A short teaser from a deep submersion in the history of 20th century economic growth in Japan

Defining characteristics of the next cycle:

(1) the massive requirement for regional and international rebuild, the attention to detail, improving the originally imported technologies and licensed patents, allows to massively expand the IP-heavy export oriented industries. Assisted by need of manufacturing goods and tools to assist with Europe post-war rebuild and then, post-war periods in Korea and Vietnam.

(2)the capital surplus utilised by monopolising corporates (lax M&A regulation to allow for strengthening of Total-Factor Productivity induced growth) to buy government bonds — that the state uses to acquire foreign debt — maintaining yield curve and pegging currency to induce low cost of in-land manufacturing.

(3) several shifts then — total utilisation of labour input, inability to fully reign FX surplus due to depreciation of USD in late 70ies and 1980ies (https://lnkd.in/dVQEnh74), leading to asset bubble.

(4) The thrift maintained by cultural norms, reinforced then by long doldrums period, leading to present conundrum of low credit leverage — where state remains principal issuer of debt (used to support “aging” population).

(5) Outsourcing phase of globalisation during late 90-ies until went to China and Korea (more ready to roll-out and accommodate incoming FDI rapidly) — in some ways repeating the course of Japan in its massive growth cycle.

(6) ultimately its all about efficiency of returns on fixed (IP heavy) assets, depreciated quick(er) vs. competitors.