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22 Pages

Planning and rapid economic growth, 1955–68

During the rapid growth period the overwhelming top priority of the Japanese gov- ernment was to promote economic growth, and the state put all its resources behind its strategy of heavy and chemical industry-led economic expansion. Because there was such a clear necessity to recover from the destruction of war, the alliance of central gov- ernment bureaucrats, the ruling Liberal Democratic Party (LDP), and big business

The development of competitive export industries was seen as the basis of national economic survival. Komiya (1990) reports that the common slogan, “Export or die”, reflects the attitude of Japanese policy-makers of this period. To achieve higher exports, the government encouraged the concentration of industry in the Pacific Belt region to help foster agglomeration efficiencies. The New Long-Run Economic Plan (Shin Keizai Keikaku, 1958-62) stressed “strengthening the foundation of industry”, “sophistication of the industrial structure”, and “heavy and chemical industrialisation” as the top priority policy objectives. While Japan maintained a relatively free market economy with firms free to locate where they wished, the Japanese government also actively worked to persuade firms to follow its direction. Such persuasion is often called “administrative guidance” ( gyôsei shidô) in Japan, and consisted largely of informal directions, suggestions and advice to individual firms. Firms often found it advantageous to follow government administrative guidance, both because close cooperation with ministry bureaucrats could yield real advantages, and because the bureaucrats could make things difficult for those firms that did not. To aid the growth of targeted industries the government used subsidies to foster their growth, preferential tax treatment for depreciation and income from exports, and low-interest loans (Komiya 1990: 8).