JC History Tuition Online - How did the USA help Japan's economy after WW2 - Global Economy Notes

How did the USA help Japan’s economy after WW2?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Reasons for growth of the global economy

A shift of US priorities in Japan: ‘Reverse Course’ policy
After Japan was defeated in World War Two, the Allied Occupation oversaw social and political reform of Japan from 1945 to 1946, ensuring that it would not endanger world peace. Under the Supreme Commander for the Allied Powers (SCAP) led by American general Douglas MacArthur, the Japanese military was disbanded and the zaibatsu conglomerates were broken up.

Against the backdrop of the looming Cold War tensions in Europe, the US government relooked its priorities. Instead of punishing Japan for its wartime aggression, the government supported the post-war recovery of Japan, in hopes of cultivating it as a new Cold War ally. This was also known as the ‘Reverse Course’ policy (逆コース).

After the early stages of the Occupation, SCAP began showing a strong interest in stabilizing Japan’s economy near the end of 1946. In spite of the fact that the “Basic Directive” clearly stated that the Occupation would not be responsible for economic reconstruction, faced with the danger of rampant inflation unless production restarted, SCAP had no choice but to become involved in economic reconstruction.

An excerpt from “The Economic History of Japan: 1600-1990: Volume 3: Economic History of Japan 1914-1955: A Dual Structure” by Takafusa Nakamura, Konosuka Odaka and Noah S. Brannen.

Consequences of warm bilateral relations: US aid to Japan
In 1958, negotiations for a US-Japan Security Treaty (日本国とアメリカ合衆国との間の相互協力及び安全保障条約) were underway. In essence, the treaty permitted US military bases in Japan, thereby establishing a military alliance between the two countries.

At the same time, the USA provided a series of economic assistance to build up Japan as a bulwark against communist expansion in Asia. For instance, the US government offered low-interest loans to Japan. These substantial capital injections led to increase in Japanese investments that propelled economic growth.

Additionally, the USA sponsored Japan’s admission to the General Agreement on Tariffs and Trade (GATT) organisation in September 1955. The USA feared that an absence of market for Japanese exports may possibly draw Japan into the Communist bloc for economic cooperation. As such, the Eisenhower administration rejected protectionist demands from local groups in the USA and opened American markets to Japanese exports.

The United States needed Japan as a stable capitalist country that would provide a bulwark against communism in Asia. It therefore supported Japanese membership of the IMF and GATT in 1955 and assisted Japan in improving relations with other Asian countries in the late 1950s and early 1960s, while at the same time keeping its own market open to Japanese goods and making technology and capital available to Japanese enterprises. Japanese capitalism could thus pursue its own interests on the international stage under the umbrella of U.S. world strategy.

An excerpt from “Japanese Capitalism Since 1945: Critical Perspectives” by Tessa Morris-Suzuki and Seiyama Takuro.

From 1958 to 1960, US purchases from Japan rose by more than 150%. This enabled Japan to enjoy its first-ever trade surplus. The correction of Japan’s balance of payment deficits thus allowed it to grow rapidly.

What can we learn from this article?
Consider the following question:
– Assess the importance of the USA in contributing to the economic miracle of Japan after 1945.

Join our JC History Tuition to learn more about the growth of the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - When did the European Union start and why - Global Economy Notes

When did the European Union start and why?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Problems of economic liberalisation

Historical context: The end of bipolarity and desires for a Common Market
Following the historic collapse of the Berlin Wall on 9 November 1989 that marked the end of the Cold War, the border between East and West is finally opened. Germany was united after more than 40 years, allowing its Eastern half to join the European Communities (EC) in 1990.

Apart from the political integration of Germany, member nations in the EC had expressed growing concerns about the slow economic progress by the mid-1980s. In comparison to rival economies like Japan and the USA, the EC members supported deregulation to boost production and trade.

The introduction of the Single or Internal Market Programme had the effect of launching a new phase in the integration process, spilling over into renewed efforts in institutional reform, reinforced EC social, regional and competition policies, and economic and monetary union. […] The programme was initially presented as an exercise in deregulation and received wholehearted support from the EC member states and business community.

An excerpt from “The European Union: Economics, Policy And History” by Susan Senior Nello.

Maastrict Treaty
European nations engaged in negotiations to anticipate the wave of globalisation in the 1990s. On 7 February 1992, the Maastrict Treaty was signed by twelve founding member states of the EC. Also known as the ‘Treaty on European Union’, it ushered in the next phase of regional integration. For instance, a single currency called the ‘Euro’ was introduced.

In December 1991 at Maastricht, member nations agreed on the Treaty on the European Union (EU), which became informally known as the “Maastricht Treaty”. […]Moreover, as part of the first pillar the Maastricht Treaty also called for an European Economic and Monetary Union (EMU) which entails the creation of the European Central Bank (ECB) and the European single currency, the Euro, by 1999.

An excerpt from “The Path to European Economic and Monetary Union” by Scheherazade S. Rehman.

Impacts of the EU on international trade
With the formation of the EU, the trading bloc had accelerated the increase in intra-regional trade. It coincided with the signing of the North American Free Trade Agreement (NAFTA) of 1994, which was a joint effort between the USA, Mexico and Canada. Overall, the EU did bring about a significant increase in world trade in comparison with NAFTA and Japan.

Trade openness, as measured by the average shares of extra-EU nominal goods exports and imports in GDP, rose from 8 per cent in the early 1960s to about 10 per cent in the late 1990s. Currently, the NAFTA area and Japan show somewhat lower trade shares in GDP, with the former increasing its share over the period. Since the mid-1980s, the European Union and Japanese trade have shown a decline. This is largely due to relative price changes of energy and raw materials.

An excerpt from “The European Union’s Trade Policies and their Economic Effects” by Peter Hoeller Nathalie Girouard and Alessandra Colecchia.

What can we learn from this article?
Consider the following question:
– How far do you agree that Europe had played a significant role in trade liberalisation?

Join our JC History Tuition to learn more about the growth of the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How does protectionism affect the global economy

How does protectionism affect the global economy?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Problems of economic liberalisation

Trade imbalances
By the late 1960s, the USA had faced economic setbacks, such as persistent trade deficits vis-à-vis Japan and Western Europe that surged to nearly US$40 billion in 1980. Throughout the 1960s, the USA had clashed with Japan over alleged dumping that hurt the profit levels of American businesses.

In particular, the automobile industry was affected by the entry of Japanese automakers which were known for their durability and fuel efficiency. The dominance of the ‘Big Three‘, namely General Motors, Ford and Daimler Chrysler, was being challenged by the Japanese counterparts.

The Nixon administration and economists generally attributed the emerging trade deficit to Vietnam War inflation, lagging productivity gains, an overvalued dollar, and ballooning energy costs.

An excerpt from “Opening America’s Market: U.S. Foreign Trade Policy Since 1776” by Alfred E. Eckes.

Trade Act of 1974
In the early 1970s, the US government contemplated on the use of protectionism to address the economic malaise. The problems were compounded by the first oil shock in 1973 that led to a surge in inflation rates.

The committee complained about the executive’s “soft” response to certain unfair foreign trade practices. “By pursuing a soft trade policy, by refusing to strike swiftly and surely at unfair trade practices, the Executive has actually fostered the proliferation of barriers to international commerce.”

As enacted, the Trade Act of 1974 appeared to represent a major shift away from the philosophy that had guided trade policy since 1934.

An excerpt from “Opening America’s Market: U.S. Foreign Trade Policy Since 1776” by Alfred E. Eckes.

Voluntary Export Restraints
In the early 1980s, the Reagan Administration negotiated a Voluntary Export Restraint (VER) with Japan to limit the number of Japanese automobile exports. The restriction was meant to ease the competition that local car producers were facing at that time. As intended, the VER had succeeded in preventing the potential collapse of the automobile industry in the USA.

By 1985, Honda was producing over 150,00 cars in Marysville, Ohio, and Nissan had started operations in Tennessee. In the years that immediately followed, Toyota, Mazda, and Mitsubishi followed suit. […] Finally, by the early 1980s, the surge in imported automobiles from Japan that occurred in the mid- and late 1970s had aged such that the demand for after market parts for Japanese cars was now increasing.

An excerpt from “The Effects of U.S. Trade Protection and Promotion Policies” by Robert C. Feenstra

What can we learn from this article?
Consider the following question:
– How far do you agree that the economic problems in the 1970s and 1980s were the result of US policies?

Join our JC History Tuition to learn more about the problems of the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.