The Impact of Globalisation on Japan

Topics: International trade, World Trade Organization, Free trade Pages: 5 (1632 words) Published: February 15, 2009
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 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 Japanese are very high, with an average life expectancy of 80.93 years, an infant mortality rate of 0.33%. The level of income inequality or distribution of family income is relatively equal, at a Gini Index of 24.9, where 100 represents perfect inequality and 0 perfect equality. Japan is also 9th out of 177 countries on the Human Development Index (HDI).

Generally, and in the past, Globalisation has aided Japan in achieving its rapid economic growth, and poses as the greatest support in the return of the Japanese economy's strength. Real economic growth peeked in the 1960's, with an average of 10%, 5% in the 70's and 4% in the 80's. Despite this, Globalisation has also negatively affected Japan's economic growth. Growth slowed in the 1990's due to the collapse of the "bubble economy" and consequences arising from overinvestment and contractionary domestic policies intended to wing speculative excesses for the stock and real estate markets. Japan has suffered deflation of 0.3%, rising unemployment of 5.5%, reduced GDP (0.4% in 2001 and 0.2% during 2002) and as of 17/11/08, Japan was officially declared in a recession, with a fall of 0.4% on an annualised basis, marking the first time the economy has contracted for two successive quarters in 7 years. Hence, the Japanese economy has seesawed between stagnancy and anemic growth in the past 10 years, and we are yet to see the full effects of the World Economic Slowdown, catalysed by Globalisation, on Japan. However, the Japanese government recently pledged $107billion of spending measures into the ailing economy to stimulate it.


The impact of globalisation on Japan's trade flows and consumers have had a positive effect. The Japanese Government has been promoting trade for decades, as it saw the opportunity for economic growth and development. It provides detailed surveys, services, and policies to help businesses trade and thereby promotes it. Japan has relied on world trade and international business and has its international competitiveness to thank for its success as an economy. In addition, Globalisation has seen a shift from agricultural production in post WW2 to manufactured good.

The influential TNCs in Japan (Sony and Toyota) have caused significant increases in both imports and exports. Industrialisation, aided by Globalisation has thus seen an astronomical (almost tenfold) increase in Japanese exports since World War Two, currently valued at $590.3 billion. However, Japan's large economy and population lacks significant domestic resources of energy and crude oil, hence it imports 89% of its energy. Despite this, Japan has a trade surplus of approximately $66billion. However, recently there has been a shift of production to China for the main parts of production due to increased production costs in Japan. Often unfinished goods such as electronics are sent over to China and back to Japan to minimise labour costs. This is shown in Government statistics which state that exports to China were at ¥3 352 billion, and imports from China at ¥4 374 billion in 2006.

The Japanese Government's role and policies have changed to a high degree due to the impact of Globalisation and in order to reap the benefits. Such...
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