d. savings rates increase and capital finds its way into the hands of entreprenuers
e, new techniques of agricultural productivity spread
4. The Drive to Maturity
a. 10-20% of national income is steadily invested
b. period of sustained if fluctuating economic growth
5. The Age of High Mass-Consumption == the Postmodern?
1. High rate of overall growth in terms of output and per capita income; 1886-1920 national output rose by 6 times
2. Population growth ratereminiscent of European economies (3/4% per year)...i.e., moderate not cannibalizing of surplus capital sufficent to keep growthrates to a modest 1.8% per year
3. Sufficient level of domestic Savings and Investment; also, Japan's modern WARS sparked economic boom, big government expenditures, e.g. 1905-1915 Japanese Imperial Navy commissioned 77 ships--all but 7 built in Japan; by 1914 Japan was one of five countries self-sufficient in production of Steam Locomotives
4. Low level of personal consumption per level of per capita income, i.e., high savings rate making capital avaialble for Investment through Banks
5. MEG taking place in a mildly inflationary setting but with sufficient growth in Agricultural production to keep pace with population pressures
6. MEG occurred without jeopardizing the traditional economy; in fact, benefitting from it.
7. Co-existence of a Traditional with a Modern sector of the Ecoomy = the DUAL STRUCTURE or DUAL ECONOMY
8. A specifically created group of financial institutions which enhance the supply or flow of Capital, i.e., modern Banks and the Zaibatsu
9. After WWI spurt, Japan's economy grew at rate of 9% per year (40%) during the war--> narikin(newly rich)
10. Japanese owned spindles in China after WWI grew 10-fold
11. September 1, 1923 Earthquake had profound impact 120,000 buildings, 140,000 lives lost
Six areas of policy change implemented by Meiji government that directly affected the transition of Japan to industrialized country:
1. Mobility of labor. Surplus labor from the countryside could easily migrate to the urban centers.
2. Compulsory education. This helped the development of a literate labor force which was important for economic growth.
3. Fiscal reform. The implementation of a land tax paid in money helped to increase the government revenue for investment. Also, the Matsukata Delfation 1881-1885; and thelead role that the central government took in creating the modern BANKING SYSTEM which was completed by 1901.
4. Introduction and diffusion of foreign technology. "Live Machines"
5. Industrial policy. Meiji government subsidized key industries and factories and sent trained technicians to them to run equipment imported from foreign countries.
6. Infrastructure. The development of telegraph, postal and railroad systems helped the spread of technology.