LEARNING FROM THE JAPANESE ECONOMIC MIRACLE

Learning From The Japanese Economic Miracle:

What Factors Lead To Economic Growth?
By James Redelsheimer

Robbinsdale Armstrong High School

Plymouth, Minnesota
james_redelsheimer@rdale.org

LESSON DESCRIPTION
In this lesson students will learn about the history of
Japan's "miracle" economic growth following the devastation
of World War II. Students will learn about what led to Japan's
economic miracle, and learn about the factors that can lead a
country to increase its economic growth and standard of
living.

TIME REQUIRED
40 - 50 Minutes

MATERIALS

One copy of Activity 1 for each student.

PowerPoint Presentation: "The Japanese Economic
Miracle."

IMPORTANCE
A nation's Gross Domestic Product is not only an indicator
of a nation's income, but also is positively correlated with
many human development standards, such as life expectancy,
infant mortality, and levels of education. For example, in the
year 2000, the United States real GDP had tripled since the
year 1950. The value of goods and services available to the
average US resident was three times greater than in the year
1950. Life expectancy and average education levels also
dramatically rose during this time. Therefore, it is important
students understand the ingredients that lead to economic
growth. An excellent way to learn about the factors that lead
to economic growth is to study the Japanese "Economic
Miracle" that took place after World War II.

AGE LEVEL
Grades 7 - 12

ECONOMIC CONCEPTS
Gross Domestic Product
Economic Growth
Human Capital
Capital Goods
Interest Rates

OBJECTIVES
Students will:
- Identify the factors that lead to economic growth.
- Understand how an increase in real Gross Domestic
Product can lead to and can increase the quality of
life in
a country.
- Learn about the history of Japan after World War II and
developments in Japan that led to the "Economic
Miracle."

PROCEDURE
1. Begin by asking the class a series of anticipatory
questions:
a. How could anyone determine if a country is
wealthy?
b. What factors might lead to one country having
higher standards of living than another?
2. If not already covered in class, explain that Gross
Domestic Product is the measure of a nation's annual
economic output or a nation's income.
3. Go through the first 4 slides of the PowerPoint on Japan's
Economic Miracle. Be sure to highlight that from 1950 to
1975 no nation had ever experienced such a rapid rise in
its citizens' standard of living as Japan.
4. On slide 5, there is a link to display the gapminder website:
http://graphs.gapminder.org/world/ to the class. Play the
chart that has life expectancy on thy Y axis, and GDP per
capita on the X axis. Ask students to notice any trends
between GDP and life expectancy. Point out that most
countries that have higher life expectancy likely have a
high GDP per capita. Changing the variable on the Y axis
to infant mortality rates, or others, also may be shown to
the class.
5. Point out that a country's standard of living depends on its
ability to produce goods and services. Go over the list of
several factors that can lead a country to increased
productivity and economic growth found on slide 6 of the
PowerPoint. The following can allow a country to
increase its standard of living:

LEARNING FROM THE JAPANESE ECONOMIC MIRACLE

a. Investment in capital goods, research and technology:
This leads to production becoming more efficient,
allowing for more output without any additional inputs.
b. Investment in human capital: education and skills.
Investment in human capital is an essential means of
increasing labor productivity and income. This
investment is very important to a country's long term
economic success.
c. Savings and Investment:
An increase in savings rates leaves more funds available,
lowering interest rates which can encourage investment in
an economy.
d. Public Policy: free trade and competition: Most
economists agree that engaging in trade with the world
and policies that promote property rights and competition
lead to high rates of economic growth.
6. Finish remainder of the PowerPoint.
7. Have students read Activity 1, and discuss the answers
in small groups. Then have the groups share their
answers with the class. Here are some possible answers
to the discussion questions: #1. The strong Japanese work
ethic and dedication to success was key to the rapidly
increasing worker productivity, production and incomes.
Worker productivity is a key ingredient of economic
growth. The high Japanese investment in human capital
paid large dividends. #2. The high savings rate led banks
to have ample money to lend to industrialists. This
enabled Japanese businesses to obtain massive amounts of
funds for expansion very cheaply between 1950 and 1975.
#3. As Japan embraced trade, they found many new
markets for their products, one of the ways trade leads to
economic growth. #4. The investment in research and
development allowed the Japanese to create new
inventions, technologies, and production techniques that
promoted economic growth. #5 The intense competition
resulted in increased efficiency and product quality. As
Japanese companies were competing for business, product
quality improved and businesses were forced to innovate
to succeed.

SOURCES
Murphey, Rhoads. East Asia: A New History (4th Edition).
New York: Longman, 2006.
Mankiw, Greg. Principles of Economics. (4th Edition)
USA: Thompson South-Western, 2007.

LEARNING FROM THE JAPANESE ECONOMIC MIRACLE

Activity #1

Learning From The Japanese Economic Miracle:

What Factors Lead To Economic Growth?
The Japanese economy was devastated after World War II ended in 1945. The Japanese
had lost much of their productive capacity; factories were destroyed and about 3 million
Japanese had died. Yet amidst this dire situation, the Japanese economy, between 1950 and
1975, had the world's most impressive record of economic growth ever seen at the time.
Incomes for the average Japanese were rising rapidly, and soon many of Japan's goods
became the best in the world market, especially cars, cameras, and electronics. Shortly after
this "economic miracle" began, Japan had the second largest economy in the world after the
United States.

Questions for Discussion: How do you think these factors contributed to Japan's
rapid economic growth?
1) Japan had and continues to have one of the world's best educated workforce, and the
Japanese workforce dedicated themselves to hard work, organization, and group effort.
2) The Japanese were saving a high percentage of their incomes, which provides banks
and other financial institutions with cheap money to lend to businesses for investment.
3) Japan embraced global trade, and their high-tech and industrial goods became popular
throughout the world, due to their high quality.
4) The Japanese made large investments in research and development, and applying
efficient production techniques.
5) Within Japan, competition in such industries as motorcycles, automobiles, and consumer
electronics was fierce.