Causes of Japanese Stagnation

The commentary's primary focus is on the principles of modern Japanese management, citing examples of their application at real companies, both American and Japanese. It

In 2001, the Bank of Japan began to target the money supply instead of interest rates, which helped to moderate deflation and stimulate economic growth. However, when a central bank injects money into the financial system, banks are left with more money on hand, but also must be willing to lend that money out. This brings us to the next problem Japan faced: a credit crunch.

In the 1900s, Japan faced a lot of economic obstacles. Due to its location on four moving tectonic plates, Japan experiences earthquakes more often than most other countries, Banks, at the time, struggled to keep economic activity stable after earthquakes and even attempted to regulate the flow by granting companies the ability to sell their products without having a drastic change in price. Following the discussion of earthquake bills and such, news was brought to the attention of the Japanese government that a bank in Tokyo had finally gone bankrupt. This sent many into a frenzy trying to get a hold of their money from banks, and in turn, many banks closed. However, this Japanese bank was indeed, not bankrupt, it was only struggling,

As for economic downturn, the lack of regulation and the failures of banks were both caused by the Gulf Wars. The United States government was too focused upon military conflict outside of its borders to pay attention to the loopholes that banks were using to make unwise lending decisions.

The growth advanced Japan to rank as the 2nd largest economy in the world rivaling the United States. However, this economic growth started slowing in the 1970s and in 1990 real estate and stock prices crashed and “the bubble burst” (Drogus and Orvis 240). Luckily, the government managed to get the economy back up and running in 2003 when Prime Minister Junichiro Koizumi reduced regulation, privatized the postal service saving system, and lowered deficit spending.

In 2008 the U.S in the midst of economic crisis. Several of the biggest banks were on the verge

Secondly, the business failures combined with the stock market crash was harmful for the banking

While the United States was struggling to emerge from the Great Depression at the end of the 1930s, and would do so partly because of the World War I, Japan was also in a bad economic position. Several things contributed to this; The Great Kanto Earthquake that hit in 1923 had destroyed Tokyo and Yokohama and the areas that surrounded them. Also, the Great Depression, which occurred in the 1930s, worsened Japan's already poor economic state. Another facet of Japan's economy was its reliance on silk exports and during the Great Depression, the price of silk dropped dramatically.   One of the outcomes of Japan's poor economy was the militarization of the government.

Intro: From the late 1930s through the mid 1940s, a time period known as World War II, a select number of countries fought for a common goal: to become a superpower. The main officiator of this group was Germany, which then Italy joined, followed by Japan and others; and was known as the Axis Powers. They sought to conquer most of Europe and promote their ideals of Nazism and Fascism, both of which were opposed by many countries and their people. In opposition to the Axis, a group known as the Allied powers formed: comprised of France, Great Britain, the Soviet Union, the United States, and China. During this time of war, the United States attempted to maintain a state of neutrality as they had already felt dire repercussions from the previous

had global impacts because the global market was so interconnected that it caused many other recessions, such as the U.S. recession of 2008 C.E. The Asian financial crisis had the largest effects on Japan because Japan’s economy and industry were steadily increasing and they were on a path to begin out producing the United States. However, the depression was so bad that Japan has still yet to recover from it. Japan’s GDP suffered a loss greater than that of the United States during the Great Depression. The recession was so severe, that the economy of that region of Asia rapidly declined. The recession of Asia was so severe that only the United States, Japan, and international institutions such as the International Monetary Fund were able to help partially improve the economy. The United States has been in a similar recession since 2008 A.D. This is most obvious in the housing market of the U.S., which has suffered the greatest loss. Before the recession, many began to build homes and buy homes because the market was so profitable. However, when the market took a turn for the worse, many were forced to sell their homes or abandon their building

In an essay presented at an Asian Studies conference held at Duke University, Sheldon Geron analyzes the relation of state, labor-unions, and small businesses in Japan between 1950s and

Sadly, the Japanese government decided to industrialize rapidly and did not foresee any of the problems that would ensue. With the government owning and operating multiple industries, the government was quickly spending too much money on maintaining these industries. The responsibility of maintaining these industries proved to be too strenuous upon the economy of the Japanese government, as Tessa Morris Suzuki points out in The Technological Transformation of Japan “By the early 1880s the costs of industrial investment were imposing immense strains on the budget and fueling the fires of spiraling inflation.” Thus the Japanese government was forced to sell their industries to private enterprises for a fraction of what they cost just to break somewhat even. Once the private enterprises gained control of these industries, the future of these industries began to turnaround because of the simple fact that the government had trained the workforce on how to use and operate the machinery and had educated the working population in industries. By having an educated workforce at their disposal, the private enterprises were set up for success and soon would see large amounts of profits being made. What made the private enterprises successful was the fact that the Japanese private

Japanese AAR figures. Although NPV and IRR methods directly maximizes shareholders wealth, in understanding Japanese corporate governance, we understand that the NPV and IRR method may not fit with the Japanese management decision making culture. Accordingly, the case mentions that Japanese managers are often less “numbers driven” than their “western” counterparts and would need to balance serving the interests of stakeholders (rather than shareholders only) as well looking after the company’s long term wealth.

Japan ranks as the third largest economy in the world as of 2010. The GDP at current prices in US dollars in Japan was reported at 5068.06 billion in 2009, according to the International Monetary Fund (IMF). Japan’s resurgence after World War II has however reached an inflection point in yearly 1989 after the burst of Japan’s asset price and real estate bubbles. As can be seen from the graph below, Japan’s GDP has hovered around the same level through more than 20 years of economic stagnation. The GDP’s slow growth has been exacerbated by the world financial crisis of 2008. A major landmark of Japan’s stagnation has been the BOJ’s fight against deflation.

One would think that morale would be low after losing a major war and it may well have been, but the Japanese disguised it well as their working environments foster teamwork, flexibility, and loyalty. Japanese corporations are well known for their lifetime employment policies, broad based training, and rewarding innovation (Satsomboon, 2014). What this means in terms of the economy is that, workers were not worrying about having a steady income. They could place their primary focus on the company they worked for and innovated ways to create more output with less input. While these are just some of the causes of what became known as, “The Japanese Miracle” there are several other factors. Just like in an economy these are the inputs and what comes next is the