“Japan's Postwar Economy”
Where the mind is without fear and the head is held high;
Where Knowledge is free;
Where the world has not been broken up into fragments by narrow domestic walls;
Where the words come out from the depth of truth;
Where tireless striving stretches its arms toward perfection;
Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;
Where the mind is led forward by thee into ever widening thought and action—
Into that heaven of freedom, my Father, let my country awake.
RABINDRANATH TAGORE, “Gitanjali,” 1912
ASIA is no longer taken for granted in the West. The shock of Pearl Harbor and the subsequent long, grueling war in the Pacific were but the crashing passages of an overture which has kept the attention of literate Westerners focused for more than a decade on the vast shifts in Asia. Seldom have so many changes, affecting half the world geographically, and all the world morally, spiritually, and materially, been concentrated in so short a period. The fall of the Japanese Empire; the Soviet advance in Asia; the British, Dutch and French retreat; the end of colonialism; the partition of the Indian sub-continent; independence for India, Pakistan, Burma, Ceylon, Indonesia, Cambodia, Laos, Vietnam, the Philippines, Korea, and Malaya; the collapse of Nationalist China; the dramatic retreat to Taiwan; the rise of Communism in mainland China; the crises over Kashmir; the civil wars in Burma; the Chinese seizure of Tibet; the controversy over New Guinea; the French debacle in Indochina; the Korean War, the intervention of the Chinese Communists, and the recall of General MacArthur; the peace treaty with Japan; the Chinese Communist threat to Formosa; the civil war in Indonesia—all these major events and many lesser ones have kept the attention of the West riveted on Asia with a crucial fascination and an unparalleled interest.
The average Westerner, who before World War II, if he contemplated Asia at all, thought naively in terms of rickshaws and rice, chopsticks, and chow mein, now knows of Nehru, U Nu, Sukarno, Mao, Rhee, Ngo Dinh Diem, and Ho Chi Minh. He reads headlines summarizing their speeches, perhaps even the speeches themselves, agrees or disagrees, condemns or applauds, but no longer ignores, for he knows that what these Asians think and say and do has already affected and will, perhaps, affect even more in the future his way of life and his material well-being.
It is, of course, commonplace to observe today that colonialism is largely dead in Asia, though Asian leaders still use it as a whipping boy to belabor the West, and that a strident nationalism has taken its place, accompanied by a fierce desire for economic betterment, for a rapid and clearly evident improvement in levels of income and conditions of living. The techniques used and the rates of progress vary from country to country, but the striking characteristic that all the countries of free Asia seem to have in common is that they seek improvement by increasing their output of material things, not by seizing existing stocks from others. Economic development has replaced the old type of colonialism as the keynote of our time. Desperately requiring peace, unable to support the financial burdens or economic dislocations of modern war, a number of the countries of Asia, and indeed of the world, are increasingly apprehensive of the growing Communist imperialism on the one hand and the mammoth countervailing force of the United States on the other. This fear is reflected in the neutralist, third-force sentiment prevalent in parts of free Asia. It is manifested by a “plague on both your houses” attitude. That this neutralism has not become more widespread, despite Soviet and Chinese Communist encouragement, is perhaps due in part to the fact that most of the countries of free Asia have important economic ties to the West, which they cannot afford to cut or sacrifice if they are to achieve their goals of rapid economic betterment.
Free Asia may be defined as the vast arc of countries stretching from Afghanistan around to South Korea, including Pakistan, India, Nepal, Ceylon, Burma, Thailand, Malaya, Cambodia, Laos, South Vietnam, Indonesia, the Philippines, Formosa, and Japan.1 These 16 countries, together with Hongkong and Singapore, contain 810 million people, or 30 percent of the total world population, and 45 percent of the population of the free world.
Free Asia, plus Communist China, comprises approximately 1,572 million people in Asia, 55 percent of the population of the entire world. Of the world’s seven most populous countries, five are wholly in Asia—China (618,000,000), India (387,000,000), Japan (90,000,000), Indonesia (84,000,000), and Pakistan (83,000,000).2
Asia’s population is increasing at a rate of perhaps as much as a million a month, so that the absolute additions each year are very large. Asia has not, however, as many people think, exceeded the West in the rate of population increase over the last century. In 1850 the population of the world outside Asia was only half of Asia’s. Today it is almost equal.3
In the light of the overriding power struggle of our times, it is interesting to note that the population of free Asia (810 million), largely neutralist and, in the main, uncommitted, is almost as large as that of the Soviet bloc (913 million).4 If free Asia were to succumb to Communist ideology, governments controlling 65 percent of the world population, or almost two-thirds, would be overwhelmingly hostile to the West.
The combined income of the peoples of free Asia is only about $60 billion, just one-twentieth of the world total—30 percent of total world population, yet only 5 percent of total income. The gross national product of the entire world is estimated at $990 billion. Of this the United States accounts for over $400 billion, producing more than 40 percent of the world’s goods and services with only 6 percent of the world’s population. Free Asia, with five times as many people as the United States, produces only one-sixth of U. S. output. Japan, with 3.4 percent of world population, produces 2 percent of total output of goods and services.
ECONOMIC IMPORTANCE OF FREE ASIA
That this region should lag so greatly in output is paradoxical, for it is rich in resources. Rice, of course, is its chief food product, with output exceeding 100 million metric tons.5 This is 87 percent of rice output in the free world and over 60 percent of total world rice production. Communist China is the only other major rice producer, accounting for about 28 percent of the world output. Japan is dependent upon South and Southeast Asia for approximately two-thirds of its rice imports.
Rubber leads the list of non-food agricultural products of the area. It dominates the exports of Indonesia and Malaya and accounts for a major part of the foreign earnings of Ceylon, Cambodia, Vietnam, Thailand, and British Borneo. About 94 percent of the world’s natural rubber is produced in South and Southeast Asia. It is estimated that world rubber output exceeds 1.8 million tons while production of synthetic rubber is about 750,000 tons. Japan obtains all of its rubber from South and Southeast Asia.
Except for cotton, free Asia encompasses the world’s main sources of agricultural and animal fibers. The area contributes 92 percent of the free world’s supply of abaca (Philippines), 95 percent of its jute (India and Pakistan), 54 percent of its wool (if Australia and New Zealand are added to the area), and 60 percent of its kapok (Indonesia). It is the major source of the world’s raw silk (Japan) and also accounts for 15 percent of the free world’s cotton output (India and Pakistan). Japan imports most of its wool, flax, hemp, and jute from the area.
The region’s output of mineral fuels and electric power in comparison with world output is very small (1.7 percent of crude oil, 3 percent of coal, and 6 percent of electric power generation). The Asian region’s coal reserves are roughly estimated at 150 billion tons. Free world reserves are about 3,700 billion tons, of which 2,500 billion are in the United States. Japan is totally deficient in high-grade coking coal, essential for steel-making. Ordinary Japanese coal reserves are estimated at 20 billion tons, adequate but not abundant.
Petroleum production comes mainly from Indonesia and British Borneo. Proved oil reserves in Indonesia and North Borneo are estimated at about 3 billion barrels, somewhat less than 2 percent of the world’s known reserves. Japan’s crude oil output supplies less than 5 percent of its domestic requirements and known reserves are very scanty.
Free Asia has 6 percent of the world’s total iron ore output but its resources are unevenly distributed.6 India has 80 to 90 percent of the region’s known reserves. As a result of vast new discoveries, the total high-grade iron ore reserves of India are now estimated at 20 billion tons, compared with 6 billion for the United States. Japan obtains four-fifths of its total iron ore imports from the area. Its own reserves are very scanty and of low grade.7 It is estimated that Japan must import about 8 million tons of iron ore annually to maintain industry at a level needed for 90 million people.
The region is well endowed in tungsten, manganese, and titanium, moderately in chromite and molybdenum, and poorly in other ferroalloy metals. The region is a prominent world producer (20 percent of the free world total) and exporter of tungsten ores, the main sources being Korea and Thailand (and Australia). The area supplies 41 percent of free world output of manganese. India is the world’s leading producer of manganese ore and also the region’s largest producer of ilmenite (titanium ore), supplying 28 percent of the free world total. The Philippines is one of the largest producers of chromite in the world, providing 13 percent of free world output. In the case of Japan, among the minerals necessary for ferroalloys, only chromite can be supplied to meet minimum needs.
In non-ferrous metals, the area has 72 percent of free world tin reserves. Malaya has been the world’s largest producer of tin ore, while Indonesia is next in importance, followed by Thailand and Burma. Japan imports all its tin ingot from the area. In contrast with tin, on the other hand, the region produces little copper, lead, or zinc. If Australia is included, output of these minerals is 7, 19, and 15 percent respectively of free world totals. Japan has adequate supplies of zinc, substantial but inadequate deposits of copper, and a deficiency of lead.8 No ore deposits for the making of aluminum are available in Japan. The country is insufficiently supplied with antimony, cobalt, nitrate, magnesite, platinum, potash, and salt,9 and must import all its nickel and phosphate rock.
The region is the world’s most important producer of graphite and mica. India has for many years been the world’s largest producer of black mica. In recent years radioactive minerals have been discovered in the region. The biggest known deposits of thorium are along the Malabar Coast, in Kerala, India. Monazite reserves in India have been estimated at well over 2 million tons. Uranium-bearing ores have also been discovered in India, while important uranium resources have been located in Australia. As yet no radioactive minerals appear to have been discovered in Japan.
As a result of the region’s abundance of resources (except for Japan), about 35 percent of U. S. imports of critical and strategic materials come from free Asia. The area supplies half of our imports of chromite, 99 percent of coconut oil, 66 percent of manila cordage fiber, 90 percent of graphite,10 50 percent of kyanite, over 30 percent of manganese ore, 88 percent of mica, 37 percent of palm oil, 96 percent of natural rubber, 58 percent of sapphires and rubies, 95 percent of shellac, 13 percent of talc, 58 percent of tin, 10 percent of vanadium ores and concentrates, and 98 percent of pepper. In addition, the area supplies 95 percent of our burlap, 38 percent of cinchona bark, 20 percent of goat and kid skins, and 73 percent of tea.11
EXTENT OF INDUSTRIALIZATION
If experts had been assembled a hundred years ago and asked to forecast which country in Asia would be the most industrialized a century later, the country they would have been least likely to select was Japan. The Japan of the 1850’s was a barren, backward country, largely shut off from the rest of the world for more than two centuries. Lacking in resources, its 35 million people eked out a scanty and precarious living from the seemingly inhospitable soil. So great was the pressure of population on the land at that time that infanticide was widely practiced by parents too poor to feed another mouth. Governed by local lords and retainers, many of whom were idle, unproductive, and unimaginative, the country was torn with dissension and lacked political stability or a constructive central government.
Yet a century later in this country an economic miracle had come to pass.12 A vast economic transformation had made Japan the leading industrial country in Asia. In all of free Asia, only Japan and India have significant manufacturing capacity. In no country of the region except Japan does manufacturing contribute as much as 20 percent of domestic product. Asia produces only 5 percent of the world’s crude steel, 10 percent of its cement, and has 20 percent of world cotton spinning capacity. Japan annually produces 11.1 million metric tons of crude steel, 4.8 percent of the world total, and India 1.7 million metric tons. Japan produces 13 million metric tons of cement, 6.4 percent of the world total; India produces 5 million tons. Japan produces 47 million metric tons of coal, 3.2 percent of the world total; India 40 million tons.13 In electric power Japan produces 72 billion kwh., 4.9 percent of the world total. India produces only 9.6 billion kwh. In cotton textile capacity, however, India exceeds Japan. India has 11.7 million cotton spinning spindles, Japan has 8 million,14 which is 6.9 percent of world capacity.
Japan supplies a major share of the total industrial output of the region covered by the United Nations Economic Commission for Asia and the Far East (ECAFE). Japan produces 49 percent of the total coal output of the ECAFE area, 50 percent of the pig iron, 50 percent of the cement, 70 percent of the electric power, 66 percent of the steel, 35 percent of the cotton yarn, and 34 percent of the cotton fabrics.15
By what means and processes Japan transformed itself into the leading industrial country of Asia is a complicated story told so well elsewhere that it need not be detailed here.16 The following table, however, highlights the long lead which Japan has over both China and India in industrial development.
PER CAPITA PRODUCTION OF MAJOR INDUSTRIAL ITEMS IN SELECTED COUNTRIES, 1956
| Sources: Economic Bulletin for Asia and the Far East, U.N. Economic Commission for Asia and the Far East, Bangkok, Vol. VIII, No. 1, May 1957; Monthly Bulletin of Statistics, United Nations, July 1957; Population and Vital Statistics Report, United Nations, Vol. IX, No. 3, July 1957. |
Yet despite the extensive industrial development in Japan, when compared with Western countries the nations of Asia, including Japan and India, are far indeed from attaining the levels of industrial development reached elsewhere. Only 28 percent of Japan’s net domestic product comes from manufacturing and mining as compared with 49 percent for West Germany, 43 percent for the United States, and 41 percent for both the United Kingdom and the U.S.S.R. On the other hand, in Japan 20 percent of net domestic product is derived from agriculture, forestry, and fishing, as against 29 percent for the U.S.S.R., 11 percent for West Germany, 5 percent for the United Kingdom, and 6 percent for the United States.
The relative size of the Japanese economy compared with that of the United States and the U.S.S.R., as of 1956, may be seen from the following tabulation.
| a Seagoing steam and motorships of 1,000 gross tons and over as of December 31, 1956. |
| Sources: Monthly Bulletin of Statistics, United Nations, August 1957; Statistical Handbook of the U.S.S.R., republished by National Industrial Conference Board, Studies in Business Economics, No. 55, New York, 1957; Economic Statistics of Japan, Bank of Japan, Tokyo, 1957; Soviet Economic Growth: A Comparison with the United States, Joint Economic Committee, 85th Cong., 1st Sess., Washington, 1957. |
While the figures are, of course, irregular, on the whole it would appear that the Japanese economy is about one-tenth the size of that of the United States and one-fifth that of the U.S.S.R.
When output is measured on a per capita basis in order to permit comparisons of countries regardless of size of population, we find that India produces .005 and Japan .123 metric tons of crude steel per capita as compared with .408 for the United Kingdom, .449 for West Germany, and .621 for the United States (data for 1956). In short, while Japan’s per capita steel output is 25 times India’s, it is only approximately one-fifth that of the United States and one-fourth that of either Great Britain or West Germany. In coal production, Japan, with 0.5 metric ton per capita, has five times the per capita output of India (0.1 metric ton), but only about one-sixth that of the United States (2.9), one-fifth that of West Germany (2.6), and but one-ninth that of Great Britain (4.4). Even in electric power generation, where Japanese development is well advanced, while Japanese per capita output is 32 times India’s (802 kwh. as compared with India’s 25 kwh.), it is less than one-half that of the United Kingdom or West Germany (1,695 kwh. for the United Kingdom and 1,633 kwh. for West Germany), and only about one-fifth that of the United States (3,571 kwh.).
The per capita national income of Japan, although higher than in most Asian countries, is about one-ninth of that of the United States and lower than the lowest in western Europe. The annual income per capita in the United States was approximately $2,038, in Great Britain $982, in West Germany $681, in Italy $382, and in Japan about $228 in 1956. A member of the so-called middle class in Japan earns about $50 a month while his counterpart in the United States makes approximately $500 a month.17
THE WEB OF TRADE
In the prewar period the metropolitan powers dominated the trade of their Asian colonies and possessions. The Philippines traded almost exclusively with the United States; what is now Indonesia with the Netherlands; the now independent countries of India, Pakistan, Burma, and Ceylon with the United Kingdom; Korea, Formosa, and Manchuria with Japan; Indochina with France.
Naturally the metropolitan powers wanted a market for their manufactures and a source of food and raw materials. To a considerable degree they achieved this pattern. They sold consumer goods and bought fuel, cotton, tin, rubber, jute, tea, sugar, rice, and oilseeds. There was a minimum of intra-Asian trade. The political break with the past, which came after World War II, did not produce nearly so sharp an economic cleavage. New trends are discernible but old patterns still persist. India and Pakistan, Ceylon and Burma still trade extensively with Britain, though capital goods are now a larger component in imports, owing to development programs. Primary products, food, fuels, fibers, and other raw materials still predominate in the exports of the region (except Japan) but the percentage these represent of total exports is now down from four-fifths to three-fifths, and may be expected to diminish somewhat further as the Asian drive for industrialization progresses. No longer are Asian countries tied in trade to the major powers (except in the new case of Communist China and the Soviet Union). Intra-Asian trade has increased. About one-third of the region’s trade is now within the region, and this can be expected to grow. For example, after India exhausts its sterling balances it is likely to buy more from Japan. As the Philippines and the United States gradually, over a decade, impose tariffs on each other’s products, the former is likely to buy proportionately more in Asia and less in the West.
In the seven years 1950-56 free Asia absorbed about 10 percent of total world imports and was responsible for approximately the same percentage of total world exports. Of Asia’s $10 billion of imports in 1956, western Europe supplied some 30 percent, the United States 20 percent, and the Asian countries themselves 32 percent (of which Japan accounted for 10 percent). Of the $8 billion of Asian exports, 28 percent went to western Europe, 18 percent to the United States, and 36 percent to the ECAFE countries themselves (with Japan absorbing 10 percent).18
Over the last half decade, free Asian countries supplied about 6 percent of western Europe’s imports and took approximately 7.9 percent of western Europe’s exports.19 Of United States total imports, these Asian countries supplied 13 percent; they took 12 percent of total United States exports.
The trade of these Asian countries with the Soviet bloc has been negligible. In 1956 only 1.1 percent of their imports came from Iron Curtain countries, while 1.3 percent of their exports went to the Soviet bloc.20 Trade with Communist China has also been small. Thus free Asia is linked to and dependent upon the non-Communist world for trade and payments viability. In turn, the loss of the $5 billion market which the United States, western Europe, and Japan have in free Asia would be a serious blow. This would be especially true for Japan, which sends about 38 percent of its exports to free Asian countries and obtains 30 percent of its imports from them.21 Free Asia is very important to the United States and western Europe. It is even more important to Japan.
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