Japan Beyond the Bubble Case
1.How did Japan perform until 1991? How do you explain this performance?
The stimulus of Japanese economic miracle was the sorrow and revenge of the Japanese after surrender in World War II that had severely affected Japanese way of living. Likewise, it pushed the Japanese together to work harder for economic reform. Japan experienced tremendous economic growth and becomes the second largest economy in the world in 1968[1]. There are several underlying mechanisms behind the success of economic and social recovery.
First, Japan was strategic and competitive in terms of trading. This includes the concept of Neo-mercantilist[2]; in other words, it encourages exports and discourages imports both physical goods and capital where it had advantage over America in terms of balance of trade. Another example is “Keiretsu”[3]- a grouping of enterprises with the same core business. This integration allows them to be more industrial efficient resulting in economies of scale.
Second, Japan’s labor force was growing in number as well as productivity. People worked long hours and were dedicated to the company because of permanent employment policies with attractive wage. They also placed importance on bank savings, which enable banks to give loans for further investments, creating more jobs and raising the standard of living for the Japanese.
Third is the appropriate change in economic reform and other policies by the government that improved the economy consistently and dealt with sudden unexpected circumstances like Nixon shocks and Oil shocks[4]. Even though oil shock incident may have worsened the economy and put pressure on the cost of production as the price of oil rose. However, this was temporary since Japan was able to come up with an alternative by producing high value added products, such as computers and electronic goods, instead. Other policies include reduction in tax and real interest rate, which helped stimulating the
The stimulus of Japanese economic miracle was the sorrow and revenge of the Japanese after surrender in World War II that had severely affected Japanese way of living. Likewise, it pushed the Japanese together to work harder for economic reform. Japan experienced tremendous economic growth and becomes the second largest economy in the world in 1968[1]. There are several underlying mechanisms behind the success of economic and social recovery.
First, Japan was strategic and competitive in terms of trading. This includes the concept of Neo-mercantilist[2]; in other words, it encourages exports and discourages imports both physical goods and capital where it had advantage over America in terms of balance of trade. Another example is “Keiretsu”[3]- a grouping of enterprises with the same core business. This integration allows them to be more industrial efficient resulting in economies of scale.
Second, Japan’s labor force was growing in number as well as productivity. People worked long hours and were dedicated to the company because of permanent employment policies with attractive wage. They also placed importance on bank savings, which enable banks to give loans for further investments, creating more jobs and raising the standard of living for the Japanese.
Third is the appropriate change in economic reform and other policies by the government that improved the economy consistently and dealt with sudden unexpected circumstances like Nixon shocks and Oil shocks[4]. Even though oil shock incident may have worsened the economy and put pressure on the cost of production as the price of oil rose. However, this was temporary since Japan was able to come up with an alternative by producing high value added products, such as computers and electronic goods, instead. Other policies include reduction in tax and real interest rate, which helped stimulating the