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Japan Economy

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Economics Research Report


May 27th 2016

Japan’s Economy

Japan is a country with a population of 127.3 million (World Bank), with an area of 377,944 km .  There are many factors going into the positives and negatives to Japan’s economy. Right now, people over the age of 65 make up a quarter of Japan’s population (JSY). This is heavily affecting Japan’s economy and is creating lots of problems.  Japan is home to one of the most famous blue zones. A blue zone is essentially a place in the world that people live longer in than the majority. Okinawa, is one of the few places on Earth that has some of the worlds oldest people. There are many reasons why they live longer, but the gist of it is that they don’t eat until they’re full (only until they feel about 80% full), eat a low calorie diet made up of mainly vegetables, and do farm work until they are bed-ridden.  The reason that Japan is in trouble with their aging population, is similar to Canada’s baby boomer situation. Lots of people are about to retire, and there is not enough people and jobs, to sustain the care of elders. Due to this, people retire to take care of their family members, and once they no longer need to be taken care of (enter a home or pass away), it is very hard for the younger people to get a job again. “More than 100,000 people leave their job a year in Japan to take care of sick relatives” (Japanese Government), and the problem with this is that most of them remain unemployed in the following years. This combined with Japan’s low birthrate (2.1 UN) means that there are less jobs, thus not helping the economy. There are many more negative impacts on Japan’s economy. Imports and exports – Since Japan is not a country with lots of natural resources, they don’t have much that countries are interested in. Technology – Japan’s electronics industry deteriorated slowly since the 80’s and 90’s. In 2000, the value of the industry was worth ¥26 trillion, but has since dropped to ¥11 trillion in 2013. This statistic is very problematic for Japan’s economy due to the fact that about 80% of their exports are electronic devices and components (Shiga University). The mass losses that Japan tech industries are seeing can be attributed to the major success of Apple Inc. (United States) and Samsung (South Korea).  

Japan’s History and Key Events

1894-1895 – Japan goes to war with China

  • Japan ultimately won, China allowed Japan to trade on the Yangtze River, and most importantly, China recognized the independence of Korea.

1910 – Japan takes over Korea

  • Japan fought Korea for three years, ultimately ending with Japan taking over Korea for thirty five years (1910-1945)

1914-1922 – War and Islands

  • In the span of eight years, Japan joined the fight in World War I, with Britain and their allies from 1914 to 1918. They seized German positions in East Asia while the opposing forces were focused on Europe. Towards the end of the war, Japans exports quadrupled from 1913 to 1918, which led to an industrial boom and inflation. They were also able to take control of a few Pacific Islands.

1923 – Earthquake in Tokyo

  • The Great Kanto Earthquake hit Tokyo, Japan on September 1st. The earthquake was an 8.2 on the Richter scale, which triggered fires, combined with heavy winds, the quake caused a total estimated 100,000 deaths.

Japan’s Great Depression

  • Since Japan relied on foreign trade, due to the lack of natural resources, the Great Depression hit them hard in the early 30’s. The value of Japanese exports dropped by 50% between 1929 and 1931 (p.686, Beers). Due to this lack of resources, Japan invaded northeastern China in 1931. Japan occupied Manchuria until the end of World War II.

Japan, Nazi Germany

  • In 1936, Japan signed an alliance to Germany. This alliance was created and directed mainly at the Soviet Union. One other stipulation in this alliance, was that Germany include the Japanese as “honorary Aryans” (Adolf, Spartacus). In 1937, Germany assisted Japan in the Second Sino Japanese War after ending their alliance with China. The result of the War was Japan losing, with Japan also losing all of the territory they gained from China since 1895.

World War II

  • When Japan entered the main stage in World War II, their main concern was fighting the Soviet Union, because of their continuous fight with China involving Manchuria. They were so occupied with this because Japan was in the middle of creating “heavy industry” and “large Japanese corporations”. Japan was proactive and did not allow the Soviet Union to encroach on them anymore than they have. Japan effectively attacked and conquered U.S. and European territories on multiple occasions. In 1941, they captured some of the Western Pacific. Though they had victories, they fell along with their ally Germany in 1942, with Japan losing the Battle of Midway, and Germany losing in North Africa. The sudden onslaught of attacks from the Soviet Union in Stalingrad, Central and Eastern Europe, and Sicily, ultimately factored in the loss of their ally Italy. From 1944-45, Japan also suffered a series of losses in China and Burma. With Japan refusing to surrender, the United States infamously dropped two atomic bombs, one in Hiroshima, and the other in Nagasaki. Due to this, and the Soviet Union invading Manchuria, Japan surrendered on the 15th of August 1945, ending the war.

Japan’s Politics

The current leader of Japan is Prime Minister Shinzo Abe. Abe is Japan’s 96th Prime Minister. Japan’s political structure is a “constitutional monarchy, is based on a parliamentary cabinet system” (Japan Consulate). Japan’s past political moves were very methodical and they always had structure in all of the different political positions. Japan’s politics today and its influence on the economy (and vice versa) is not as straightforward as it once was. “Any study of business influence on government and politics raises extremely difficult conceptual and methodological problems. It involves examination of widely held assumptions about the structure of power in Japanese society” (p.34 Curtis). Japan’s Cabinet has their schedules for new policies, bills, and budgets set up to be voted on a year before they are to be implemented. The new politicians that make up the Cabinet and the Diet are in the spotlight more than ever. Even Shinzo Abe, the current PM is being watched by the public after the massive scandal came out in 2009. At the G7 conference in 2009, Japans Finance Minister Shoichi Nakagawa was allegedly drunk at the meeting. He was on tape “slurring his speech, and looking drowsy and confused.” (Michigan). The Monday after this incident, Japan announced their economy shrank at its fastest rate in 35 years in the fourth quarter. To combat this major loss, Japan’s parliament created “a contentious 4.8 trillion yen ($52.2 billion) extra budget in January that includes business tax credits and a cash payout of 12,000 yen ($133) per Japanese taxpayer” (Aso). This causes massive problems because of all the unemployed people and dying economy, there is no approval of this from the public. Takao Toshikawa stated, “If elections were held right now, the opposition would win”. And he was actually correct. The next year, the opposition (DPJ) won, and Yukio Hatoyama was elected. The DPJ is much more safe in their policies and bills, and they were in office until 2012.  



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