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Japans High Speed Growth Model - Essay Example

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Japans High Speed Growth Model

the then government of the Meiji took some modernized measures which propelled the economy of Japan later in the 19th and early part of 20th century and by the year 1945 Japan was considered one of the most powerful nations both economically and militarily, and this led to the basic foundation structure of the post war high speed growth. To understand the post war economic miracle in economic terminology we will bring the concept of neo-classical theory of economic convergence. This economic model concept brings out the reality of the Japan's post war economic miracle.
The basis of such model which constituted the high speed growth in Japan was actually brought by two people - Solow and Swan in 1956.Later many people developed the model as per the timeline they lived in. The model provides interesting results. They are termed as follows. Every economy has its own steady state that is to say a kind of growth ceiling to its own possibilities of sustained per capita income growth. This is usually determined by the company's structure of technology and its economic level, rate of savings, rate of population growth and rate of human capital depreciation. The whole scenario can be turned into a mathematical format and can be formalized in the following manner. Let the production of output Y t be a Cobb-Douglas function with physical and human capital define by Kt and effective labor AtLt so that Y t = F(Kt, AtLt )=Ktv (AtLt)1-v where the level of knowledge At and the labor force Lt grow at the exogenous exponential rates g and n respectively. Another important feature of the model is that it states that each country necessarily converges to its own steady state and per capita income will only increase at the same rate as the level of the technology present. So this model provides whole basis and framework of how Japan has shown economic miracle post war. The factors which the model takes as describing its analysis are war destroying the nation and it's per capital stock, increase in the saving rate after wards and increase in the level of technological progress . We can understand that all such events have taken place in the Japanese history. So we realized that Solow model was based on the assumptions war torn country uplifting its economic stock level and also its technological acquisition level after the war and as per our knowledge we can say that Japan has done just to the same assumptions which propelled it to a great nation few years down the line. This can be bolstered by the fact that Japan participated in the World War II and a large part of its capital stock was destroyed in the early part of that same decade. If we look at the statistics Japan's saving rate grew at 19.8 per cent from the period of 1930-1948 and at 34 percent form 1949-1980. Finally the confirmation of technological progress in terms of development of electronics arena and automobile sector proved that Solow model of the high speed growth model was the just the substance required for Japan to rise from the rubble

High Speed Model and Vietnam

Before venturing into discussion of how Vietnam followed the model. Let's first understand the economic comparison of the two countries. If we consider Japan we can say that Japan was had a war style economy before 1945 and market economy after ...Show more

Summary

It is a known fact that Japan today boasts as one of the most powerful nations in the world and that Japanese economy is the second largest economy in the world. So we need to understand the factors which took place to overturn the fortunes of a country which was shattered to pieces five decades ago…
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Japans High Speed Growth Model essay example
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