Japanese Post-war Economic Miracle - American Contributions

American Contributions

In the mid- to late-1940s, wartime expenses threatened economic ruin in Japan. Post-WWII inflation, unemployment and shortages in all areas seemed overwhelming. Japan’s immediate economic improvement was not achieved on its own. The American government, under the auspices of the Supreme Commander of the Allied Powers (SCAP), played a crucial role in Japan’s initial economic recovery, although Japanese government measures fostered rapid postwar growth. SCAP officials believed economic development could not only democratize Japan but also prevent the reemergence of militarism, and forfend communism. Military hostilities in the Korean peninsula further boosted the economy in 1950 because the U.S. government paid the Japanese government large sums for "special procurement." These payments amounted to 27% of Japan’s total export trade. The United States also insisted that Japan be admitted to GATT as a "temporary member" – over British opposition. During the Korean War, SCAP departed and the Treaty of San Francisco restored sovereignty to the government of Japan.