The economic miracle, the bubble and the 'lost decades'
From the ruins of war Japan becomes the world's second-largest economy, symbolised by the 1964 Olympics and bullet train, before a spectacular asset bubble bursts in 1990–91.
- MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 — Chalmers Johnson, Stanford University Press (1982)
- A Modern History of Japan: From Tokugawa Times to the Present — Andrew Gordon, Oxford University Press (2003)
- Japan in Transformation, 1945–2010 (2nd edition) — Jeff Kingston, Pearson (2011)
- Japan as Number One: Lessons for America — Ezra F. Vogel, Harvard University Press (1979)
Japan’s economy grew at around 10 percent a year from the mid-1950s to the early 1970s. Factors included high savings, an educated workforce, US procurement during the Korean War, access to American markets, and industrial policy coordinated by bureaucrats at the Ministry of International Trade and Industry, which Chalmers Johnson made famous. Prime Minister Ikeda’s 1960 plan to double incomes in a decade was achieved early.
- MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 — Chalmers Johnson, Stanford University Press (1982)
- A Modern History of Japan: From Tokugawa Times to the Present — Andrew Gordon, Oxford University Press (2003)
The 1964 Tokyo Olympics and the opening of the Shinkansen bullet train announced Japan’s return to the world. By 1968 Japan had the largest economy outside the United States in the capitalist world. Brands like Sony, Toyota and Honda became global, and in 1979 Ezra Vogel’s Japan as Number One captured Western admiration and anxiety. Growth also brought pollution diseases such as Minamata mercury poisoning.
- A Modern History of Japan: From Tokugawa Times to the Present — Andrew Gordon, Oxford University Press (2003)
- Japan as Number One: Lessons for America — Ezra F. Vogel, Harvard University Press (1979)
In the late 1980s land and stock prices soared; the Nikkei index peaked on 29 December 1989. When the bubble burst in 1990–91, banks were left with bad loans and the economy entered years of low growth and deflation known as the “lost decade”, later “lost decades”. The Nikkei did not regain its 1989 peak until 2024. Japan remained rich, safe and highly productive, but its sense of limitless progress was gone.
- Japan in Transformation, 1945–2010 (2nd edition) — Jeff Kingston, Pearson (2011)
- A Modern History of Japan: From Tokugawa Times to the Present — Andrew Gordon, Oxford University Press (2003)
Why it matters today
Older Japanese remember a country of rising incomes, lifetime employment and national confidence. Younger generations have grown up with stagnant wages, insecure jobs and deflation. That gap shapes attitudes to work, marriage and the future.