Confusion In The Japanese Economy: Four Problem Areas
I sense a major paradox surrounding Japan lately. If you look at GDP, or
the per capita national income, Japan is one of the richest countries in
the world. Trade surpluses are at record levels, foreign exchange reserves
are the highest in the world, and Japan is the biggest creditor nation in
the world. However, apart from 1995-96, business conditions have been
continuously bad since 1991. In 1997, real growth was 0.9%. In the OECD
forecast, which came out in March of this year, real growth for 1998 is
projected to be -0.3%. The IMF forecasts zero growth. Stock prices continue
to drop; the Nikkei index is now below 15,000. The dollar used to sell for
80 yen, but today the rate is in the ...
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Japan is now a financial giant. Is it strange that Japanese banks
have to pay higher interest rates when they borrow money?
At the international conferences I have attended over the past few months,
whenever the Asian crisis is discussed, four countries--Thailand, Indonesia,
Korea, and Japan--are mentioned as the main problem countries. China's new
and powerful prime minister, Zhu Rongji, has come to be thought of as the
leader of Asia. He has stressed that he has no plans to devalue the yuan.
Meanwhile, many Americans and Malaysians, among others, are talking why
Japan is so helpless.
So, what is wrong with Japan?
First, not many policies have substance. In their place we largely see
superficial debate.
Second, the economic policymakers--the politicians and bureaucrats--tend
only to pay attention to the problems financial section. In today's Japan,
the most important problems are not just finance; they have to do with the
economy as a whole. But for whatever reason only the ...
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1985, when the dollar fell and the yen rose, so that exports
weakened and put the brakes on the Japanese economy. To deal with this,
fiscal and monetary policies needed to be put into effect together, but the
implementation of fiscal policy was delayed for two years. During this time,
only monetary policy was used, so that interest rates went down five times,
and money flowed all over Japan. Fortunately, however, the yen was strong
so that the prices of imported goods did not go up, and the excess
liquidity went into land and stocks.
The authorities concerned with these policies, including the Bank of Japan,
were late in addressing this property inflation. The reasons behind this
are ...
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"Confusion In The Japanese Economy: Four Problem Areas." Essayworld.com. November 23, 2005. Accessed November 23, 2024. http://www.essayworld.com/essays/Confusion-Japanese-Economy-Four-Problem-Areas/36942.
"Confusion In The Japanese Economy: Four Problem Areas." Essayworld.com. November 23, 2005. Accessed November 23, 2024. http://www.essayworld.com/essays/Confusion-Japanese-Economy-Four-Problem-Areas/36942.
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