Generally speaking, innovation is driven by constraints and shortages. When Japan faced the first international oil crisis in 1973, it looked like the end of the world for the nation, since it depended on imports for 99 percent of its oil. However, Japan survived the oil crunch and used it as a springboard for further economic expansion, instead of sinking in the upheaval.

Although crude prices quadrupled after the crunch, the specter of a cutoff of oil supplies to Japan never materialized. Most industrial nations were major consumers of oil, and Japan was not the only one to be affected by price hikes of the Organization of Petroleum Exporting Countries.

Higher oil prices led to a surge in demand for fuel-efficient Japanese subcompacts and power-efficient home electronic products. Even before the oil crisis, automobile and electronics makers in resources-short Japan had designed products to be energy-efficient while people tried to conserve energy in their daily lives. For Japanese manufacturing industries, energy conservation had been a priority in technological innovation.

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