Japan's Economic History in the Last Forty Years Essay

The United States has for more than a century maintained the largest economy in the world. Japan, on the other hand, currently has the third largest economy in the world (according to some estimates) after realizing incredible growth since the damage and ruin it experienced during World War II (BBC, 2015). This essay compares and contrasts the current economies of the United States and Japan in terms of three leading economic indicators: real Gross Domestic Product (GDP), inflation, and unemployment. While some similarities exist between the two economies this comparison will highlight what the differences mean in terms of economic health for the two countries.

During the decade of the 1960s, the monetary value of exports grew at an average annual rate faster than the average rate of all noncommunist countries. This rapid productivity growth in manufacturing industries made Japanese products more competitive in world markets. With the fixed exchange rate for yen during the decade of 1960, the chronic deficits that the nation faced in the 1950s had disappeared by the middle of the 1970s.

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).

in a mere half-century Japan had gone from a backward country being virtually dismissed by the West as an obscure and rather backward to being recognized as a major world power. It was arguably the most remarkable achievement of any nation in world history. (Henshall, 1999, P102)

Nonetheless, the 1990s was the start of a new American policy in Asia, specifically focused on Japan, and an unrelenting period of competition “between free-market capitalism and non-capitalist market”. However, the 1990s is dubbed as Japan’s lost decade, a time “the powerful and privileged lost while the ordinary people benefited”. The lost decade was a “period when the economy imploded, the asset bubble collapsed, banks teetered on the edge of insolvency, unemployment skyrocketed, suicides increased and the leaders of Japan, Inc. were tarnished by exposes of pervasive corruption”. The lost decade encompassed the loss of money, security, stable families, and the credibility of the nation’s leadership. Again, a part of the lost decade is corruption and “the vast majority of postwar prime ministers have been implicated in corruption scandals”. In addition, the corruption involved the Yakuza, a major gangster organization, they manipulated “bankers and bureaucrats to secure huge loans for speculative and illegal activities”. Therefore, this asset bubble “may have been a giant con game that enriched the mob at public expense”, a partial reason for why the bubble

The statistics show that the growth of the economy in Japan comes out very good, but it is a

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. •

In September 1945, Japan had nearly 3 million war dead and the loss of a quarter of the national wealth. Post war Japanese economic take off was due to a variety of factors that had to do with American policies towards Japan, the international market, social mobilization, existent industrial capacities and experience, and government policies and expertise, among other things.

From the time following World War II, Japan's government cooperation, work ethics, and highly defense technology have helped built up a strong advanced economy. Two

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.

The Japanese economy, the 2nd largest in the world, accounts for 7.1% Global World GDP, at US$4.6 triliion and a per capita income of approximately US$33,550 (World Bank 2006). As a result of globalisation, literacy levels are at 99% and the general living standards of the

Japan was one of the first Asian countries to have a successful economy. Unlike other economies, Japan gew through high input and efficiency growth. It was clear back then that Japan was certain to catch up, or at least come close to the United State’s economy. Despite their past growth though, they have since slowed down and reach a plateau of growth. It was predicted that they would surpass the United States by 1998, but instead hit its limits. Japan was unique compared to its neighboring countries like its big brother

“What kept Japan down were repeated macroeconomic policy mistakes” (The New York times, 2008). In fact, the Japanese government’s action was not effective regarding the situation of their economy. The use of monetary policy did not only worsen the effect of the liquidity trap but also create a deflationary pressure. On the other hand, their slow cuts in Bank of Japan nominal interest rate and deflation lead to nominal and real interest rate of different levels. Even nominal interest rate at zero, real interest rate has been positive. Fiscal policy was inadequate to increase demand and output but led to deficits and accumulating government debt.

Japan started taking steps towards economic growth around 1868 with the Meiji Restoration; but they did not really begin to make leaps and bounds toward a market economy until after their independence in 1951 where they developed quickly through industrialization. Japan was “the first non-western country to join the ranks of the advanced nations, but it also has outperformed most of them” (Sato 1989). Carl Mosk has a great model for this rapid economic growth that will be discussed in depth in this paper. South Korea also achieved amazing economic growth which is now aptly named the Miracle on the Han River. This is the story of how they came back from the destruction caused by the

The Greater Japanese Empire was one of the fastest growing and most dominant world powers of the late 1800’s and early 1900’s. After being created as a result of the Meiji Restoration of 1868, the Empire of Japan grew quite well and prospered until it was dissolved in 1947. Although Japan experienced a long period of economic strife, massive destruction and a switch from a military to a consumer based economy, after World War II, the country emerged stronger than ever and became a serious player on the world economic stage. While scholars have debated World War II’s impact on Japan’s economy, ultimately WWII allowed Japan to emerge with adaptive and innovative manufacturing capabilities.