Japanese Economy Essay example

1. Outline very briefly the main factors that led to the bubble economy of the 1980s and

In 1850-1935, Japan has become an industrial power and replaced its traditional, feudal government with a regime in which ministers appointed by the emperor combined with parliament. The interwar years were not a time of crisis for Japan, however. During the 1920s, new cultural developments, an expanding economy and a brief commitment to liberal democracy produced important currents as well. In the 1930s, Japan turned to a more adventurous foreign policy in response to economic challenge and political change. Japan participated in the global economy by changing its government to benefit the economy, the emergence of open trade and still continuing to depend heavily on imports of raw materials.

The Japanese thought returning to a state-controlled economy would further alleviate the financial problems. However, these actions did not correct their economy. The Japanese people blamed their

The economies of the U.S. and Japan are very integrated in terms of trade in goods and services. As stated in the article the article, “Japan-U.S. Relations: Issues for Congress,” of the Congressional Research Service, the U.S. is the world’s largest economy and Japan is the world’s third-largest economy. This status makes the U.S. and Japan valuable trading partners, considering the U.S. was Japan’s second-largest source of imports and their largest export partner as of 2014 (Chanlett-Avery, Manyin, et.al). One can see through examining past economic crises in Okinawa and the U.S. that such incidences impede healthy global relationships. In the article, “U.S.-Japan Economic Relations: Significance, Prospects, and Policy Options,” William H. Cooper, specialist in international Trade and Finance, explains ways in which two specific Japanese economic crises affected global relations. One financial crisis occurred in 2008, when the economies of the U.S. and Europe were declining, leading to a decline in global demand for Japanese exports. Another occurred in 2011, following the tsunami, earthquake, and a nuclear incident in northeast Japan. These exigencies lead to great deficits, specifically in U.S. and European trade (Cooper, 2014). As previously mentioned, Okinawa has been unable to develop a self-sufficient economy. These past economic crises show that when Japan is economically

Its actions have helped initiate new industries, cushion the effects of economic depression, create a sound economic infrastructure, and protect the living standards of the citizenry. Indeed, so pervasive has government influence in the economy seemed that many foreign observers have popularized the term "Japan Inc." to describe its alliance of business and government interests. Whether Japan in the mid-1990s fit this picture seems questionable, but there is little doubt that government agencies continue to influence the economy through a variety of policies. Not only did the American press use the same terms as the federal government, but in doing so it also helped lay the framework of the Japanese- American internment in a completely inaccurate way (Lau, 2014).

Beginning from the last years of World War II and then following Japan’s defeat to the allied forces, the Japanese had to endure arguably its most painful few years to date. The majority of Japan’s cities had all been completely destroyed during the war, especially in Hiroshima and Nagasaki, where the first atomic bombs were dropped. As a result, the majority of Japanese population had to not only survive the extremes of the seasons in make-shift shelters, but also endure starvation due to the lack of food and water available. However, thanks to the American occupation of Japan following the end of the war, Japan was finally able to recover. The year 1950 turned out to be the beginning of an extended period of Japanese economic and social prosperity. Starting from 1950 to 1990, Japan had experienced unrivalled miraculous economic growth and success in comparison to the majority of other developed countries. For this reason, the Japanese economic success during this period is known by many as the “economic miracle”. There are multiple reasons behind this so called “miracle”, and this essay explores some of these causes. In particular focusing on the major factors which include; the American occupation of Japan, the Korean and Vietnam War as well as social and economic reasons.

To view a window into the future, take a look at Japan, where their population, who is advancing in age has brought the country’s once amazing economy to a standstill to the point where it will likely never truly recover.

Japan’s unemployment rate of about 4% opposed to the U.S. unemployment rate of close to 10%. Even the financial debt to GDP ration is an advantage, and debt in the private sector has not increased unlike the U.S. and European countries, (Time, 2009). In addition, since Japan is a huge exporter and with the U.S. demand going downward, the international balances and growth declined especially as the dollar value dropped and the yen surged. •

The FED decided to carry out its bond purchasing program in August to help prevent deflation (Hauser, 2011). The article could have turned out much differently if the FED did not step up and take action. In addition the FED has the authority to adjust interest rates in accordance with the current economic condition. Currently the FED is willing to curb inflation by adjusting the interest rates at a moment’s notice (Hauser, 2011). The FED’s invisible hand can sometimes help prevent major economic disasters.

First being a balanced budget, followed by suspension of new loans from the Reconstruction Finance Bank (this source of supply of money was identified as the root cause of inflation), and lastly, reducing as well as completely eliminating subsidies. The above-mentioned policies were identified to aid in accelerating the Japanese economy. Dodge’s policies caused problems along the way in its implementation but it created a path for recovery without the help of America. The Japanese were encouraged to economize and accumulate capital through such a policy.

The Federal Reserve went into action in response to the 2008 recession by rapidly reducing interest rates with the hopes of encouraging economic growth. The federal funds target rate was decreased to between zero and .25 percent. The results of the rate changes caused what is called “zero bound”, this reduced the effectiveness of monetary policy with the near non-existence of interest rates.

Assumptions about the Japanese workforce have turned out to be more myth than reality and some of the former strengths have become weaknesses in the new economy

Globalisation has had a profound impact on the Japanese economy influencing levels of international trade, business operations, financial flows, government policy, labour markets and even environment. This movement has been driven primarily by numerous TNCs, trade liberalization, and the deregulation of the financial system, and numerous strategies adopted by the Government and Economy, resulting in the creation of a 'new' Japan.

The onset of Super Endaka in 1995 summed up to an already existing situation of global recession (1991), with price pressures, posted production and sales declines. Moreover, trade barriers in Europe prevented Japan's firms to expand and compensate for the US losses, where the price effects of yen appreciation were most severe. This time, the challenge posed by the new exchange rate shift was even harder than the first one.

In addition to the causes above, the following events have further deepened Japan’s economic situation during the Lost Decades: