Many people credit the creation of a particularly successful Japanese corporate culture for Japan’s extraordinary economic recovery following World War II. A little-known fact, however, is that an American statistician was responsible for sowing the seeds of Japanese domination and all of its iterations since the 1950s. A generation of management schools and businesses outside of Japan have been inspired by the ways in which Japanese businesses, which are most keenly observed in the automobile and electronics industries, boost productivity while preserving quality.
Between 1880 and 1970, Japan’s per capita income increased steadily thanks to industrialization. It’s not unusual to increase manufacturing in order to increase income. Indeed, by shifting from agricultural output to manufacturing and technologically advanced service sector activities, Western Europe, Canada, Australia, and the United States have all achieved high per capita incomes.
Four distinctive characteristics characterize Japan’s industrialization-driven development;
an early industrial base
Prior to industrialisation, Japan’s agricultural productivity was sufficient to support artisanal (proto-industrial) production in both rural and urban areas of the nation.
The growth in Japanese manufacturing has been fueled by domestic investment in infrastructure and industry. coordinating middlemen for building infrastructure in the public and private sectors, including infrastructure funded by federal, state, and municipal governments.
The private sector has mostly been responsible for investing in production capacity.
Capital accumulation was made possible by rising domestic savings.
Japanese growth was not export-driven but rather investment-driven.
Rapid increases in total factor productivity allowed for increased output per unit of input.
The rise in total factor productivity on the supply side was very large. The decrease in unit costs brought on by higher production levels—scale economies—helped to boost overall factor productivity. Geographical concentration, expansion of the national economy, and expansion in the production of individual businesses have all contributed to the existence of economies of scale. Additionally, it decreased unit prices as businesses slashed the “learning curve,” raised total output, and raised demand for the good.
As society became more capable of importing and modifying foreign technology, factor productivity as a whole increased.
Investing in children’s education has increased societal capability at the home level. By establishing internalized labor markets that link employers and employees and provide workers a strong incentive to adapt nimbly to new technology, it has improved social capabilities at the business level. Industrial policy improved social capacity at the state level by lowering the cost for private businesses to secure international enterprises. Growth in total factor productivity has been facilitated by the transition from low-productivity agriculture to high-productivity industry, mining, and construction.
After the 1910s, Japan’s labor and capital markets became distinctly divided. Labor-intensive industries earned relatively low salaries whereas capital-intensive industries with high capital labor paid relatively high compensation.
Due to the duality, there was domestic social discontent as a result of income inequality. Several public policy changes made after 1945 addressed the inequalities that led to Japan’s defeat in the Second World War. It eliminated the societal suffering caused by the dualism that had wracked the country prior to World War II.
The success of Japanese businesses was due to the creation of a thorough and useful management philosophy. W. Edwards Deming, who worked on the 1949 American census and later the 1951 Japanese census, founded the movement. During the war, he began using a technique called statistical process control (SPC), and senior Japanese managers attended a series of lectures on statistical quality control (SQC). Deming persuaded Japanese executives that maintaining quality was the most profitable strategy to reduce manufacturing costs and increase market share. He had a huge impact on senior executives and business owners in Japan who viewed management teams and production lines as a collection of discrete occurrences rather than systems.
Control of Statistical Quality
The primary use of SQC is not the restriction of customer tolerance but rather the random testing of product samples to assure compliance with a more constrained range of ideal values. In terms of minor wear to manufacturing machinery of variables like size or ratio, tiny product adjustments or additions are the most inevitable. Over time, these modifications add up, and finally the item no longer satisfies customer tolerance standards. The optimum range of widget values is much more narrowly defined by SQC standards. constant-random-item number Additionally, the widget recognizes variations in patterns and enables the production process to be changed so that the upper bounds of consumer toleration are never reached. Due to effective production, this ongoing awakening results in long-term savings, and incentives for sustained quality ensure devoted customers. Certain Japanese firms’ practices, like Toyota’s Kanban or Just-In-Time manufacturing, are supported by changes in statistical quality control. Excellence is viewed as a target where businesses and processes are always changing.
Edward W. Deming
Before the 1980 Japan Nuclear Weapons Forces NBC story, Deming’s role to Japan’s economic miracle was seldom acknowledged. What prevents us? After a lengthy absence, Deming made his way back to the country and started serving as a consultant for one of the earliest American businesses in 1960. He lavished accolades on him and the Japanese people in his interviews for restoring Japanese business. Following the broadcast of the documentary, Deming was in high demand, and in 1993, the Japanese Association of Science and Engineers, a think tank called his nation, and the Total Quality Management award he undertook both presented him with posthumous awards. DC, the capital. A few Turkish businesses have successfully used the Japanese economic model.
Japan’s economy depends somewhat on trade; the combined value of exports and imports amounts to 37% of GDP. There is an applicable average tariff rate of 1.2 percent. Numerous agricultural imports are prohibited, and the government screens foreign involvement in some economic areas. Despite competition in the banking sector, government participation is still present. Banks have adequate capital, and the percentage of bad loans is minimal.
Most academics agree that significant Japanese manufacturing businesses entered international competitiveness in the early 1970s, even though Japan continued to narrow the gap in per capita income between itself and the United States beyond those years. In this respect, it may be claimed that Japan’s industrialisation up to the early 1970s allowed it to successfully finish its nine-year process of adjusting to global competition.
Without a question, the Pacific War significantly increased society’s ability to adopt and absorb foreign technology. The political rift that led to the expansion of compulsory education and the collapse of the zaibatsu was lessened by land reform, social healing, and agricultural incentives. This has had favorable results. Japan’s social capability is also considered as being facilitated by modernizing the Ministry of International Trade and Industry (MITI), which is in charge of directing industrial policies. Without a doubt, MITI has lowered the price of acquiring foreign technology. To lower the royalties that Japanese concerns had to pay for technology licenses, it intervened between Japanese enterprises and foreign corporations by acting as a single technology buyer and playing rival American and European businesses. In order to promote the quick adoption of technology, MITI shortened national patent exclusivity periods.
The abundance of numerical data demonstrating Japan’s growth is one of the crucial subjects when evaluating Japan’s economic progress after 1880. Estimates of Japanese income, output, industry, capital, and labor go back to the 1880s, a time of low per capita income for the country. As a result, it is easy to statistically examine Japan’s gradual transition from relative poverty to abundance. Production and long-term investments are also responsible for this achievement.