Japanese Economy

Japanese Economy

The Japanese economy is the second largest in the world, behind only the American economy. As such, its decade long downward slide has many lessons the American economy can learn from. The difference between the economies is one of degree, not type. Our own economy has been faltering of late, bringing fear of recession. The Japanese have been on that road for over ten years, and of late have been making aggressive moves towards a restructuring. This paper will look at the types of reforms planned in the Japanese economy, and more importantly if these reforms will be enough to pull a modern economy from the doldrums.

The current state of the Japanese economy has much to do with a failure to adjust. In post-WWII Japan the country's economy experienced a "bubble economy". This era of high growth is very similar to that which the American economy experienced after WWII. A booming population and a new focus on industry were mostly responsible for the unprecedented growth in both countries. In the mid-1980's, Japan's central bank reduced prime interest rates in response to what was then considered a moderate slowing. This lowering wasn't enough to give the economy a chance at sustained growth, as it wasn't combined with robust reform. Japanese banks took advantage of the low rates, and began taking on massive debt. The slowdown never truly stopped, though there were quarters of greater growth. Though the economy grew by one percent on average, th... [continues]

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