Agricultural and Manufacturing Enterprises

Between the time of the Meiji Restoration in 1868 and World War II, Japan was transformed from an isolated feudal agrarian state to a major industrial trading nation. Although the foundation of its manufacturing enterprises was laid before the turn of the century, much of the industrial expansion occasioning Japan's economic transformation occurred after 1910, having been stimulated materially by World War I. Factory output increased severalfold in the three decades following 1910; during that period, the rate of increase was much higher in the production of manufactured goods than in the output of primary products. For 1935-38, the index of manufacturing production (1910-14=100) was 600; the index for food production in 1935-39 was 161, and that for raw materials, 205.3 On the eve of World War II, Japan was the predominant industrial nation in Asia. Although more than two-fifths of its labor force still found employment in agriculture and forestry in 1936, those industries contributed only a fifth of the national income. Manufacturing industries, on the other hand, provided more than a quarter of the national income, and the service trades, taken together, nearly a half (table 1).

Agriculture

Agriculture in Japan is favored by abundant rainfall and by a growing season long enough to permit double cropping in much of the country. Nevertheless, Japan's agriculture is severely handicapped by infertile soils, mountainous topography, widespread drainage problems, and recurrent tropical storms and earthquakes. Only by heavy applications of fertilizer, prodigious expenditure of labor, and the use of improved seed varieties have the Japanese achieved high agricultural yields.

The great bulk of Japan's agricultural output consists of foodstuffs, virtually all of which are consumed within the country. Even though the large fishing industry also provides an important part of the nation's food, the domestic food supply has not been sufficient for many years to meet even the minimum needs of the Japanese people. In the thirties, indigenous food production supplied about four-fifths of Japan's minimum caloric and protein requirements.* Since then, the domestic food output has about kept pace with the expanding population, so that currently about the same share of the country's food requirements is produced domestically. Hence, Japan still finds it necessary to import about a fifth of its food requirements.

3 William W. Lockwood, The Economic Development of Japan: Growth and Structural Change 1868-1938, Princeton University Press, 1954, pp. 86, 102.

4 Based on minimum requirements of 2,160 calories and 70 grams of protein daily per capita. See General Headquarters [Supreme Commander for the Allied Powers], Japanese Natural Resources: A Comprehensive Survey, [Tokyo] 1949, p. 127.

TABLE 1.-Japan: Employed labor force and national income, by industry, 1936 and 1955

2 Survey during last week of September.

Except for raw silk and tea, few agricultural products are exported in quantity. Exports of raw silk have declined steadily in importance since the 1920's, and overseas shipments of tea have been much smaller in recent years than before World War II.

Manufacturing

World War II left the Japanese economy prostrate from war damage and from the exhaustion of many basic supplies. Many of its industrial facilities had been destroyed, and much of the remainder had become obsolete, worn, or had been "cannibalized" for metal scrap. War damage to nonmilitary property alone was estimated at 4,200 billion yen (in terms of 1948 prices) -the amount of the damage being almost double the national income in that year.5 In 1947, roughly 2 years after the war, the volume of manufacturing output in Japan was only 35 percent of that of the mid-thirties. Japan's merchant fleet had been reduced to only about a sixth of the prewar tonnage, with coastal vessels constituting almost the whole of the postwar tonnage.

Despite these handicaps, Japan has reestablished itself as a major industrial nation. In 1956 the volume of Japan's manufacturing production was considerably more than double that of the midthirties, and mining output was about a third larger (table 2).

TABLE 2.-Japan: Indexes of agricultural and industrial production, specified years 1947 to 1956

11933 35-100. Indexes published by the Japanese Ministry of Agriculture and Forestry, adjusted to 1933-35 base.

Japan, Economic Planning Agency, Economic Survey of Japan (1956–1957), Tokyo, 1957, p. 117. Source: Japan, Ministry of Finance, Quarterly Bulletin of Financial Statistics, 1st Quarter, 1957 Fiscal Year, Tokyo, June 1957, pp. 90-91, except as noted.

5 Institute of World Economy, The Japan Annual, 1955, Tokyo, 1955, p. 167. 6 The postwar expansion of industrial production occurred in virtually all major industrial countries. The rate of growth of industrial production in some countries, such as Canada, the United States, Italy, and West Germany, was larger than that in Japan, but the rate of growth in other countries, such as Belgium, Denmark, France, and the United Kingdom, was smaller than that in Japan.

As might be expected, individual manufacturing industries have recovered or expanded at markedly different rates. Not until 1956 did the textile industry achieve a level of output commensurate with that in the prewar period; by that time most of Japan's other important manufacturing industries had more than doubled their output. The largest increases in production over the average in the prewar period occurred in the chemical and machinery industries; the production in each of those industries was nearly four times as large in 1956 as the annual average production in 1934–36.

The Role of Foreign Trade in Japan's Economy

The economy of Japan, like that of Switzerland, Belgium, and the United Kingdom, relies materially on international trade. During the quarter century between the two world wars, the annual value of Japan's exports and that of its imports each was generally equivalent to nearly a fifth of the country's annual national income. Japan's foreign trade during that period expanded more or less commensurately with its national income. Industrialization in Japan required increasing amounts of imported raw materials, fuel, and capital equipment; the growing population required increasing imports of food. These imports were financed largely by exports of raw silk and manufactured consumer products. In the period 193538, the average annual volume of Japan's exports was 5 times that in the period 1910-14, and the average annual volume of its imports was about 311⁄2 times that in the earlier period. During the years immediately before the war, Japan ranked about fifth among the major trading nations of the world.

With the recovery of its economy after World War II, Japan's foreign trade revived markedly from the low level to which it had fallen during the war. In 1956 Japan's exports and imports had a combined value of more than 5 billion dollars. Nevertheless, Japan had not yet fully resumed the position in world trade that it held before the war. Japan's imports and exports have accounted for a smaller share of world trade in recent years than they did in the mid-thirties, and the value of Japan's foreign trade in relation to its national income has remained smaller than it was in the thirties.