The Japanese Economy

Japanese economy

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Employers gushed about robots and bemoaned the shrinking pool of skilled humanoids. Nestled in recent revisions to second-quarter gross domestic product was a jump in private investment: That was the seventh consecutive increase, a stretch unseen since the bubble era of the s.

But give Japan its due. Japan has had its share of false dawns since then. The central bank has tried to crank inflation up to 2 percent and years of aggressive easing have got it barely halfway. Looked at another way, at least we are talking about too-low inflation, rather than deflation. Japan could also be collateral damage in the trade war between the United States and China.

Japanese auto executives also fret about U. Its long-term prospects are far stronger than conventional wisdom implies. Daniel Moss writes and edits articles on economics for Bloomberg Opinion. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America. Abenomics , Japanese economy , Japan. Sorry, but your browser needs Javascript to use this site. If you're not sure how to activate it, please refer to this site: By the mid-eighteenth century, Edo had a population of more than 1 million and Osaka and Kyoto each had more than , inhabitants.

Many other castle towns grew as well. Osaka and Kyoto became busy trading and handicraft production centers, while Edo was the center for the supply of food and essential urban consumer goods. The rice was sold at the fudasashi market in Edo. These contracts were similar to modern futures trading.

During the period, Japan progressively studied Western sciences and techniques called rangaku , literally "Dutch studies" through the information and books received through the Dutch traders in Dejima. The main areas that were studied included geography, medicine, natural sciences, astronomy, art, languages, physical sciences such as the study of electrical phenomena, and mechanical sciences as exemplified by the development of Japanese clockwatches, or wadokei , inspired from Western techniques.

Since the midth century, after the Meiji Restoration , the country was opened up to Western commerce and influence and Japan has gone through two periods of economic development. The first began in earnest in and extended through to World War II; the second began in and continued into the mids. Economic developments of the prewar period began with the " Rich State and Strong Army Policy " by the Meiji government. During the Meiji period — , leaders inaugurated a new Western-based education system for all young people, sent thousands of students to the United States and Europe, and hired more than 3, Westerners to teach modern science, mathematics, technology, and foreign languages in Japan Oyatoi gaikokujin.

The government also built railroads, improved road, and inaugurated a land reform program to prepare the country for further development. To promote industrialization , the government decided that, while it should help private business to allocate resources and to plan, the public sector was best equipped to stimulate economic growth. The greatest role of government was to help provide good economic conditions for business.

In short, government was to be the guide and business the producer. In the early Meiji period, the government built factories and shipyards that were sold to entrepreneurs at a fraction of their value. Many of these businesses grew rapidly into the larger conglomerates. Government emerged as chief promoter of private enterprise , enacting a series of probusiness policies.

In the mids, the Japanese nominal wage rates were "10 times less" than the one of the U. From the s to the s, overall real economic growth was extremely large: Growth slowed markedly in the late s also termed the Lost Decade after the collapse of the Japanese asset price bubble. As a consequence Japan ran massive budget deficits added trillions in Yen to Japanese financial system to finance large public works programs.

By , Japan's public works projects still could not stimulate demand enough to end the economy's stagnation. In desperation, the Japanese government undertook "structural reform" policies intended to wring speculative excesses from the stock and real estate markets. Unfortunately, these policies led Japan into deflation on numerous occasions between and In his paper, Japan's Trap, Princeton economics professor Paul Krugman argued that based on a number of models, Japan had a new option.

Krugman's plan called for a rise in inflation expectations to, in effect, cut long-term interest rates and promote spending. Japan used another technique, somewhat based on Krugman's, called Quantitative easing. As opposed to flooding the money market with newly printed money, the Bank of Japan expanded the money supply internally to raise expectations of inflation. Initially, the policy failed to induce any growth, but it eventually began to affect inflationary expectations. By late , the economy finally began what seems to be a sustained recovery.

GDP growth for that year was 2.

Japan’s economy is starting a new chapter

Despite having interest rates down near zero for a long period of time, the Quantitative easing strategy did not succeed in stopping price deflation. However, on 5 April , the Bank of Japan announced that it would be purchasing 60—70 trillion yen in bonds and securities in an attempt to eliminate deflation by doubling the money supply in Japan over the course of two years. In recent years, Japan has been the top export market for almost 15 trading nations worldwide. Japan's spendings on roads has been considered large. Rail transport is a major means of transport in Japan.

Dozens of Japanese railway companies compete in regional and local passenger transportation markets; for instance, 6 passenger JR enterprises, Kintetsu Railway , Seibu Railway , and Keio Corporation. Some high-speed Shinkansen trains connect major cities. There are 98 passenger and total airports in Japan , and flying is a popular way to travel. This is a chart of trend of gross domestic product of Japan at market prices estimated by the International Monetary Fund with figures in millions of Japanese Yen.

Industries by GDP value-added The following table shows the main economic indicators in — The Japanese agricultural sector accounts for about 1. Japan's small agricultural sector, however, is also highly subsidized and protected, with government regulations that favor small-scale cultivation instead of large-scale agriculture as practiced in North America. Rice accounts for almost all of Japan's cereal production.

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Japan ranked fourth in the world in in tonnage of fish caught. Coastal fishing by small boats, set nets, or breeding techniques accounts for about one third of the industry's total production, while offshore fishing by medium-sized boats makes up for more than half the total production. Deep-sea fishing from larger vessels makes up the rest. Among the many species of seafood caught are sardines, skipjack tuna , crab, shrimp, salmon, pollock , squid, clams, mackerel , sea bream , sauries , tuna and Japanese amberjack.

Among the nearly fish species in the rivers of Japan are native varieties of catfish, chub, herring and goby, as well as such freshwater crustaceans as crabs and crayfish. Japanese manufacturing and industry is very diversified, with a variety of advanced industries that are highly successful. Japan enjoys high technological development in many fields, including consumer electronics , automobile manufacturing , semiconductor manufacturing, optical fibers , optoelectronics , optical media , facsimile and copy machines , and fermentation processes in food and biochemistry.

Japan is the third biggest producer of automobiles in the world. Japan's mining production has been minimal, and Japan has very little mining deposits. Japan's service sector accounts for about three-quarters of its total economic output. In , Japan was the fifth most visited country in Asia and the Pacific, with over 8. The Tokyo Stock Exchange is the third largest stock exchange in the world by market capitalization , as well as the 2nd largest stock market in Asia, with 2, listed companies. The unemployment rate in December was 3. While one countermeasure for a declining birthrate would be to remove barriers to immigration , despite taking new steps towards it, the Japanese government has been reluctant to do so, since foreign immigration to Japan has been unpopular among citizens.

Labor union membership is about 12 million. Japan ranks 27th of countries in the ease of doing business index Japan has one of the smallest tax rates in the developed world. In , the IMF encouraged Japan to adopt an income policy that pushes firms to raise employee wages in combination with reforms to tackle the labor market dual tiered employment system to drive higher wages, on top of monetary and fiscal stimulus.

Shinzo Abe has encouraged firms to raise wages by at least three percent annually the inflation target plus average productivity growth. Shareholder activism is rare despite the fact that the corporate law gives shareholders strong powers over managers.

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Japan's central bank has the second largest foreign-exchange reserves after the People's Republic of China, with over one trillion US Dollars in foreign reserves. It is considered an important element in any major change, before any formal steps are taken, and successful nemawashi enables changes to be carried out with the consent of all sides. Japanese companies are known for management methods such as " The Toyota Way ".

When applied to the workplace, Kaizen activities continually improve all functions of a business, from manufacturing to management and from the CEO to the assembly line workers. Kaizen was first implemented in several Japanese businesses during the country's recovery after World War II, including Toyota, and has since spread to businesses throughout the world.

The Nenko System or Nenko Joretsu, as it is called in Japan, is the Japanese system of promoting an employee based on his or her proximity to retirement. The advantage of the system is that it allows older employees to achieve a higher salary level before retirement and it usually brings more experience to the executive ranks. The disadvantage of the system is that it does not allow new talent to be combined with experience and those with specialized skills cannot be promoted to the already crowded executive ranks. It also does not guarantee or even attempt to bring the "right person for the right job".

Relationships between government bureaucrats and companies are often close. The practice is increasingly viewed as corrupt and a limitation on efforts to reduce ties between the private sector and the state that prevent economic and political reforms. Its frequent use by Japanese corporations, and its prevalence in Japanese manga and anime has gradually led to its acceptance in English-speaking countries as a noun for a Japanese white-collar businessman. The word can be found in many books and articles pertaining to Japanese culture.

Immediately following World War II, becoming a salaryman was viewed as a gateway to a stable, middle-class lifestyle. The term salaryman refers almost exclusively to males. An office lady , often abbreviated OL Japanese: Like many unmarried Japanese, OLs often live with their parents well into early adulthood.

Office ladies are usually full-time permanent staff, although the jobs they do usually have little opportunity for promotion , and there is usually the tacit expectation that they leave their jobs once they get married. They may also be described as underemployed or freelance workers. These people do not start a career after high school or university but instead usually live as parasite singles with their parents and earn some money with low skilled and low paid jobs.

The low income makes it difficult for freeters to start a family, and the lack of qualifications makes it difficult to start a career at a later point in life. It is a contraction of the Japanese words for salaryman and cash. The biggest sarakin are publicly traded and often allied with big banks. The first "Western-style" department store in Japan was Mitsukoshi , founded in , which has its root as a kimono store called Echigoya from When the roots are considered, however, Matsuzakaya has an even longer history, dated from The kimono store changed to a department store in In , Matsuzakaya store in Ginza allowed street shoes to be worn indoors, something innovative at the time.

They sold, or rather displayed, luxurious products, which contributed for their sophisticated atmospheres.

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Another origin of Japanese department store is that from railway company. There have been many private railway operators in the nation, and from the s, they started to build department stores directly linked to their lines' termini. Seibu and Hankyu are the typical examples of this type. From the s onwards, Japanese department stores face fierce competition from supermarkets and convenience stores, gradually losing their presences. Gift certificates for prestigious department stores are frequently given as formal presents in Japan. Department stores in Japan generally offer a wide range of services and can include foreign exchange , travel reservations, ticket sales for local concerts and other events.

It is a type of business group. Before Japan's surrender, Japanese industry was controlled by large family-controlled vertical monopolies called zaibatsu. The Allies dismantled the zaibatsu in the late s, but the companies formed from the dismantling of the zaibatsu were reintegrated. The dispersed corporations were re-interlinked through share purchases to form horizontally integrated alliances across many industries.

Where possible, keiretsu companies would also supply one another, making the alliances vertically integrated as well.

In this period, official government policy promoted the creation of robust trade corporations that could withstand pressures from intensified world trade competition. The major keiretsu were each centered on one bank, which lent money to the keiretsu's member companies and held equity positions in the companies. Each central bank had great control over the companies in the keiretsu and acted as a monitoring entity and as an emergency bail-out entity. One effect of this structure was to minimize the presence of hostile takeovers in Japan, because no entities could challenge the power of the banks.

There are two types of keiretsu: Vertical keiretsu illustrates the organization and relationships within a company for example all factors of production of a certain product are connected , while a horizontal keiretsu shows relationships between entities and industries, normally centered on a bank and trading company.

Both are complexly woven together and sustain each other. The Japanese recession in the s had profound effects on the keiretsu. Many of the largest banks were hit hard by bad loan portfolios and forced to merge or go out of business. This had the effect of blurring the lines between the keiretsu: Additionally, many companies from outside the keiretsu system, such as Sony , began outperforming their counterparts within the system.

Generally, these causes gave rise to a strong notion in the business community that the old keiretsu system was not an effective business model, and led to an overall loosening of keiretsu alliances. While the keiretsu still exist, they are not as centralized or integrated as they were before the s. This, in turn, has led to a growing corporate acquisition industry in Japan, as companies are no longer able to be easily "bailed out" by their banks, as well as rising derivative litigation by more independent shareholders.

Japanese companies have been involved in 50, deals between and This cumulates to a total value of 2, bil. USD which translates to , The most active year so far was with over 3, deals, but only a total value of bil.

TOKYO (9 a.m.)

Net international investment position: From Wikipedia, the free encyclopedia. The neutrality of this article is disputed. Relevant discussion may be found on the talk page. Please do not remove this message until conditions to do so are met.

August Learn how and when to remove this template message. Tokyo , the financial center of Japan. Population below poverty line. Motor vehicles electronic equipment machine tools steel nonferrous metals ships chemicals textiles processed foods.

Economic history of Japan. Japanese post-war economic miracle and Economic history of Japan. Energy in Japan and Transportation in Japan. Agriculture, forestry, and fishing in Japan. Fishing industry in Japan. Trade and services in Japan.

Labor market of Japan. Our expansion could be much bigger and quicker, but we are held back. Nowhere in the world do the [regulatory approvals] take so long. The process is old fashioned. Retrieved October 9, Retrieved 11 September Retrieved 9 June

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