Japanese economic miracle

The Japanese economic miracle was Japan's record period of economic growth between post-World War II era to the end of Cold War. During the economic boom, Japan rapidly became the world's second largest economy (after the United States) by the 1960s. By 1990s, Japan's demographics began stagnating and the workforce was no longer expanding as it did in previous decades, despite per worker productivity remaining high.

This economic miracle was the result of post-World War II Japan and West Germany benefiting from the Cold War. It occurred chiefly due to the economic interventionism of the Japanese government and partly due to the aid and assistance of the U.S. After World War II, the U.S. established a significant presence in Japan to slow the expansion of Soviet influence in the Pacific. The U.S. was also concerned with the growth of the economy of Japan because there was a risk after World War II that an unhappy and poor Japanese population would turn to communism and by doing so ensure that the Soviet Union would control the Pacific.

The distinguishing characteristics of the Japanese economy during the "economic miracle" years included: the cooperation of manufacturers, suppliers, distributors, and banks in closely knit groups called keiretsu; the powerful enterprise unions and shuntō; good relations with government bureaucrats, and the guarantee of lifetime employment (Shūshin koyō) in big corporations and highly unionized blue-collar factories. This economic miracle was spurred mainly by Japanese economic policy, in particular through the Ministry of International Trade and Industry.

The Japanese financial recovery continued even after SCAP departed and the economic boom propelled by the Korean War abated. The Japanese economy survived from the deep recession caused by a loss of the U.S. payments for military procurement and continued to make gains. By the late 1960s, Japan had risen from the ashes of World War II to achieve an astoundingly rapid and complete economic recovery. According to Mikiso Hane, the period leading up to the late 1960s saw "the greatest years of prosperity Japan had seen since the Sun Goddess shut herself up behind a stone door to protest her brother Susano-o's misbehavior." The Japanese government contributed to the post-war Japanese economic miracle by stimulating private sector growth, first by instituting regulations and protectionism that effectively managed economic crises and later by concentrating on trade expansion.

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