The Japanese Occupation of Southeast Asia

Document Type

Student Paper

Publication Date

Fall 9-26-2023


Asian History | Economic History | Economics | Finance and Financial Management | Japanese Studies | Military History | South and Southeast Asian Languages and Societies | United States History

Description, Abstract, or Artist's Statement

The economy of the Philippines was derailed by the Japanese occupation during World War II. As an American colony before World War II, the Philippines had close amicable ties with the United States highlighted by promises of independence on July 4th, 1946. The Philippines also maintained a beneficial economic relationship with the States at this time through extensive foreign trade. However, because of the Japanese invasion, the Philippine economy was robbed of this profitable foreign trade and the promise of independence, severely crippling the island nation and her morale. The first policies implemented by Japan were designed to control the local economy. These include the closure of Western banks and control of local currency, which caused inflation to increase at an uncontrollable pace. The reorganization of the Philippines’ formerly profitable industries, such as sugar, caused these industries to collapse, leading to vast unemployment across the archipelago. With a shortage of viable fuel, a deteriorating supply chain management, and poor policy implementation, food shortages were common in the Philippines. While ethnic Chinese capital staved off some negative effects during and after the occupation, the Japanese administrative decisions would haunt the country for decades after 1945. Utilizing the economic theory of Gresham’s law and analysis of the policies, situations, and circumstances of the time, a calculation of the reduction of Gross Domestic Product (GDP) by 70 percent at the end of 1945 can be estimated, characterized by a 137,500 percent increase in the price of rice over the course of the Japanese occupation. This staple household food reflects the damage caused by Japan’s economic actions in the Philippines by the end of the war.


This work was completed at Temple University Japan for a course taught by faculty member Jeff Kingston.