Topics: International trade, Japan, Economy of Japan Pages: 1 (589 words) Published: September 28, 2014
The Japanese economy has always been an enigma of the modern world. Japan is one of the few countries in the world that has had years of deflation, and a decreasing population. However, these are minor reasons in the grand scheme of things. With the recent signing of new trade pacts, winning the bid of the 2020 Olympics and general reforms to make Japan more accessible for tourists, the Japanese economy is on the cusp of revitalizing the economy again, a second miracle. With in the next two to five years, the economy will begin to ramp up.

Policy makers in Japan are plagued with the problem of deflation and have had trouble with creating solutions to combat this problem. However, with recent years, Japan has signed many trade agreements to combat this problem. The most recent trade pact was signed with the US and Korea. By reducing tariffs and import limitations, this will open the international market even more. Another recent agreement was also signed with Australia to reduce meat tariffs and allow for cheaper meat into the country. By allowing more imports from different countries this in turn will incentivize the Japanese to in turn create products that can be exported to the world.

With this deepening of capitalism, Japan will be able to play on the global field. The Japanese have historically invested massive amounts of money into capital-intensive fields i.e., automobile, steel and chemicals. These fields are known to have high elastic demand. In other words, as the average income of a country increases, the demand for said products increase exponentially. By breaking down trade barriers countries have then able to focus on goods that best fit their respective country. And by exporting goods to a country that lacks certain goods, the price of the product drops. In the case of meat, the Japanese have a limited about of meat and have traditionally imported meat from the U.S. However the distance between the U.S. and Japan drives transportation costs...
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