Japan Economy Analysis

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CUHK International Summer School 2009

MGT 3580

Global Enterprise Management

- Individual Country Analysis Assignment –

Contents Page

1. Introduction – Japan in a Glance 3

2. Japan’s Current Economic Performance 3

1. GDP /Capital (PPP) and GDP growth Rate 3

2. Inflation Rate 3

3. Unemployment Rate 4

4. Foreign Direct Investment Report 4

1. FDI inflows

2. FCI potential index

3. FDI performance index

5. Index of economic freedom 5

3. Japan’s Potential for International Business

1. Global Competitiveness Report 5

2. Corruption Perception Index 6

3. Worldwide Governance Indicators 6

4. Conclusion 6

5. Annex 7- 18

6. References 19

1. Introduction – Japan in a Glance

Lying off the east coast of Asia, neighbour to , People's Republic of China, North Korea, South Korea and Russia, Japan is known to be one of the ‘Tigers’ of Asia. It have provided most of the capital and expertise for Asia’s developing countries. Japan is the world's second largest economy by nominal GDP and the third largest in purchasing power parity. It is also the world's fourth largest exporter and sixth largest importer. It is a developed country with high living standards (8th highest HDI). It is consider to be a Statist economy has the government play a major role in the direction of the economy, both directly through state-owned enterprises and indirectly through the central planning of the overall economy. In the following report, we will look at Japan’s current economic performance with respect to its past years, and analysis on the overall trends of Japan’s economic situation. We will also look into Japan’s potential for international business in the global market from its competitiveness, corruption index, governance index, the type of market situation in Japan as well as its foreign business policy to assess the suitability for international business in Japan.

2. Japan’s Current Economic Performance

1. GDP /Capital (PPP) and GDP growth Rate

With a population of 127.8 million, Japan has a Gross Domestic Product (GDP-PPP) of $4,354,368, ranking number 3 under the list by the International Monetary fund and the World Bank in 2008. Its GDP per capital is $31947. Japan has a GDP growth rate of 2.4% and 1.8% 5-year compound annual growth. Japan’s GDP has a steady growth as seen on the graph of Japan’s GDP from 1980 -2007. (Refer to Annex 2.11). Its GDP per capital has been matching the benchmark standard of the OECD until 1998 where it falls below the OECD standard. It is believed to be due to monetary-policy mistakes and increase in global market competition from its neighbouring countries. Currently, Japan’s GDP is still having positive GDP growth despite the global economic crisis, but its growth rate is decreasing.

2. Inflation Rate

Japan has a 0.0% inflation rate as of 2008, showing that the Consumer Price Index was constant as compared to the previous year. However, for the past 10 years, Japan’s inflation rate has been influctuating for the past 10 years and finally reaches a 0% inflation phenomenon in 2008. (Refer to Annex 2.21) From...
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