Economic history of Japan

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The economic history of Japan refers to the economic progression in what is now known as modern-day Japan across its different periods. Japan's initial economy was primarily agricultural, in order to produce the food required to sustain the population. Trade existed in this period, and artifacts of culture from mainland Asia were introduced to the Japanese, such as pottery.

The rise of political centralization and a subsequent authoritarian body, through the establishment of the Imperial House in 660 BC saw the appointment of the first Emperor of Japan, and the Imperial House would help manage foreign trade, which at the time, still primarily consisted of trade towards East Asian countries like China. However, the overthrowing of the existing Soga Clan by the Fujiwara Clan in 645 was a period of reform for the Japanese. Confucianist ideas were brought into Japan, where importantly, land and people were now under the direct control of the government. During this period, the first currency was developed in Japan, following similar ideas from the Chinese Tang Dynasty. The remainder of the classical period of Japan would be characterised by a steady increase of economic activity, spurred by improved efficiency in both trade and taxation.

The era of Feudal Japan saw prosperity across the island, with improvements in farming techniques allowing for a significant increase in the country's population, allowing for greater productivity. It was also in this period, that Japan reshaped from a bartering-based to a currency-based economy. Japan first contacted Europeans in the 16th century. European trade would proceed soon after the first contact, with Japan's main trading partners at the time being Portugal.

However, fearing the foreign influence of religion from the Europeans, Japan entered a period of isolationism in the mid 17th century, where formal relations between Japan and other countries were severely limited, and stricter border control stopping foreigners from entering and citizens from leaving. The fall of the Tokugawa Shogunate and ensuing abandonment of the isolationist stance catalysed development in Japanese society in the Meiji Period, where Japan began rapid industrialization and westernization. Japan's new factories allowed them to be competitive with western countries in various industries.

Japan's involvement in WW1 and WW2 would prove to be detrimental to their economy. The conclusion of WW1 saw a rise in the price of rice, leading to the 1918 Rice Riots. In WW2, Japan's expansionist policies were supplemented by the rising steel industries, where the country was producing up to 9 million tons of steel. Additionally, Japan's aircraft manufacturing industries at the time could produce up to 10,000 aircraft a year. However, military conscription would cause a labour shortage, which the Japanese solved by using captured prisoners-of-war as factory workers.

The end of WW2 in Japan would exemplify the economic destruction that the war caused to Japan. Resource shortages, damaged infrastructure and transport issues would bring the Japanese economy to a standstill. The occupation of American Soldiers in the following years symbolised reform, where the Japanese government shifted to a democracy, and the long-standing feudal system would be dismantled.

The assistance of the USA would spur rapid economic development in Japan for the remainder of the 20th century. In this period, the agricultural sector dwindled, and would be slowly replaced by the manufacturing sector, supplementing the rise of consumerism. In the 1990s, Japan faced a period of deflation, and the government would implement quantitative easing in an attempt to combat it. Japan's economy has since seen comparatively slower growth, compared to the 'miracles' post WW2.