Japan’s Surprising Success Formula Even After US Nuclear Attack 1945

The Japanese people were able to create a new economy from scratch after Japan was defeated in World War II. A number of reform measures were implemented to help the damaged country rebuild and recover, ultimately giving Japan the chance to become an economic superpower.


Japan’s transformation of its country into a major economic force in less than 40 years following The conclusion of World War II stands out as an unusual anomaly in the history of contemporary economics. Before the loss in 1945, Japan’s whole night was devoted to winning the war and creating havoc in the process.

Many of the industrial and commercial structures, along with the equipment they housed, had been destroyed, and a lot of the equipment that had previously been utilized to produce goods for the civilian market had been scrapped to make metal for explosives. The Japanese people who survived the war were met upon their return to their nation with turmoil, famine, and unemployment as a result of the concentration of power employed in the war.

The Allied Occupation Forces arrived to save the shattered nation, which had over 25% of its housing stock destroyed. Even though companies and infrastructure were left in ruins and trash, Japan was able to rebuild its economy from scratch by drawing on its prior economic experience and learning from the rest of the globe.


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Major Effects On Japan After Nuclear Attacks

The loss caused the Japanese economy to experience a number of issues. Unemployment was the biggest challenge. There were 7.6 million soldiers when the armed services were abolished, and an additional 4 million people lost their employment when military manufacturing and other jobs associated with the military were discontinued. A total of 13.1 million individuals were unemployed, and 1.5 million people were compelled to return to Japan from overseas.

However, widespread unemployment was never experienced. This is because, despite the fact that agriculture employed 18 million people in 1947, which is roughly 4 million more than it did before the war, the issue of the low-income “underemployed” remained for a very long time. The shortages of food and energy were next on the list of worries.

Coal was one of the primary energy sources at the time, but its output sharply decreased following the victory. The prime factor of its decline was the refusal of the Koreans, and Chinese people were forced to labor in the mines, and the fact that coal mining was essentially shut down.

The nation’s food supply, which consists primarily of rice, was also in short supply, which added to the energy crisis. People worried they would starve to death during the winter of 1945–1946 because they had no food or fuel. For this reason, many unemployed individuals found work in agriculture and coal mining immediately following the loss. Inflation was a significant issue following the defeat.

The main reason for this issue was the massive flow of money intended to cover temporary military costs. The wages of the demobilized troops, money for finished orders of military equipment, advance payments, loss compensation, and so forth into circulation.

The Postwar Miracle in Japan

After World War II, Japan’s crippled economy swiftly recovered. Real per capita GDP had surpassed prewar 1940 levels by 1956. The average annual growth rate of the per capita GDP was 7.1% throughout the postwar recovery period (1945–1956). The period of substantial expansion followed the period of recovery.

As seen by the graph, Japan started encroaching on the West once more at a rate that was far faster than its prewar advance. Japan’s per capita GDP in 1973 was 69% lower than that of the United States and 95% lower than Britain’s. The so-called rapid-growth era ended that year, although the Japanese economy expanded at a relatively quick pace throughout the next almost two decades.

Japan’s per capita GDP was 120% higher than Britain’s and 85% higher than that of the US in 1991, the final year of the “bubble economy.” The process of catching up with the West, which had started a little more than a century ago, was essentially finished, notwithstanding the setback of World War II.

The Automobile Business

Since around 1960,  the Ministry of International Trade and Industry (MITI) has consistently fought the growth of the Japanese car industry because, in large part, it sees the private automobile as a form of self-indulgence and the gateway to a consumer culture that it considers objectionable.

In addition, it has always expressed significant doubt, at least in the early years, about the capacity of unproven Japanese automakers to compete with brands like GM, Ford, Fiat, and Volkswagen. It has also been quite afraid that the one thing it resolved to stop, demands to open Japan to foreign products, would be sparked by the country’s sizable vehicle market.

The Path to Consistent Growth

The 1973 oil crisis had a significant impact on the expanding Japanese economy.

Since the availability of oil has fueled Japan’s economic expansion. Inflation skyrocketed in the economy, and a crisis with unemployment developed, prompting Japan to enter a recession that only lasted a short while. But the Japanese government maintained the economy under control thanks to its strict money policies, which once more led to a successful recovery.

Because of the government’s prompt action, the economy stabilized following the oil crisis and a high technological achievement already. The rise in the economy was essential to recovering exports of goods like electronics, automobiles, and other things that expanded far faster than imports. By 1977, there was global concern over Japan’s expanding trade surplus.

Finding a New Growth Engine for Japan

Japan’s postwar economy has tremendous intrinsic potential for expansion right away. Its dynamic potential resulted from two fundamental factors:

(1) the technological gap between Japan and the rest of the world and

(2) a sizable agricultural sector with poor productivity. The war’s systemic reforms enabled the economy to realize its potential, experience the fast expansion seen in the graph, and eventually catch up to the industrial West. But if this potential were used up, Japan would likely struggle to continue its current pace of fast development. Moreover, both sources of dynamism ceased to exist by 1990: the catch-up process was almost over, and the proportion of the labor force engaged in the agricultural sector had decreased from 36% in 1955 to 6.5%.


The ability of the Japanese people to successfully combine all the knowledge and skills acquired from other countries and then improve those skills to fit their system was the most significant factor that enabled Japan’s phenomenal growth, which was somewhat an exception to modern economic history.

The underlying elements for growth had been set up long before World War II. Therefore the economic miracle was not only the result of reform measures performed during the American soldiers’ occupation. The driving forces behind the development are particular and rely on the policies and plans created during the expansion process.

Large-scale financial support for technical research and development The most important lesson from the “Japanese miracle” is that well-designed institutions and mechanisms are crucial for efficient resource allocation and new growth.

How did Japan evolve into a wealthy nation?

●        With a more educated populace, Japan’s industrial sector expanded tremendously. As a result, by the turn of the 20th century, Japan had become a military and economic superpower by incorporating the Western concept of capitalism into advancing technology and applying it to their military.

How did Japan rise to dominance in the world?

●        Japan rose to global supremacy through wins in the Sino-Japanese (1895) and Russo-Japanese (1904-05) wars, among other conflicts.

What caused Japan to proliferate?

●        Despite MITI’s engagement, Japan expanded quickly for several years thanks to its institutional context of comparatively minimal government intrusion and great economic freedom.

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