page_title: Empire of Japan
section_title: Economic development
hierarchical_section_title: Empire of Japan / Meiji era (1868–1912) / Economic development
caption_attribution_description: 日本語: 益田太郎冠者男爵（1875～1953）
context_page_description: The Empire of Japan is a historical nation-state along with its colonies, protectorates, mandates, and other territories that existed from the Meiji Restoration in 1868 to the enactment of the 1947 constitution of modern Japan.
  Japan's rapid industrialization and militarization under the slogan Fukoku Kyōhei and Shokusan Kōgyō led to its emergence as a great power and the establishment of a colonial empire following the First Sino-Japanese War, the Boxer Rebellion, the Russo-Japanese War, and World War I. Economic and political turmoil in the 1920s led to the rise of militarism, nationalism and totalitarianism, eventually culminating in Japan's membership in the Axis alliance and the conquest of a large part of the Asia-Pacific in World War II.
  Japan's armed forces initially achieved large-scale military successes during the Second Sino-Japanese War and the Pacific War. However, after many Allied victories and following the Soviet Union's declaration of war against Japan on August 9, 1945, and subsequent invasion of Manchuria and other territories, and the atomic bombings of Hiroshima and Nagasaki, the Empire surrendered to the Allies on August 15, 1945.
context_section_description: The process of modernization was closely monitored and heavily subsidized by the Meiji government in close connection with a powerful clique of companies known as zaibatsu (e.g.: Mitsui and Mitsubishi). Borrowing and adapting technology from the West, Japan gradually took control of much of Asia's market for manufactured goods, beginning with textiles. The economic structure became very mercantilistic, importing raw materials and exporting finished products — a reflection of Japan's relative scarcity of raw materials.
  Economic reforms included a unified modern currency based on the yen, banking, commercial and tax laws, stock exchanges, and a communications network. The government was initially involved in economic modernization, providing a number of "model factories" to facilitate the transition to the modern period. The transition took time. By the 1890s, however, the Meiji had successfully established a modern institutional framework that would transform Japan into an advanced capitalist economy. By this time, the government had largely relinquished direct control of the modernization process, primarily for budgetary reasons. Many of the former daimyōs, whose pensions had been paid in a lump sum, benefited greatly through investments they made in emerging industries.
  Japan emerged from the Tokugawa-Meiji transition as an industrialized nation. From the onset, the Meiji rulers embraced the concept of a market economy and adopted British and North American forms of free enterprise capitalism. Rapid growth and structural change characterized Japan's two periods of economic development after 1868. Initially, the economy grew only moderately and relied heavily on traditional Japanese agriculture to finance modern industrial infrastructure. By the time the Russo-Japanese War began in 1904, 65% of employment and 38% of the gross domestic product (GDP) were still based on agriculture, but modern industry had begun to expand substantially. By the late 1920s, manufacturing and mining amounted to 34% of GDP, compared with 20% for all of agriculture. Transportation and communications developed to sustain heavy industrial development.
  From 1894, Japan built an extensive empire that included Taiwan, Korea, Manchuria, and parts of northern China. The Japanese regarded this sphere of influence as a political and economic necessity, which prevented foreign states from strangling Japan by blocking its access to raw materials and crucial sea-lanes. Japan's large military force was regarded as essential to the empire's defense and prosperity by obtaining natural resources that the Japanese islands lacked.
caption: Baron Masuda Tarokaja, a member of the House of Peers (kazoku). His father, Baron Masuda Takashi, responsible for transforming Mitsui into a zaibatsu.
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