Economies under Occupation The Hegemony of Nazi Germany and Imperial Japan in World War II

During the World War II, Germany and Japan occupied large territories in Europe and Asia, and tried to construct “Greater Economic Sphere” (Grosswirtschaftraum) and “Greater East Asia Co-Prosperity Sphere (Daitoa Kyoei Ken), respectively. This book aims to compare the occupation regimes of these two spheres, focusing on administration of the occupied areas, trade structure, industrial structure, plundering and expropriations. To do that, the editors invited eighteen contributors who are experts on the war economies of occupied areas, and provided them a common framework of comparison. That is, each chapter on a country delivers a short presentation of the territorial impact of the occupation, the patterns and different stages of occupation, and the impact of the administrative support of collaborating local elites. To our knowledge, it is the first attempt of a systematic comparison of the occupied economies across the Eurasia during the World War II.
 
The two occupation regimes had many similarities. In the occupied areas, private property mostly prevailed, and in order to control the economies, government organizations or semipublic corporations were introduced. They determined the entitlement of input factors such as raw materials, semi-finished products and the workforce. In addition, control on foreign trade was established, directing the flow of war goods to the aggressors’ economies as well as restricting the imports of commodities from them. By controlling money supply through erecting the quasi-central bank for an occupation area or introducing military scrip, the occupiers monetized occupation costs and procurement costs. Sometimes a price-controlling scheme was established at the same time. As private companies played the central role in the two economic spheres, their economic incentives were essential for production. At least in the late stage of the war, the German and the Japanese governments introduced economic incentives into the management of the economies.
 
At the same time, the two occupations regimes had differences in some respects. One difference is that Japan could hope for local supports at least in some areas that Germany could hardly expect. Japan installed so-called “puppet governments” in the occupied areas including Manchuria, Malaya and Burma. In addition, Germany plundered the occupied areas at the initial stage, while outright plundering did not occur on the large scale in the areas Japan occupied. The trade patterns were also different between the two spheres. Germany had a large trade deficit to the occupied countries, which means that Germany was successful in directing the war goods into its own economy. On the other hand, Japan’s trade deficit was small. This was mainly because Japan faced serious shortage of marine shipping capacity for transporting war goods from occupies areas, especially South East Asia, to Japan.
 

(Written by Tetsuji Okazaki, Professor, Graduate School of Economics / 2017)