Japan and the Power of Production: Japanese Protectionist Policy Since the Mid-19th Century

Abstract

Since 1853, Japan has experienced two important economic transformations. In its first transformation, the nation went from being a politically sequestered society with a largely agrarian economy in the mid-1800s to becoming an economic, political, and military powerhouse with several important colonies by 1940. And yet, by 1945, Japan found itself in a state of economic devastation after its humiliating defeat in World War II. Astoundingly, over the subsequent decades, Japan was able to achieve even faster growth than it had during its initial industrialization phase, as the nation rose to become one of the most powerful global economies. These two unprecedented economic growth spurts have sparked extensive debates over the secret to Japan’s developmental strategy.

The following paper describes Japan’s protectionist policies over the past couple centuries and explains how the country has successfully used tariff and non-tariff barriers to protect its infant industries from the mid-19th century until the present. Furthermore, this paper will discuss the logic and implementation of import substitution and export promotion strategies for industrial development. It will demonstrate that Japan has effectively combined these two approaches to foster its domestic industries without suffering some of the pitfalls of pure import substitution industrialization, such as over-reliance on imported inputs.

This paper is split into three chronological sections, each of which serves as a case study for Japan’s protective policies: (1) 1853–1918. During this timeframe, Japan was first forced to open up to trade under a series of “Unequal Treaties” that limited Japanese tariff autonomy. This first chapter will focus on textile and shipping industries in particular, and it will discuss how these industries grew under the Japanese government’s protection. It will also investigate World War I’s positive effect on the Japanese market. (2) 1919–1945. The second chapter will depict a world of growing isolationism and illustrate how Japan implemented its own protectionist measures in response. It will discuss the continued expansion of trade that was subverted by growing militarism in the 1930s and the Second World War. (3) 1945–Present. The third and final section will examine the postwar period, looking at the Allied occupation of Japan and tariff and non-tariff barrier implementation in the subsequent decades.

Many of today’s leading developed nations and international institutions decry protectionism and push vehemently for trade liberalization among developing countries. However, by illustrating how Japan thrived with the help of protective measures, this paper will suggest that developing countries should consider the ways in which effectively and intelligently implemented protectionist policies can be an invaluable tool for developing countries that want to cultivate their industries and enter new manufacturing sectors.