Yoshihisa Godo

Catching Up in Education in the Economic Catch‐up of Japan with the United States, 1890–1990*

I. The Problem and the Approach The record of “modern economic growth” a la Simon Kuznets shows that sustained increases in real national income in advanced market economies depend predominantly on improved efficiency as measured by the growth of total factor productivity (TFP). Real national income is less dependent on increases in conventional inputs, that is, physical capital and labor in personhours. With the strong advocacy of economists such as Theodore Schultz, it has been established that investment in education is a major source of growth in TFP and, hence, national income. Estimations of the contribution of TFP to economic growth in advanced market economies have hitherto been limited to periods after these economies reached a stage of relatively high income. However, recent extensions of growth accounting analysis for earlier stages of industrialization in the United States as well as in Japan show that the contribution of TFP growth to national income growth was relatively minor. These historical findings are also consistent with other studies, indicating that the contribution of TFP growth to economic growth was small in comparison to the contribution of physical capital accumulation in newly industrialized economies (NIEs) in recent decades. Such observations suggest that the role of education may be different between the earlier and the later stages of modern economic growth. The validity of this hypothesis is critical for drawing relevant policy implications for developing economies from the historical experiences of developed economies. Nevertheless, a comprehensive analysis on the role of education covering the entire span of modern economic growth has been stymied by the sheer

The Human Capital Basis of the Japanese Miracle: A Historical Perspective

One of the most conspicuous events that has occurred in the Japanese economy since the Second World War has been the sharp downward kink in its growth trend, beginning in the 1990s. For nearly three decades, from the mid-1950s to the oil crisis of 1973–4, the Japanese economy had recorded an exceptionally high rate of growth of about 10 percent per year, during which its real GDP per capita nearly trebled. As a result, Japan advanced from being a lower-middle-income economy to one of the high-income economies. This high economic growth, which Japanese economists commonly call kodo keizai seichou (literally, “high-speed economic growth”) was unprecedented in history, although soon replicated by other high-performing economies in East Asia. Thus, this phenomenon can be seen as a forerunner of the East Asian Miracle (World Bank, 1993). After a relatively quick recovery from stagflation caused by the oil crisis, the Japanese economy continued to display such an outstanding performance throughout the 1980s that the expression “Japan as Number One” became the vogue during this period. As such, it may not be an exaggeration to call Japan’s four decades from the 1950s to 1980s the “Japanese Miracle.” However, the economy plunged at the beginning of the 1990s, with the country experiencing zero economic growth throughout the period commonly known as the “lost decade.” The Japanese economy has not yet been able to regain its previous vigor; until recently, its annual growth rate was below 3 percent, the lowest of the major industrialized countries.

Can Abenomics Reinvigorate Japan's Economy?: A Preliminary Assessment

After Japanese Prime Minster Shinzo Abe launched a new economic doctrine, which is often referred to as “Abenomics,” stock prices had risen dramatically till the first half of May 2013. A May 2013 public poll showed that Abenomics had worked well. Stock prices, however, have been volatile since then. This paper investigates the contents of Abenomics and considers whether Abenomics will rescue Japanese economy from its prolonged recession.

The Failure of Land-Use Planning in Japan

Japan is the first non-Western nation to “catch up” with policies instituted by advanced nations. Before Japan completed the catching-up process, Japan had been devoted to imitating political and economic systems of Western society. Largely, Japan succeeded in imitation; however, where democracy is concerned, Japan made a mistake. While democracy consists of two factors, i.e., the private right of assertion and the citizen’s participation in local administration, Japan imitated the private right of assertion, only. As a result, land-use planning became “a picture of a rice cake” (something of little value) and actual land use was not implemented. Once land use was not effectively implemented, land-use planning has been difficult to restore and will result in negativity for future generations. Learning from Japan’s failure of land-use planning, today’s developing countries should make efforts to introduce citizens’ participation into local administration.

Shinzo Abe's Challenges for the New Growth Strategy and Tax Reform

Japanese Prime Minister Shinzo Abe made various announcements and actions under the names of the New Growth Strategy and the tax reform in 2014. None of them, however, seems adequate to place the Japanese economy on the path to sustainable growth. While Abe now enjoys political stability in the Diet, serious risks of excess liquidity and national bankruptcy are seemingly increasing in the Japanese economy.

Abenomics and the Japanese Economy

Japanese Prime Minister Shinzo Abe regained power in end 2012. Almost simultaneously, Japans economy started flourishing. Abe proclaims that his new economic policy called Abenomics is responsible for the growth. Since many factors account for the current economic boom, it is uncertain how much comes from Abenomics. It is, however, quite certain that Abenomics has worsened the financial condition of the government, which is already struggling with dangerous budgetary problems.