Japan Economic Growth After WWII

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of textiles. In 1975, however, that percentage had dropped to 5% as machinery claimed 30% of all manufactured goods.

The reason for the quick shift in manufactured goods is because machinery had greater price elasticity. The market for these goods was more sensitive to price fluctuations. The growth of sales of the high elastic industries only fueled the fire of growth within those industries, spurring more employment, investment in new capital resulting in more output. This cycle continued as Japanese companies grew larger and more profitable.

The Japanese automakers' solution was to develop a product line that shifted continually. This prevented the American automakers from recognizing a fixed target on which to focus their considerable mass production skills. This worked, as it conveniently was timed with the rapid gasoline price hikes of the 1970's. The continuously changing Japanese models appealed to Americans as an alternative to American cars.

Initial failures ...

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