Devastated by the war, Japan's population in 1946 was what it had been in 1940, but it increased with Japanese arriving from Korea and Manchuria. Japan was under the impression that it would not again be a first-class military power. Its resources were limited. The dream of prosperity through conquest was over. Japan was now dependent on goodwill and trade. With the United States supplying the military needed for defense, Japan could now devote its entire economy to peace-time development.
After the war, Japan was in much need of economic development. In the cities, some were starving. City dwellers were rushing to farming areas in what was called the "onion existence," pealing off layer after layer of possessions and exchanging them for food. For years Japan's population was kept from starvation by free food from the United States. It would take time for Japan to develop its industry and exports to create self-sufficiency. Forced to rebuild its industry, Japan did not need to overcome reluctance to spend money on new machinery as some did in the industrialized West.
One advantage that Japan had with others called "developing nations" was its tradition in education. Like Germany, Japan emerged from World War II with a reservoir of persons experienced with technology and science. Another advantage was Japan's devotion to free enterprise. Japan's industries were relatively well managed within a free enterprise system. The Soviet Union's experience demonstrated that no matter how well trained a work force, much was lost if the system was poorly managed.
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