japan inc

A common mistake people make is thinking a country's economy grows just because its companies are smart or lucky. Someone in Lagos might hear that Toyota or Sony conquered the world market and assume it was pure private genius, nothing more, no help from anywhere else. That mistake misses one of the most instructive stories in modern economics.

Japan Inc is the nickname economists gave to Japan's post war growth machine, roughly from the 1950s to the 1980s. It was not one company. It was the whole system, the government's trade ministry, the big banks, and giant firms like Mitsubishi and Toyota, all moving in the same direction, almost like a family business where everyone reports to the same table even though they have different names on their doors.

The government picked industries to back, cars, electronics, steel, and steered cheap loans toward them through the banks. Companies competed hard with each other for market share abroad, but at home they cooperated more than rivals normally would, sharing suppliers, swapping staff, protecting each other from foreign takeover. It worked so well that Japan went from wartime ruins to the world's second largest economy in about three decades.

A Nigerian familiar with how NNPC, the ministries and a handful of big conglomerates sometimes move together on major projects will recognise the shape of it, even though the scale and discipline were different. A person in the United Kingdom who watched Japanese car imports flood British showrooms in the 1980s, cheaper and more reliable than local models, was watching Japan Inc's export engine at full throttle.

The model eventually strained under its own success. Property and stock prices inflated into a bubble in the late 1980s, the bubble burst in 1990, and Japan spent the following decades known as the lost decades, growing slowly while banks nursed bad loans. The same closeness that built the boom made it harder to clean up after.