3 Key Historical Events that Shaped How the Japanese Think About Japan's Role in the Global Economy Today

When I talk to Japanese business partners, I often notice how conscious they are of Japan's role and relative position in the global economy.

One day they will applaud a statistic about Toyota being the world's largest automaker, the next they will lament the fact that Japan has dropped one spot in the global GDP ranking.

I sometimes wonder: Why do they take these national news to heart?

The answer lies deep in the Japanese psyche. Here are three historic events that shape how the Japanese think about their country today:

Key Event 1: The Meiji Restoration's impact on industrialization and modernization

From the mid-19th century, after two centuries of isolation, Japan played catch-up with the West. Japan began to integrate and emulate a wide range of European and American innovations, from medicine and legal systems to steel production, railways, and military technology.

The Meiji Era (1868-1912) turned Japan into Asia's first industrialized nation within a few decades.

It is one of the most transformative periods in Japan's history, instilling a strong sense of national pride and determination to compete globally. Up to this day, Meiji leaders serve as national icons: Their portraits cover bank notes, their stories feature in TV dramas.

Key Event 2: The post-war economic boom and Japan's technological prowess

Following the devastation of World War II, Japan’s remarkable post-war recovery saw its economy skyrocket. Before long, Japan was a global leader in technology, particularly in the automotive and electronics industries.

Nothing symbolizes Japan's rise from the ashes better than the 1964 opening of the Shinkansen, the world's first high-speed railway line.

The export-led successes of the 1970's and 80's era solidified a sense of pride in Japan's ability to innovate and lead the world in cutting-edge industries. Nothing seemed impossible: This is the time when Harvard scholar Ezra Vogel touted "Japan as Number One".

Key Event 3: The bust of the Bubble Economy and the "Lost Decades"

The high-growth period culminated in a speculative frenzy of exploding stock and real estate prices. When the bubble burst in the beginning of the 1990's, it led to a prolonged period of anemic growth and stagnation.

The economic challenges of the ensuing "lost decades" have had a lasting impact on Japan's economic psyche.

For years, Japanese policymaker struggled to turn the ship around. By the beginning of the new millennium, Japanese businesses had become more cautious, forcing them to re-evaluate their strategies in the global economy. This period coincided with China's rise as the eminent economic power in Asia.

These three events - the Meiji Period, the Post-War Boom, and the "Lost Decades" - have greatly shaped Japan's economic self-image and its approach to global business.

Understanding these historical contexts provides a deeper insight into the modern economic mindset of your Japanese business partners.

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