Japanese Industrialization and Economic Growth Essay

japan achieved sustained egress in per capita income betwixt the 1880s and 1970 through industrialization. Moving along an income harvesting trajectory through expansion of manufacturing is hardly unique. Indeed Western Europe, Canada, Australia and the joined States all attained high school levels of income per capita by shifting from agrarian- musical themed production to manufacturing and technologically sophisticated service sector activity. Still, there are four distinctive features of lacquers development through industrialization that merit discussionThe proto-industrial base lacquers coarse productivity was high enough to sustain substantial craft (proto-industrial) production in both rural and urban areas of the region prior to industrialization.Investment-led proceedsDomestic investment funds in industry and infrastructure was the driving force behind growth in japanese produce. Both occult and public sectors invested in infrastructure, national and local autho ritiess serving as coordinating agents for infrastructure build-up. * Investment in manufacturing capacity was largely left to the closed-door sector. * acclivity domestic savings made increasing peachy ingathering possible. * lacquerese growth was investment-led, not export-led.Total factor productivity growth achieving more out(p)put per unit of input was rapid. On the supply side, total factor productivity growth was extremely important. Scale economies the reduction in per unit cost imputable to increased levels of output contributed to total factor productivity growth. Scale economies existed due to geographic concentration, to growth of the national economy, and to growth in the output of individual companies. In addition, companies moved down the learning curve, reducing unit costs as their cumulative output rose and demand for their product soared. The kind capacity for importation and adapting unlike engine room improved and this contributed to total factor productivity growth * At the household level, investing in education of children improved social capability.* At the firm level, creating internalized chore markets that bound firms to workers and workers to firms, thereby giving workers a strong incentive to flexibly adapt to new technology, improved social capability. * At the g everyplacenment level, industrial policy that reduced the cost to private firms of securing foreign technology enhanced social capacity. Shifting out of low-productivity tillage into high productivity manufacturing, mining, and grammatical construction contributed to total factor productivity growth.DualismSharply segmented labor party and capital markets emerged in lacquer after the 1910s. The capital intensive sector enjoying high ratios of capital to labor paid comparatively high wages, and the labor intensive sector paid relatively low wages. Dualism contributed to income ine choice and therefore to domestic social unrest. after wards 1945 a ser ies of public policy reforms addressed inequality and erased much of the social bitterness around dualism that ravaged lacquer prior to World contend II. The remainder of this article will expand on a turn of events of the themes mentioned above. The appendix reviews valued evidence concerning these points. The conclusion of the article lists references that provide a riches of particular evidence supporting the points above, which this article can buoy only begin to explore. The Legacy of Autarky and the Proto-Industrial Economy Achievements of Tokugawa Japan (1600-1868)Why Japan?Given the relatively poor record of countries outside the European cultural area few achieving the kind of catch-up growth Japan managed between 1880 and 1970 the question naturally arises why Japan? After all, when the linked States forcibly opened Japan in the 1850s and Japan was forced to cede extra-territorial rights to a number of Western nations as had China primitively in the 1840s, many Westerners and Japanese alike thought Japans prospects seemed dim indeed.Tokugawa achievements urbanization, road ne 2rks, rice cultivation, craft production In answering this question, Mosk (2001), Minami (1994) and Ohkawa and Rosovsky (1973) mark the achievements of Tokugawa Japan (1600-1868) during a long close of closed country autarky between the mid-seventeenth century and the 1850s a high level of urbanization well substantial road networks the channeling of river water flow with embankments and the extensive elaboration of irrigation ditches that supported and advance the refinement of rice cultivation based upon improving seed varieties, fertilizers and planting methods particularly in the Southwest with its relatively long suppuration season the development of proto-industrial (craft) production by merchant houses in the major cities like Osaka and Edo (now called Tokyo) and its airing to rural areas after 1700 and the promotion of education and population control a mong both the military elite (the samurai) and the well-to-do peasantry in the eighteenth and archaean nineteenth centuries. Tokugawa political economy daimyo and shogunThese developments were inseparable from the political economy of Japan. The system of confederation g overnment introduced at the end of the fifteenth century placed certain powers in the turn over of feudal warlords, daimyo, and certain powers in the hands of the shogun, the well-nigh powerful of the warlords. Each daimyo and the shogun was assigned a geographic region, a domain, being given taxation say-so over the peasants residing in the villages of the domain. Intercourse with foreign powers was monopolized by the shogun, thereby preventing daimyo from cementing alliances with other countries in an effort to overthrow the central government. The samurai military retainers of thedaimyo were forced to abandon rice outlying(prenominal)ming and reside in the castle town headquarters of their daimyo overlord. In exchange, samurai received rice stipends from the rice taxes collected from the villages of their domain. By removingsamurai from the countryside by demilitarizing rural areas conflicts over local water rights were largely made a thing of the past. As a vector sum irrigation ditches were extended throughout the valleys, and riverbanks were shored up with stone embankments, facilitating transport and preventing flooding. The sustained growth of proto-industrialization in urban Japan, and its widespread dissemination to villages after 1700 was also inseparable from the productivity growth in paddy rice production and the growing of industrial crops like tea, fruit, mulberry plant growing (that sustained the raising of silk cocoons) and cotton. Indeed, Smith (1988) has given pride of place to these domestic sources of Japans prospective industrial success.Readiness to emulate the WestAs a result of these domestic advances, Japan was well positioned to take up the Western challen ge. It harnessed its infrastructure, its high level of literacy, and its proto-industrial distribution networks to the task of emulating Western organizational forms and Western techniques in energy production, first and foremost enlisting inorganic energy sources like blacken and the other fossil fuels to generate move power. Having intensively demonstrable the organic economy depending upon natural energy flows like wind, water and fire, Japanese were quite lively to master inorganic production after the Black Ships of the Americans forced Japan to jettison its long-standing autarky.From Balanced to Dualistic increment, 1887-1938 Infrastructure and Manufacturing Expand Fukoku KyoheiAfter the Tokugawa government collapsed in 1868, a new Meiji government committed to the twin policies of fukoku kyohei (wealthy country/strong military) took up the challenge of renegotiating its treaties with the Western powers. It created infrastructure that facilitated industrialization. It bui lt a modern naval forces and army that could keep the Western powers at bay and establish a protective buffer zone in North East Asia that eventually make the basis for a burgeoning Japanese empire in Asia and the Pacific. Central government reforms in education, finance and transportation Jettisoning the confederation style government of the Tokugawa era, the new leading of the new Meiji government fashioned a unitary state with powerful ministries consolidating authority in the capital, Tokyo.The freshly minted Ministry of Education promoted compulsory primary schooling for the raft and elite university education aimed at deepening engineering and scientific knowledge. The Ministry of Finance created the Bank of Japan in 1882, laying the foundations for a private banking system plunk for up a lender of last resort. The government began building a steam railroad trunk line girding the four major islands, encouraging private companies to participate in the project. In particul ar, the national government committed itself to constructing a Tokaido line connecting the Tokyo/Yokohama region to the Osaka/Kobe conurbation along the Pacific coastline of the main island of Honshu, and to creating deepwater harbors at Yokohama and Kobe that could accommodate deep-hulled steamships. Not surp liftly, the merchants in Osaka, the merchant capital of Tokugawa Japan, already well versed in proto-industrial production, turned to harnessing steam and coal, investing heavily in integrated spinning and weaving steam-driven textile mills during the 1880s.Diffusion of best-practice agricultureAt the same time, the abolition of the three hundred or so feudal fiefs that were the moxie of confederation style-Tokugawa rule and their consolidation into politically weak prefectures, under a strong national government that virtually monopolized taxation authority, gave a strong contract to the diffusion of best practice agricultural technique. The nationwide diffusion of seed va rieties developed in the Southwest fiefs of Tokugawa Japan spearheaded a substantial improvement in agricultural productivity especially in the Northeast. Simultaneously, expansion of agriculture using traditional Japanese technology agriculture and manufacturing using imported Western technology resulted.Balanced growthGrowth at the close of the nineteenth century was balanced in the sense that traditional and modern technology using sectors grew at roughly equal rates, and labor especially young girls recruited out of farm households to labor in the steam using textile mills flowed back and forrard between rural and urban Japan at wages that were roughly equal in industrial and agricultural pursuits.Geographic economies of de eggshell in the Tokaido belted ammunitionConcentration of industrial production first in Osaka and subsequently throughout the Tokaido belt fostered powerful geographic scale economies (the ability to reduce per unit costs as output levels increase), red ucing the costs of securing energy, raw materials and access to global markets for enterprises located in the great harbor metropolises stretching from the massive Osaka/Kobe complex magnetic north to the teeming Tokyo/Yokohama conurbation. Between 1904 and 1911, electrification mainly due to the proliferation of intercity electrical railroads created economies of scale in the nascent industrial belt facing outward onto the Pacific. The consolidation of two huge hydroelectric power grids during the 1920s one servicing Tokyo/Yokohama, the other Osaka and Kobe further solidified the comparative advantage of the Tokaido industrial belt in factory production. Finally, the widening and paving during the 1920s of roads that could handle buses and trucks was also pioneered by the great metropolises of the Tokaido, which further bolstered their relative advantage in per capita infrastructure.Organizational economies of scale zaibatsuIn addition to geographic scale economies, organizati onal scale economies also became increasingly important in the late nineteenth centuries. The governance of the zaibatsu (financial cliques), which step by step evolved into diversified industrial combines tied unitedly through central holding companies, is a fibre in point. By the 1910s these had evolved into highly diversified combines, binding together enterprises in banking and insurance, trading companies, mining concerns, textiles, iron and steel plants, and machinery manufactures. By channeling profits from older industries into new lines of activity like electrical machinery manufacturing, the zaibatsu form of organization generated scale economies in finance, slew and manufacturing, drastically reducing information-gathering and transactions costs. By attracting relatively scare managerial and entrepreneurial talent, the zaibatsu format economized on human resources.ElectrificationThe push into electrical machinery production during the 1920s had a revolutionary impact on manufacturing. Effective exploitation of steam power required the use of large central steam engines simultaneously driving a large number of machines power looms and mules in a spinning/weaving plant for instance throughout a factory. bantam enterprises did not mechanize in the steam era. But with electrification the unit drive system of mechanization spread. Each machine could be powered up respectively of one other. Mechanization spread rapidly to the smallest factory.Emergence of the dualistic economyWith the drive into heavy industries chemicals, iron and steel, machinery the demand for skilled labor that would flexibly suffice to rapid changes in technique soared. Large firms in these industries began offering premium wages and guarantees of employment in good times and bad as a flair of motivating and holding onto valuable workers. A dualistic economy emerged during the 1910s. Small firms, light industry and agriculture offered relatively low wages. Large enterpri ses in the heavy industries offered much more favorable remuneration, extending paternalistic benefits like company housing and company welfare programs to their internal labor markets. As a result a widening gulf opened up between the great metropolitan centers of the Tokaido and rural Japan. Income per head was far higher in the great industrial centers than in the hinterland.Clashing urban/rural and landlord/tenant interestsThe economic strains of emergent dualism were amplified by the slowing down of technological progress in the agricultural sector, which had soundly reaped the benefits due to regional diffusion from the Southwest to the Northeast of best practice Tokugawa rice cultivation. Landlords around 45% of the cultivable rice paddy land in Japan was held in some form of tenancy at the beginning of the twentieth century who had played a crucial role in promoting the diffusion of traditional best practice techniques now lost interest in rural affairs and turned their a ttention to industrial activities.Tenants also found their interests disregard by the national authorities in Tokyo, who were increasingly focused on supplying cheap foodstuffs to the burgeoning industrial belt by promoting agricultural production at heart the empire that it was assembling through military victories. Japan secured Taiwan from China in 1895, and formally brought Korea under its imperial rule in 1910 upon the heels of its successful war against Russia in 1904-05. Tenant leagues reacted to this callous disrespect of their needs through violence. Landlord/tenant disputes broke out in the early 1920s, and keep to plague Japan politically throughout the 1930s, calls for land reform and bureaucratic proposals for reform being rejected by a Diet (Japans legislature) politically dominated by landlords.Japans military expansionJapans thrust to imperial expansion was inflamed by the growing instability of the geopolitical and world(prenominal) apportion regime of the lat er 1920s and early 1930s. The relative decline of the unify Kingdom as an economic power doomed a gold regular regime tied to the British pound. The United States was bonnie a potential contender to the United Kingdom as the backer of a gold measurement regime but its long history of high tariffs and isolationism deterred it from taking over leadership in promoting global trade openness. Germany and the Soviet Union were increasingly becoming industrial and military giants on the Eurasian land mass committed to ideologies hostile to the liberal democracy championed by the United Kingdom and the United States. It was against this worldwide backdrop that Japan began aggressively staking out its claim to being the dominant military power in East Asia and the Pacific, thereby bringing it into conflict with the United States and the United Kingdom in the Asian and Pacific theaters after the world slipped into global warfare in 1939.Reform and Reconstruction in a juvenile Internatio nal scotch Order, Japan after World War II Postwar occupation economic and institutional restructuring Surrendering to the United States and its allies in 1945, Japans economy and infrastructure was revamped under the S.C.A.P (Supreme Commander of the Allied Powers) Occupation lasting through 1951. As Nakamura (1995) points out, a variety of Occupation-sponsored reforms transformed the institutional surround conditioning economic performance in Japan.The major zaibatsu were liquidated by the Holding Company Liquidation Commission set up under the Occupation (they were revamped as keiretsu corporate groups mainly tied together through cross-shareholding of stock in the aftermath of the Occupation) land reform wiped out landlordism and gave a strong push to agricultural productivity through mechanization of rice cultivation and collective bargaining, largely illegal under the Peace Preservation Act that was used to suppress union organizing during the interwar arrest, was given the imprimatur of constitutional legality. Finally, education was opened up, partly through making middle school compulsory, partly through the creation of national universities in each of Japans forty-six prefectures.Improvement in the social capability for economic growthIn short, from a domestic point of view, the social capability for importing and adapting foreign technology was improved with the reforms in education and the fillip to competition given by the dissolution of the zaibatsu. Resolving tension between rural and urban Japan through land reform and the establishment of a rice price support program that guaranteed farmers incomes comparable to blue compass industrial workers also contributed to the social capacity to absorb foreign technology by suppressing the political divisions between metropolitan and hinterland Japan that plagued the nation during the interwar years.Japan and the postwar international orderThe revamped international economic order contributed to th e social capability of importing and adapting foreign technology. The instability of the 1920s and 1930s was replaced with replaced with a relatively predictable bipolar world in which the United States and the Soviet Union opposed each other in both geopolitical and ideological arenas. The United States became an architect of multilateral architecture designed to encourage trade through its sponsorship of the United Nations, the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (the predecessor to the World Trade Organization). Under the logic of building military alliances to contain Eurasian Communism, the United States brought Japan under its nuclear umbrella with a bilateral security treaty. American companies were encouraged to license technology to Japanese companies in the new international environment. Japan redirected its trade away from the areas that had been integrate into the Japanese Empire before 1945, and towards the huge an d expanding American market.Miracle Growth Soaring Domestic Investment and Export Growth, 1953-1970 Its infrastructure revitalized through the Occupation period reforms, its capacity to import and export enhanced by the new international economic order, and its access to American technology bolstered through its security pact with the United States, Japan experienced the dramatic Miracle Growth between 1953 and the early 1970s whose sources have been cogently analyzed by Denison and Chung (1976). Especially striking in the Miracle Growth period was the remarkable increase in the rate of domestic fixed capital formation, the rise in the investment proportion being matched by a rising savings rate whose secular increase especially that of private household savings has been well documented and analyzed by Horioka (1991). While Japan continued to close the gap in income per capita between itself and the United States after the early 1970s, most scholars believe that large Japanese man ufacturing enterprises had by and large become internationally competitive by the early 1970s. In this sense it can be said that Japan had completed its nine decade long convergence to international competitiveness through industrialization by the early 1970s.MITIThere is little doubt that the social capacity to import and adapt foreign technology was vastly improved in the aftermath of the Pacific War. Creating social consensus with Land Reform and agricultural subsidies reduced political divisiveness, extending compulsory education and breaking up the zaibatsu had a positive impact. Fashioning the Ministry of International Trade and Industry (M.I.T.I.) that took responsibility for overseeing industrial policy is also viewed as facilitating Japans social capability. There is no doubt that M.I.T.I. drove down the cost of securing foreign technology. By intervening between Japanese firms and foreign companies, it acted as a single buyer of technology, vie off competing American and European enterprises in order to reduce the royalties Japanese concerns had to pay on technology licenses. By keeping domestic patent periods short, M.I.T.I. encouraged rapid diffusion of technology.And in some cases the experience of International Business Machines (I.B.M.), enjoying a virtual monopoly in global mainframe computer markets during the 1950s and early 1960s, is a classical case M.I.T.I. made it a condition of entry into the Japanese market (through the creation of a subsidiary Japan I.B.M. in the case of I.B.M.) that foreign companies share many of their technological secrets with potential Japanese competitors. How important industrial policy was for Miracle Growth remains controversial, however. The view of Johnson (1982), who hails industrial policy as a pillar of the Japanese Development State (government promoting economic growth through state policies) has been criticized and revised by subsequent scholars. The book by Uriu (1996) is a case in point. Internal labor markets, just-in-time inventory and quality control circles Furthering the internalization of labor markets the premium wages and long-term employment guarantees largely cut back to white collar workers were extended to blue collar workers with the legalization of unions and collective bargaining after 1945 also raised the social capability of adapting foreign technology.Internalizing labor created a highly flexible labor force in post-1950 Japan. As a result, Japanese workers embraced many of the key ideas of Just-in-Time inventory control and Quality take in circles in assembly industries, learning how to do rapid machine setups as part and parcel of an effort to produce components just-in-time and without defect. Ironically, the concepts of just-in-time and quality control were originally developed in the United States, just-in-time methods being pioneered by supermarkets and quality control by efficiency experts like W. Edwards Deming. Yet it was in Japan that these c oncepts were relentlessly pursued to knock over assembly line industries during the 1950s and 1960s.Ultimate causes of the Japanese economic miracleMiracle Growth was the completion of a protracted historical process involving enhancing human capital, massive accumulation of physical capital including infrastructure and private manufacturing capacity, the importation and adaptation of foreign technology, and the creation of scale economies, which took decades and decades to realize. Dubbed a miracle, it is best seen as the reaping of a bountiful harvesting whose seeds were painstakingly planted in the six decades between 1880 and 1938. In the course of the nine decades between the 1880s and 1970, Japan amassed and lost a sprawling empire, reorienting its trade and geopolitical stance through the twists and turns of history. While the ultimate sources of growth can be ferreted out through some form of statistical accounting, the specific way these sources were marshaled in practice is inseparable from the history of Japan itself and of the global environment within which it has realized its industrial destiny.Appendix Sources of Growth Accounting and Quantitative Aspects of Japans Modern Economic Development One of the attractions of studying Japans post-1880 economic development is the abundance of quantitative data documenting Japans growth. Estimates of Japanese income and output by sector, capital stock and labor force extend back to the 1880s, a period when Japanese income per capita was low. Consequently statistical probe of Japans long-run growth from relative poverty to abundance is possible.The remainder of this appendix is devoted to introducing the subscriber to the vast literature on quantitative analysis of Japans economic development from the 1880s until 1970, a nine decade period during which Japanese income per capita converged towards income per capita levels in Western Europe. As the reader will see, this discussion confirms the importance of factors discussed at the outset of this article. Our initial touchstone is the excellent sources of growth accounting analysis carried out by Denison and Chung (1976) on Japans growth between 1953 and 1971. Attributing growth in national income in growth of inputs, the factors of production capital and labor and growth in output per unit of the two inputs combined (total factor productivity) along the following lines G(Y) = a G(K) + 1-a G(L) + G (A)where G(Y) is the (annual) growth of national output, g(K) is the growth rate of capital services, G(L) is the growth rate of labor services, a is capitals share in national income (the share of income accruing to owners of capital), and G(A) is the growth of total factor productivity, is a standard approach used to penny-pinching the sources of growth of income. Using a variant of this type of decomposition that takes into account improvements in the quality of capital and labor, estimates of scale economies and adjustments for structural change (shifting labor out of agriculture helps explain why total factor productivity grows), Denison and Chung (1976) generate a useful set of estimates for Japans Miracle Growth era.Operating with this sources of growth approach and proceeding under a variety of plausible assumptions, Denison and Chung (1976) estimate that of Japans average annual real national income growth of 8.77 % over 1953-71, input growth accounted for 3.95% (accounting for 45% of total growth) and growth in output per unit of input contributed 4.82% (accounting for 55% of total growth). To be sure, the precise assumptions and techniques they use can be criticized. The precise numerical results they arrive at can be argued over. Still, their general point that Japans growth was the result of improvements in the quality of factor inputs health and education for workers, for instance and improvements in the way these inputs are utilized in production due to technological and organizational chang e, re storage allocation of resources from agriculture to non-agriculture, and scale economies, is defensible.Notes a Maddison (2000) provides estimates of real income that take into account the purchasing power of national currencies. b Ohkawa (1979) gives estimates for the N sector that is defined as manufacturing and mining (Ma) prescribed construction plus facilitating industry (transport, communications and utilities). It should be noted that the concept of an N sector is not standard in the field of economics. c The estimates of trade are obtained by adding merchandise imports to merchandise exports. Trade openness is estimated by taking the ratio of total (merchandise) trade to national output, the latter defined as Gross Domestic ingathering (G.D.P.).The trade figures include trade with Japans empire (Korea, Taiwan, Manchuria, etc.) the income figures for Japan exclude income generated in the empire. d The Human Development Index is a composite varying formed by adding t ogether indices for educational attainment, for health (using life expectancy that is inversely related to the level of the infant mortality rate, the IMR), and for real per capita income. For a detailed discussion of this index see United Nations Development Programme (2000). e Electrical generation is measured in million kilowatts generated and supplied. For 1970, the figures on NHK subscribers are for television receiver subscribers. The symbolic representation n.a. = not available. Sources The figures in this table are taken from various pages and tables in Japan Statistical Association (1987), Maddison (2000), Minami (1994), and Ohkawa (1979).Flowing from this table are a number of points that bear lessons of the Denison and Chung (1976) decomposition. One cluster of points bears upon the timing of Japans income per capita growth and the relationship of manufacturing expansion to income growth. Another highlights improvements in the quality of the labor input. Yet another poin ts to the overriding importance of domestic investment in manufacturing and the lesser significance of trade demand. A fourth group suggests that infrastructure has been important to economic growth and industrial expansion in Japan, as exemplified by the figures on electricity generating capacity and the mass diffusion of communications in the form of radio and television broadcasting. Several parts of Table 1 point to industrialization, defined as an increase in the proportion of output (and labor force) attributable to manufacturing and mining, as the driving force in explaining Japans income per capita growth. Notable in Panels A and B of the table is that the gap between Japanese and American income per capita closed most decisively during the 1910s, the 1930s, and the 1960s, precisely the periods when manufacturing expansion was the most vigorous.Equally noteworthy of the contrives of the 1910s, 1930s and the 1960s is the overriding importance of gross domestic fixed capital formation, that is investment, for growth in demand. By contrast, trade seems much less important to growth in demand during these critical decades, a point emphasized by both Minami (1994) and by Ohkawa and Rosovsky (1973). The notion that Japanese growth was export led during the nine decades between 1880 and 1970 when Japan caught up technologically with the leading Western nations is not defensible. Rather, domestic capital investment seems to be the driving force behind aggregate demand expansion. The periods of especially intense capital formation were also the periods when manufacturing production soared. smashing formation in manufacturing, or in infrastructure supporting manufacturing expansion, is the main agent pushing long-run income per capita growth.Why? As Ohkawa and Rosovsky (1973) argue, spurts in manufacturing capital formation were associated with the import and adaptation of foreign technology, especially from the United States These investment spurts were also associated with shifts of labor force out of agriculture and into manufacturing, construction and facilitating sectors where labor productivity was far higher than it was in labor-intensive farming centered around labor-intensive rice cultivation. The logic of productivity gain due to more efficient allocation of labor resources is apparent from the right hand column of Panel A in Table 1. Finally, Panel C of Table 1 suggests that infrastructure investment that facilitated health and educational attainment (combined public and private expenditure on sanitation, schools and research laboratories), and public/private investment in physical infrastructure including dams and hydroelectric power grids helped fuel the expansion of manufacturing by improving human capital and by reducing the costs of transportation, communications and energy supply faced by private factories.Mosk (2001) argues that investments in human-capital-enhancing (medicine, public health and education), financial (b anking) and physical infrastructure (harbors, roads, power grids, railroads and communications) laid the groundwork for industrial expansions. Indeed, the social capability for importing and adapting foreign technology emphasized by Ohkawa and Rosovsky (1973) can be largely explained by an infrastructure-driven growth hypothesis like that given by Mosk (2001). In sum, Denison and Chung (1976) argue that a combination of input factor improvement and growth in output per combined factor inputs account for Japans most rapid spurt of economic growth. Table 1 suggests that labor quality improved because health was enhanced and educational attainment increased that investment in manufacturing was important not only because it increased capital stock itself but also because it reduced dependence on agriculture and went hand in glove with improvements in knowledge and that the social capacity to absorb and adapt Western technology that fueled improvements in knowledge was associated with in frastructure investment.ReferencesDenison, Edward and William Chung. Economic Growth and Its Sources. In Asias nigh Giant How the Japanese Economy Works, edited by Hugh Patrick and Henry Rosovsky, 63-151. Washington, DC Brookings Institution, 1976. Horioka, Charles Y. Future Trends in Japans Savings Rate and the Implications Thereof for Japans External Imbalance.Japan and the World Economy 3 (1991) 307-330. Japan Statistical Association. Historical Statistics of Japan Five Volumes. Tokyo Japan Statistical Association, 1987. Johnson, Chalmers. MITI and the Japanese Miracle The Growth of Industrial Policy, 1925-1975. Stanford Stanford University Press, 1982. Maddison, Angus. Monitoring the World Economy, 1820-1992. Paris Organization for Economic Co-operation and Development, 2000. Minami, Ryoshin. Economic Development of Japan A Quantitative Study. Second edition. Houndmills, Basingstoke, Hampshire Macmillan Press, 1994. Mitchell, Brian. International Historical Statistics Africa an d Asia. newfangled York New York University Press, 1982. Mosk, Carl. Japanese Industrial History Technology, Urbanization, and Economic Growth. Armonk, New York M.E. Sharpe, 2001. Nakamura, Takafusa. The Postwar Japanese Economy Its Development and Structure, 1937-1994. Tokyo University of Tokyo Press, 1995. Ohkawa, Kazushi. Production Structure. In Patterns of Japanese Economic Development A Quantitative Appraisal, edited by Kazushi Ohkawa and Miyohei Shinohara with Larry Meissner, 34-58. New Haven Yale UniversityPress, 1979. Ohkawa, Kazushi and Henry Rosovsky. Japanese Economic Growth Trend Acceleration in the twentieth Century. Stanford, CA Stanford University Press, 1973. Smith, Thomas. Native Sources of Japanese industrialisation, 1750-1920. Berkeley University of California Press, 1988. Uriu, Robert. Troubled Industries Confronting Economic Challenge in Japan. Ithaca Cornell University Press, 1996. United Nations Development Programme. Human Development Report, 2000. New York Oxford University Press, 2000. Citation Mosk, Carl. Japan, Industrialization and Economic Growth. EH.Net Encyclopedia, edited by Robert Whaples. January 18, 2004. URL http//eh.net/encyclopedia/article/mosk.japan.final