Presentation is loading. Please wait.

Presentation is loading. Please wait.

Business Groups and the Big Push: Meiji Japan’s Mass Privatization and Subsequent Growth Working Paper by: Randall Morck and Masao Nakamura Presented by:

Similar presentations


Presentation on theme: "Business Groups and the Big Push: Meiji Japan’s Mass Privatization and Subsequent Growth Working Paper by: Randall Morck and Masao Nakamura Presented by:"— Presentation transcript:

1 Business Groups and the Big Push: Meiji Japan’s Mass Privatization and Subsequent Growth Working Paper by: Randall Morck and Masao Nakamura Presented by: Cap Perry

2 The Rundown  The idea of a “big push”  Japan’s shock therapy and the lead up to the “big push”  Japan starts “big push”  Zaibatsu propel “big push”  Lessons learned

3 Big Push Introduction  Big Push: state-coordinated effort to achieve economic takeoff  Multiple failures – only Japan successful  Difference: business groups substituted the state

4 Japan’s Shock Therapy  Isolated until 1858  Political tsunami occurs (Meiji Restoration)  Meiji era ushered in  Japanese sent abroad for studies  Modernization unrivaled  Institutional change  Most old wealthy merchant families were eclipsed

5 Japan’s Big Push  State-Owned Enterprises (SOE)  Built new industries essential to modernization  Massive effort from  3 main ministries (industry, interior, agriculture)  Industry: build regions into a nation  Interior: maintained budgets for SOEs  Most important SOEs established by the state anew

6 Japan’s Big Push (cont)  Government Failures  Financing for modernization became insufficient  Unsustainable inflationary spiral  Monetary reform  Slashed SOE subsidies  Key Effects  Budgetary excesses made visible  The allure of privatizing inefficient SOEs  Justify benefits against realistic costs

7 Japan’s Big Push (cont)  Mass Privatization  26 large SOEs by 1896  Gov’t received gains from privatizing  Raised 45 million yen between 1884 and 1889  Meiji Japan’s government no longer involved

8 Zaibatsu  Pyramidal Business Groups  Tiered business structure  Japan’s form = Zaibatsu  Advantages:  Family owns every firm in pyramidal group  Apex firm’s controlling S/H only needs modest wealth  Existing firms’ earnings can finance new firms  Protection from lawsuits

9 Zaibatsu (cont)  Zaibatsu facilitate big push growth  Customers and suppliers grow in tandem  Siphon money between firms  National savings on a huge scale  Controlling S/H has interest in profitability and ethics  Venture into new industries  Take over big push

10 Why Did Japan Succeed?  Main reasons:  Feudal elite bow out  Japanese government take hands-off approach  Zaibatsu families become marginalized

11 Learning from Japan  Big Push can succeed if:  State gives initial shove  Pyramidal business groups propel big push  Controlling S/H marginalized  Big push done with limited trade barriers and no barriers against foreign investment


Download ppt "Business Groups and the Big Push: Meiji Japan’s Mass Privatization and Subsequent Growth Working Paper by: Randall Morck and Masao Nakamura Presented by:"

Similar presentations


Ads by Google