The Problems of Economic Growth

In its planning forecasts the official body now called the Economic Planning Agency has consistently underestimated Japan’s rate of economic growth. (The disparities between forecasts and achievements have been set out in Chapter 6 above.) Conscious of their past errors, the forecasters have cautiously raised their sights, and in the plan for 1967–71 they have estimated the annual average rate of growth (in real terms) at 8.1 per cent. If this rate is achieved, by 1971 Japan will have the national gross product which she would have reached if there had been no Second World War and if the prewar average rate of growth of 4.5 per cent had been maintained. Some economists seem to attach significance to this statistical accident, and think that the rate of growth will fall back sharply after 1971. But it is difficult to justify their implied assumption that there exists some ‘natural’ rate of growth which Japan is destined to achieve in the absence of catastrophes. An attempt to estimate what would have happened to the economy if there had been no Second World War is about as useful as speculation about the fate of Europe if Napoleon had won the Battle of Waterloo!