Focus on quality was one; just-in-time delivery of raw materials and parts to the factory was another; economy of scope replaced the century-long economy of scale to make each manufacturing unit more productive than ever before.
The nation’s Gross Domestic Product, GDP, grew about 8 per cent per annum for over a decade. Japan rose to become the world’s second-largest economy, surpassed only by the United States of America.
A nation with almost no natural resources was suddenly the world’s leading manufacturer. Japanese products from cars to cameras, tools to television sets, took over markets once dominated by European and American products; Toyota eventually upended General Motors as the world’ s largest global auto manufacturer. The Japanese seemed unstoppable. Futurists were busy trying to guess when Japan would eventually overtake America as the world’s largest economy. It is quite possible that the Japanese themselves believed the pundits regarding their inevitable rise to the top.
Unexpectedly, the rapid growth slowed down; at first unnoticeably, but, it later gathered momentum. Today, Japan has slipped to the third position behind USA and China. Furthermore, it might soon fall behind India to the fourth position. The obvious question is what happened? The general answer is: loss of manufacturing power. China and India have overtaken Japan in manufacturing. Not only that, China and India are proving that a nation without a large population and natural resources can only go so far with the most productive manpower base.
HOW THE BIG THREE DEVELOPED
The Industrial Revolution did not start in the US, China or India. Europe was its birthplace and Europe consequently colonized the rest of the world and forced us to supply raw materials to the factories of Europe and to accept the products manufactured there. Modern civilization followed the rise of industries and a template for economic development and competitiveness was laid.
From an agrarian nation a country must strive to move into manufacturing as soon as possible; supply its own domestic needs first, and then venture into export. Comparative advantage dictated that each nation should focus on those goods which in the beginning were easiest for it to produce in large quantities given geographical and environmental advantages.
It was not surprising that certain parts of the world, at first, specialized in supplying certain commodities as raw materials for industrial Europe; until they gradually started moving into manufacturing themselves. For most of the seventeenth to half of the twentieth century, manufacturing was the main driver of economic growth and development.
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