growth. first, favorable demographics ( slide 3 ). total population increased at an annual rate of + 1 % during this period and the relative youth of the working - age population supported both production and consumption. at the beginning of the economic boom period, the farming population reached approximately 40 % of the total population and the migration of surplus labor from the rural areas to the cities enabled the rapid growth of a high productivity manufacturing sector. second, the use of competitive forces. it is sometimes pointed out that the government ’ s industrial policy or so - called “ japan incorporated ” was the key factor behind japan ’ s economic miracle. i believe such public sector influence is overstated. when we look at the the conference was held on may 5th and 6th under the theme, “ monetary policy under resource mobility ”. please refer to, http : / / www. suomenpankki. fi / en / tutkimus / konferenssit / tulevat _ konferenssit / pages / bof200 _ 2011. aspx bis central bankers ’ speeches history of japan ’ s leading firms, it is not rare to find cases where they entered into new areas dissenting against the government ’ s industrial policy or cases where they did not receive any favorable treatment. there are also examples where industries and firms which were wellprotected gradually lost their vibrancy. strong competition supported japan ’ s high - growth period by stimulating entrepreneurship and promoting technological innovation which enabled japanese firms to catch - up with those in advanced economies. third, the benefits of global free trade. when one looks at the contribution of individual components to gdp growth, domestic demand is by far the main factor ( slide 4 ). however, this does not refute the important role that the overseas economy played. japan produced large amounts of producer and consumer goods for the expanding global market, such as steel, electronic appliances and automobiles. the foreign exchange obtained through exports was used to import raw materials necessary to support domestic economic development. the basic condition which made such a growth model possible was the continued growth of the world economy and the maintenance of the global free trade system. the bubble and its collapse japan ’ s high - growth period ended in the early 1970s and the pace of growth gradually slowed. however, during the 70s and 80s, japan still maintained a relatively high - growth rate when compared with other major advanced economies ( slide 5 ). favorable demographics and strong global competitiveness were the basic components which continued to

emerging economies based on such an understanding of japan ’ s growth pattern, i would next like to conduct a simple comparison of the high growth that china and india are currently undergoing with japan ’ s past experience ( slide 8 ). china ’ s rapid growth started at the beginning of the 1990s and the pace of growth for the first 15 years is almost exactly the same as japan. the difference is that china has continued to grow on average at a pace above + 10 %. with regard to india, the growth rate is slightly lower than that of current china, or japan during its boom period. this is perhaps because india has yet to enter the population bonus stage ( slide 9 ). during a high - growth period, the supply of labor from rural areas plays a key role. when we compare the urban population rate of japan and china, china ’ s current level is roughly similar to japan ’ s level in the 1960s. looking at the car ownership rate as a reflection of a consumption boom due to strong household income growth, once again china ’ s level is similar to that of japan in the 1960s. when seen from this simple comparison, i believe that the chinese economy will continue its high growth for some time. with regard to india, the population bonus period will arrive around 2015, so its growth rate may accelerate further3. however, as japan ’ s experience shows, when income levels increase together with strong economic growth, each society faces various new challenges. a smooth transition from high growth to stable growth is quite a challenge. from the perspective of a country which has been facing these challenges for some time, i would like to share with you some of the lessons we have learned. preventing bubbles the first challenge is preventing the emergence of bubbles. when an economy experiences strong growth over an extended period, society often becomes over - confident. this seems to be human nature. japan ’ s bubble during the latter half of the 1980s, was the result of a complex interaction among multiple factors. however, the fundamental reason was the overconfidence which cloaked the entire country and the ensuing dramatically aggressive economic behavior. at that time, japan ’ s growth rate was higher than other advanced economies and the inflation rate was quite subdued. japan was the perfect model student ( slide 10 ). it may sound ridiculous, but according to an estimate released at that time, the aggregate value of land in central tokyo was equivalent to that of the entire united states. financial supervision was also insufficient. lending to real estate, construction