GROWTH AND STABILITY OF THE POSTWAR JAPANESE ECONOMY.

The article discusses some challenges faced by the economy of Japan after World War II and the reasons for its present growth and stability. Japan surrendered on August 15, 1945 and at least roughly for the subsequent four years her economy was in an extremely abnormal condition. Abnormalities consisted of the process of rehabilitation from the nadir of defeat in a major war-the nadir characterized by the loss of one-fourth of the reproducible physical wealth and by the extreme slump in productive activities, less than 20 per cent in industrial production as a whole, and about 60 per cent in agricultural production, both compared with the 1934-36 averages. The inflation of substantial magnitude, continuing unmitigated until the first quarter of 1949, with an accompanying phenomenon of widespread black and gray market prices in both consumers' and producers' goods. The overriding influence of non-economic policy decisions by the occupation authorities on the economic life of the country-the policy decisions, which were at first oriented towards restricting the tempo of recovery and then in early 1948 were rather abruptly turned in the opposite direction. However, after 1951-54, a shift in structure, high investment and generation of sufficient demand led to the economic growth of Japan.