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Well-being and Happiness in
Japan’s Economic Development ― In Search of the New Goals of Development ―
August 31, 2012 Shigeru T. Otsubo & Yumeka Hirano
Graduate School of International Development(GSID), Nagoya University
(http://www.gsid.nagoya-u.ac.jp/sotsubo/)
Happiness as the Goal of Development l The idea of happiness as the goal of development was
brought to the attention of the international community by the PM of Bhutan during the Sixty Fifth session of the United Nations General Assembly in September, 2010.
l The new UN resolution passed unanimously at the General Assembly in July 2011 1) “to pursue the elaboration of additional measures that
better capture the importance of the pursuit of happiness and well-being in development with a view to guiding their public policies”
2) “to develop new indicators and other initiatives to share information thereon with the Secretary- General as a contribution to the United Nations development agenda, including the Millennium Development Goals”
2 (Ref.: UN Genera; Assembly, the agenda item 13 ‘implementation of the follow-up to the outcomes of the major United Nations conferences and summits in the economic, social and related fields, resolution (A/65/L.86)’, 13 July, 2011. )
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Bhutan’s Development Philosophy: “Happiness” and “Well-being”
l Gross National Happiness (GNH): designed in an attempt to define an indicator that measures quality of life or social progress in more holistic and psychological terms than only the economic indicator of GDP.
l In November 2008, the Royal Government of Bhutan has adopted the GNH index.
l The purpose of the GNH index is to reflect GNH values, set benchmarks, and track policies and performances of the country. The GNH index was developed by the Centre for Bhutan Studies (CBS), under the leadership of Dasho Karma Ura.
l Happiness of the people was made the guiding goal of development. The exact phrase GNH is more important than GDP was coined by His Majesty the 4th King of Bhutan, who is the author of GNH.
l GNH has attracted attention, and opinion around the world has started to converge on happiness as a collective goal.
(Ref.: GNH The Centre for Bhutan Studies http://www.grossnationalhappiness.com/gnhIndex/gnhIndexVariables.aspx ) 3
l GNH 9 key dimensions – Psychological wellbeing – Education – Time use – Ecology – Culture – Community vitality – Health – Living standards – Good governance
(Ref.: GNH The Centre for Bhutan Studies http://www.grossnationalhappiness.com/gnhIndex/gnhIndexVariables.aspx )
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Bhutan’s Development Philosophy: “Happiness” and “Well-being” (cont.)
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l Green and Happiness Index (GHI) – To encourage people participation – To be a major tool for suggesting the national
development’s guidelines – To be a driving force for well-being development – To be a guideline for developing data bases and
indicators l GHI is primarily based on the philosophy of
Sufficiency Economy, human-centered development, and the vision of the “Green and Happiness Society,” as stated in the 10th National Economic and Social Development Plan, 2007 to 2011.
(Ref.: Thailand Foreign Office, The Government Public Relations Departmenthttp://thailand.prd.go.th/view_inside.php?id=2154)
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Thailand’s Development Philosophy: “Happiness” and “Well-being”
l GHI key 6 components – Health – Warm and loving family – Community empowerment – Economic strength and equity – Good quality environment and ecological
system – Democratic society and good governance
(Ref.: Thailand Foreign Office, The Government Public Relations Department http://thailand.prd.go.th/view_inside.php?id=2154) 6
Thailand’s Development Philosophy: “Happiness” and “Well-being” (cont.)
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Attention to “Happiness” around the World l Japan: Cabinet Office introduced “Happiness Indicator” to measure well-being
of people. (HP: http://www5.cao.go.jp/keizai2/koufukudo/koufukudo.html) l The UK: “New measure of national well-being "could give us a general picture
of whether life is improving" and eventually "lead to government policy that is more focused not just on the bottom line, but on all those things that make life worthwhile”. The first official measure of the nation's well-being will be published in summer 2012. (BBC News “Plan to measure happiness ‘not woolly’ Cameron”, 25 Nov 2010 http://www.bbc.co.uk/news/uk-11833241)
l France: French national statistics office produces guidelines on measuring well-being as precursor to national happiness index. (http://www.guardian.co.uk/world/2010/nov/17/france-happiness-index 17Nov, 2010)
l Germany: RTE News “German politicians are investigating ways to gauge the country's quality of life and prosperity as a way to complement its GDP indicator”, 17 Jan 2011http://www.rte.ie/news/2011/0117/happiness-business.html)
l Independent think-tank “The Happy Planet Index”: Introduced the index, which combines environmental impact with human well-being to measure the environmental efficiency with which, country by country, people live long and happy lives. (http://www.happyplanetindex.org/) 7
The Need for Defining a New Economic Paradigm l High-level Meeting On Wellbeing And Happiness: Defining A New
Economic Paradigm, 2 April 2012, United Nations Headquarters, New York
l Recognized the urgent need for a new global economic system l Happiness as a fundamental human goal and universal aspiration l Discussed various issues, including wellbeing and happiness,
ecological sustainability, efficient use of resources, and fair distribution.
l Broad agreement: Government worldwide can take practical and immediate steps towards adoption of the new well-being and happiness-based economic paradigm.
8 (Ref.: The , The Government Bhutan, Defining a New Economic Paradigm: The Report of the High-level Meeting on Wellbeing and Happiness http://www.2apr.gov.bt/images/BhutanReport_WEB_F.pdf)
How does your country define a New Economic Paradigm?
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Objectives of This Presentation The purpose of this presentation is six-fold: Presenter: Prof. Shigeru T. Otsubo 1) to introduce the 4 phases of the postwar Japanese economic
development and evolving development goals; 2) to review the evolution in the goals of Japanese indicative and
consensus-building economic development plans; 3) to show the elements/state of ‘satisfaction’, ‘well-being’, and
‘happiness’ in the Japanese society; 4) to introduce/discuss some of the Japanese traditional values
behind the Japanese social capital/network; and 5) to discuss the directions/goals of development in Japan after 3.11. Presenter: Ms. Yumeka Hirano 1) to discuss two significant disparities in Japan (gender inequality
and intergenerational gap) in conjunction with ‘happiness’ discussion.
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Four Phases of Japanese Economic Development
Phase I (1945-1960s) Catching-up Process
1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s) 2. High Economic Growth Period (mid 1950s – early 1970s)
Democratization Common Goals
Phase II (1970s-1980s) Failure to Reform
& “Bubble” Economy
1. End of Catch-up Process & Need to Change (1970sè1980s) 2. Overcoming Oil Crises (1970s ) 3. ‘Bubble’ (latter ½ of 1980s) No More Common Goals
Autonomous Actions
Phase III (1990s-2009) Long Stagnation
& Koizuminomics
1. Bubble Burst (1990) & Long Stagnation (1990s-2000s) 2. Koizuminomics Supply-Side Policies & Widening Inequality (2001-2006-)
Phase IV (2009-) Political Regime Change,
3.11 and Beyond
1. First Regime Change through Election LDP+ è DP+ (2009) 2. 3.11 & Fukushima
In Search of New Goals
Socio-Economic Outcome (-1970-)
Environmental Issues Social Dimensions NNW(1973)
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14 economic plans officially adopted
Economic plans in a free market economy
‘Indicative-type’ rather than ‘Command-type’ Sharing of information between the government and the public (business and household sectors)
-- Medium-run development scenario the government assumes, including target economic growth rate and other indicators
-- Medium-run economic policy stance and policy priority, including allocation of funds for investment in
social overhead capital -- Economic behavior of household and business sectors that the government deems desirable
Economic Planning for Consensus Building
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From MEIJI Revolution (1867-) to the end of WWII (-1945)
Individual Well-being < National Wealth/Goals ‘I do not want anything until our country wins the war.’
‘Luxury is our enemy. Etc.
êPhase I (1945-1960s) Catching-up Process
1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s) 2. High Economic Growth Period (mid 1950s – early 1970s)
Democratization Common Goals
Individual Well-being = National Wealth/Goals
Individual Well-being ≥ National Wealth/Goals
ê
ê
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THE CONSTITUTION OF JAPAN CHAPTER III. RIGHTS AND DUTIES OF THE PEOPLE Article 13. All of the people shall be respected as individuals. Their
right to life, liberty, and the pursuit of happiness shall, to the extent that it does not interfere with the public welfare, be the supreme consideration in legislation and in other governmental affairs. Note: Japan’s constitution was drafted and promulgated under the guidance of the GHQ(General Headquarters), constructed upon General Douglas MacArthur draft in 1946. Therefore, the article 13 perhaps reflects the US Declaration of Independence that includes/supports ‘pursuit of happiness’.
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ê
Individual Well-being >National Wealth/Goals
Individual Well-being ≥ National Wealth/Goals
ê
è
Phase II (1970s-1980s) Failure to Reform
& “Bubble” Economy
1. End of Catch-up Process & Need to Change (1970sè1980s) 2. Overcoming Oil Crises (1970s ) 3. ‘Bubble’ (latter ½ of 1980s) No More Common Goals
Autonomous Actions
Phase III (1990s-2009) Long Stagnation
& Koizuminomics
1. Bubble Burst (1990) & Long Stagnation (1990s-2000s) 2. Koizuminomics Supply-Side Policies & Widening Inequality (2001-2006-)
Phase IV (2009-) Political Regime Change,
3.11 and Beyond
1. First Regime Change through Election LDP+ è DP+ (2009) 2. 3.11 & Fukushima
In Search of New Goals
Individual Well-being >=National Wealth/Goals
*New Public Commons *Minimum Unhappiness Society
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Examples of Adopted Economic Plans I
Name
1.Economic Self- Reliance Plan
3.Doubling National Income Plan
5.Economic and Social Development Plan
7.Economic and Social Basic Plan
8.Economic Plan for 2nd Half of the 1970s
Plan period 1956
~1960 1961
~1970 1967
~1971 1973
~1977 1976
~1980
Major purposes
Economic self-reliance Full employment
High growth Higher living standard Balanced and fulfilled
economy/society People’s welfare
International relations Stable development
Fulfilled people’s living
Growth target /actual growth
4.9% 8.8% 7.8% 10.0% 8.2% 9.8% 9.4% 3.5% 6%+ 4.5% 15
Examples of Adopted Economic Plans II
Name
9.New Economic/ Social 7-year Plan
10. Vision/Guideline for the 1980s
12.Lifestyle Superpower Plan
13.Economic and Social Plan for Structural Reform
14.Vision for Society and Economic Revitalization
Plan period 1976
~1985 1983
~1990 1992
~1996 1995
~2000 1999
~2010
Major purposes
Stable economic development Quality of people’s life Peaceful/stable intn’l relations
Security & well-being of people’s life
From economic superpower to Lifestyle superpower Freer and dynamic economy
Well-being & Security of people’s life
Society with diversified wisdom Preparing for aging/depopulation
Coexistence with environment
Growth target /actual growth
5.7% ?.?% 4%± ?.?%
3.5%± ?.?% 3%± ?.?% 2%± ?.?% 16
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Part I.1: Postwar Economic Reforms and Rehabilitation
(1945 – mid 1950s)
Phase I (1945-1960s) Catching-up Process
1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s) 2. High Economic Growth Period (mid 1950s – early 1970s)
Democratization Common Goals
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l Human loss – 1.85 million (2.8 million) deaths l Material loss – 25% of national wealth l Industrial production dropped to 1/10 of the
prewar level. l Hyper-inflation with commodity shortage
Devastation during WWII (1941-1945)
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Zaibatsu dissolution Dissolution of
Zaibatsu conglomerates; Prevention of economic
power concentration
Agrarian reform Elimination of tenant system; Growing # of
independent farmers
Democratization of the Economy
Fair market rules Anti-trust Law;
Securities Exchange Law; etc.
Post-war Economic Reforms
Labor market reform Legalization of labor
movement; Establishment of
labor unions 19
l Introduction of new technology to fill the gap – Steel (strip mills); shipbuilding (electric
welding); chemical fertilizers; synthetic fiber; consumer electric appliances, etc.
– “First machine is imported and the second machine is produced domestically”
‘Improved Engineering’
l Rural-urban transfer of young workforce ‘Shudan Shushoku’(1954-1975) l Industrial Policy
– Business Rationalization Promotion Act (1952)
– Government-owned financial institutions – JDB, ExIm Bank, Small Business Credit Corporation
– Establishment of long-term credit banks
From rehabilitation to enhancing competitiveness
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Part I.2: High Economic Growth Period
(mid 1950s – early 1970s)
Phase I (1945-1960s) Catching-up Process
1. Post-war Rehabilitation & Economic Reforms (1945-mid 1950s) 2. High Economic Growth Period (mid 1950s – early 1970s)
Democratization Common Goals
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Dual structure -- lower productivity and poorer working conditions in small businesses, consumption-goods and service sectors National consensus -- trickle-down strategy
8.8 9.2
4.5 4.43.34.9
1.5 1.0 1.4
11.1
024681012
1956-60
1961-65
1966-70
1971-75
1976-80
1981-85
1986-90
1991-95
1996-2000
2001-2005
Average real growth rate
Source: National Accounts
Entering Virtuous Cycle Period of rapid growth (1955--1970)
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Rapid growth as a “catching-up” process
Catching-up process Goal of development Consensus formation
Advantage of latecomers -- introduction of technology and process innovation -- lower business risks -- incentive for innovation and quality control through
competition in foreign market
National Income Doubling Plan (1961-70): great success 23
l Demand side – Shortage of production capacity – investment
demand – New consumer durables – consumer demand – Increased Quality and undervalued exchange rate –
export expansion l Supply side
– Innovation seeds from overseas – Growth of working-age population and its migration – Increase in household savings – Rise in education attainment to enhance human
capacity
Demand and supply side factors for rapid growth
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3 Sacred Treasures in the latter half of 1950s
3 Cs in the High-growth period of 1960s
1956 Economic White Paper “We have come out of the post-war rehabilitation.”
1964 : Tokyo Olympic Game, OECD Membership, IMF Article 8 Country
TOYOTA Corolla (1966-) vs. NISSAN Sunny (1966-) 1000cc 1000cc 1100cc affluence of plus 100cc 1200cc neighbor’s car looks smaller
Drive to Material Happiness/Affluence
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Socio-Economic Outcome of Rapid Growth
( – 1970s – )
Socio-Economic Outcome (-1970-)
Environmental Issues Net National Welfare(1973)
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l Labor market – labor surplus to labor shortage – Wage increase – productivity-differential inflation
l Infrastructure – Tokaido bullet train; Meishin super highway – Physical transportation modes – motorization
l Negative side – Underdevelopment of social overhead capital
(infrastructure) for better living – Overpopulation in urban areas and depopulation
in rural areas – Environmental degradation
l Public pension system extended to self-employed
Socio-Economic Transformation Employment share 1955 1970
Primary industry 41.3% 19.7% Secondary industry 24.9% 35.3% Tertiary industry 33.8% 45.0%
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40
50
60
70
80
90
100
1955
1965
1975
1985
1995
2004
1,000-
500-999
300-499
200-299
100-199
50-99
30-49
20-29
40
50
60
70
80
90
1947
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Longevity Fem ale
M ale
Positive Outcomes of the Rapid Growth
0
10
20
30
40
50
60
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2006
M aleFem ale
Total
Wage gap by size of company
Manufacturing
Percentage of students who enter colleges/universities
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15
M ovem ent fromrural to urban
M ovem ent fromurban to rural
M ovem ent inside urbanfrom one prefectureto another
M ovem ent inside ruralfrom one prefectureto another
Net inflow of populationto M etropolitan Tokyo
thousand
Negative Outcomes of the Rapid Growth (1) Overpopulation and Depopulation
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Negative Outcome of the Rapid Growth (2) Environmental degradation
00.010.020.030.040.050.060.07
1965
1970
1975
1980
1985
1990
1995
2000
2004
SO 2(ppm )NO 2(ppm )
Atm ospheric polution
SO 2(ppm )
Source: Ministry of Environment
Sulfur Dioxide (SO2) Yokkaichi-city Asthma
30
16
20
40
60
80
100
1975
1980
1985
1990
1995
2000
2004
Lakes
Rivers
W ater pollution% of attaining environm ental standard
Source: Ministry of Environment
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010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000
1970
1975
1980
1985
1990
1995
2000
2005
0
500
1,000
1,500
2,000
2,500
3,000Atm ospheric pollutionrelated disease (left)
M inam ata disease (right)
Num ber of patients
Source: Ministry of Environment
Minamata Disease caused by mercury poisoning
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