This paper examines Japan's economic transformation during the Meiji Restoration through World War II, focusing on the nation's shift from feudalism and isolationism to an open, mercantilist economy. The analysis traces how Japan abandoned its historical Exclusion Policy to engage in international trade and manufacturing, sending scholars to study Western economic policies and rapidly industrializing. The paper identifies key mercantilist characteristics: acquisition of wealth through exports and precious metals, expansion of foreign trade and manufacturing, and state control over economic development. It argues that close government-business relationships, exemplified by zaibatsu companies like Mitsubishi and Mitsui, along with heavy manufacturing output, defined Japan's mercantilist period and enabled its rise as a regional and global power.
One of the most important periods in Japan's economic history is the implementation of an open foreign trade economy immediately after the Meiji Restoration, which followed the end of samurai and warrior-class rule. The Meiji Restoration era signaled the end of feudalism in Japan's economy and terminated the country's long-standing Exclusion Policy. This isolationist policy had been implemented to preserve Japan and unite its citizens against the threat of colonization by other powerful nations.
During the Meiji Restoration era, however, Japan opened itself to foreign and international trade relations to improve and develop its economic and political power. These were essential factors needed to establish Japan as an independent, powerful country alongside strong nations such as the United States and Great Britain. Because of economic developments begun during the Meiji Restoration, Japan transformed from a feudalist society into a mercantilist nation, a status that extended through the Second World War.
Mercantilism is characterized by several important factors. According to the Columbia Encyclopedia, mercantilism is defined as the acquisition of material wealth and power through an "increase in exports and collection of precious metals." Additional defining features include increasing foreign trade with other countries and the development of manufacturing processing businesses, as well as complete government or state control in order to attain economic stability, prosperity, and development.
As Japan emerged as a mercantilist nation, these important characteristics were explicitly illustrated in the country's economic policies and history. Immediately after ending its Exclusion Policy, Japan began developing its economy by learning important political and economic policies from Western nations. Although Japan was scarce in natural and manufactured economic resources, the country possessed a literate and knowledgeable population. Japanese scholars and officials were sent to Western nations to study, learn, and acquire the economic policies that could help develop Japan into an economically advanced state.
Because of Japan's diligent and progressive economic development efforts, the country was rapidly integrated into the international market and became recognized as an emerging powerful nation not only in the Asian region but also worldwide. Foreign trade flourished, and major manufacturing businesses emerged, including the Mitsubishi, Mitsui, and Iwasaki companies, which would become dominant forces in Japan's economy.
Another defining characteristic of Japan as a mercantilist nation was the close relationship between government and business. The Japanese government—headed by the Emperor during the Meiji Restoration and by the military during World War II—worked closely with businesses and companies regarding economic policies and regulations. The Japanese government especially strengthened its ties with the business community before and during World War II, when the military became the primary controller of the country.
Manufacturing became the leading sector in the country's economic priorities as Japan actively participated in World War II. Manufacturing and production increased dramatically, and government-business contracts emerged to enable Japan to keep pace with Western nations. This rapid industrialization came at considerable cost, as competing with the resources of the United States and other nations proved extremely challenging for Japan. Nevertheless, the close relationship between government and business companies, heavy foreign trading, and the expansion of manufacturing enterprises remained central to Japan's mercantilist economy during this period.
"Mercantilist policies enabled Japan's emergence as world power"
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