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Economics

Japan
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Profile

Japan is a country located in East Asia. The mainland nearly consists of major islands (Hokkaido, Honshu, Shikoku and Kyushu...), mountains and volcanoes. The country's islands stretches 2,400 km through the Western North Pacific ocean.
  • Population: 124,285,000 (2023-)
  • Language: Japanese (hiragana, katakana and kanji from Chinese), 
    Capital: Tokyo
    Currency: Yen (1 USD=132.339 Yen)
    Ethnicities: Japanese, Chinese, Korean, Filipino, Brazilian and ethnic groups like Ainu, Yamato, Ryukyuan
    Main industries: agriculture, robotics, computers technology, semiconductor (chemicals), trade, tourism, fishing, shipbuilding, art (design and digital media), mining, fashion (textiles), manufacturing
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Business cycle (1870-2000)

The year of 1870-1940 was the period that make the start for economic growth in Japan before WW2. The Industrial Revolution rise during the meiji era and Japan urged modernization to catch up with the West, and sooner with better labor production,  "Japan’s per capita GDP grew from 23% of Britain’s and 30% of America’s in 1870 to 42% of Britain’s and 41% of America’s on the eve of the Pacific War", it reached a peak in 1940. Since 1945, real GDP grew even higher than prewar period as it gained economic support from the U.S (due to Korea war) and took over Britain by 120% in 1990s.
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Comparison

Focus: 2017 (Real GDP and nominal GDP)

Nominal GDP

The graph shows that Japan made a peak in nominal GDP since 1995, then fluctuated over time as Japan needed a long time to recover from the disaster and reached the highest peak in 2012. After the earthquake disaster in 1995, Japan lost $100 billion in total and over 6000 of deaths. This caused a decline in the country's income and labor force, which decreased productivity and GDP decreased. The GDP was about $4.87 trillion in 2017, currently ranked 3rd place in the world.

Real GDP

Japan had a positive change in real GDP from 2011-2017 which went from $6 trillion to $4.87 trillion, while nominal GDP had the reversed change from $5.7 trillion to $6 trillion. According to brookings.edu, Japan experienced a tsunami disaster in 2011: "138,000 buildings were destroyed and $360 billion in economic losses were incurred. This was the most expensive disaster in human history." Deaths, increased tax spend for emergency with big loss in money and infrastructure led over 300,000 people to move out from Japan for refugee, which lowers labor and decreased the GDP. (In 2012, exports growth in Japan were slow and unproductive, also affect the GDP).

HDI

In 2021, the rate of Japan human development was about 92.5%, ranked 19th place in the world. There's a constant increase since 1990 in life expectancy at birth, schooling years, schooling system and national income. The total rate of HDI change is 81%. This show  that the society has improved in life quality for people, standard of living, economy and education. People had much better living conditions since Japan recovered from the war and coal mine riots in the 1960s. And with the growth of urbanization, there's better access to healthcare, food, supplies, houses and the change in lifestyles so people live longer.
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Unemployment rate in the last 15 years

Increased by 4% in 2008
Total labor force
66,726,949
Unemployed people (estimated)
26,690.8



Inflation and deflation rate 

1960-1974

Inflation

As a result of WW2, "Unemployment and inflation became a huge problem in Japan. Even the black market suffered from inflation as the government kept printing money." Inflation rate in Japan had been really high since 1960, increased by 3.57%, and reached a peak in 1974 by 23.21%. The nytimes stated: "Because of the fourfold increase in prices of crude in recent months, Japan's bill for oil is expected to rise to as much as $16‐billion in 1974." The rise of oil price brought a lot of challenges to the economy because Japan relied on oil as the main import of production (which resulted in high inflation) since 1973, mostly from Middle East. 

1990-2001

Deflation

Deflation has been around Japan since the Lost Decades period in the 1990s by the collapse of housing prices and stock prices (At that time, there was heavy debt and banking failed attempt to reduce interest rates). In only one year, money supply went from 11% to 0.6% in 1991. Lower private investment and consumption worsen the deflation rate. Moreover, as values of estate dropped (investment failed), people couldn't paying for the loans, therefore more of their possessions collected, keeping constant low domestic demand and created the cycle of deflation period.

Category

Policies

One of the Japanese government policies that failed to stable deflation is in 2001, when the Bank of Japan tried to stop high deflation by the "quantitative easing" policy (lower the interest rates from consumers side to make markets more effective). The result is that deflation keeps rising despite interest rates reached negative.

In 2009, the government suggested the bank to raise tax spending on protecting the environment and subsidies to lower the rate. Luckily, this policy help them stable deflation as economic activities are improved.

HDI, improvement plan

Problem: Japan Yen weakness was a result of high deflation in the 1990s and exchange rates because of too much oil and imports' dependence. The need of oil is also shown in the fight between US and Japan in Pearl Harbor and the two countries didn't form an economic relation until the end of WW2 when US used Japan as a military defense against the Soviet influence in the Pacific. The U.S decided to help Japan's economy to prevent them from communism, it got better since the 1950s.                     
The education in Japan is currently having difficulty during the pandemic with school lockdown: "most public schools were unable to hold online courses due to the lack of facilities both in schools and at student households." (link.springer). To improve this, I think that the government should make family support policy. By the finance support, families can help children's performance. They can also make tax regulations for public school fundings to support the educational programs.

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