Pros and Cons of Joining a Currency Union: Japan

1264 Words3 Pages
bulb-icon

Recommended: Japan's economic development

Introduction
The goal of every economist and politician is to optimize the economy of their respective countries in a way that improves the global economy under limited resources.
Adopting a currency union is beneficial in many cases, but harmful in others. A currency union consists of multiple nations sharing a single form of currency, often comprised of a single market and a customs union. Participating countries may also affect one another’s economic/foreign policies.
As it is commonly known, Japan’s economy boomed after World War II. By the eighties, Japan went from having a low wage economy to one of the higher wage economies. However, within the next decade, the economy became stagnant. Even through large public works programs and increased internal money flow, prices remained deflated until the Bank of Japan purchased approximately seventy trillion yen worth of bonds and securities. As of recent, Japan has become a top exporter among the world’s open economies.
Japan’s financial system has been supported, using its own form of currency called the Yen. Joining a currency union has many risks and benefits associated with it. Not only would this union affect Japan, but it would greatly impact the entire region as well. In recent years, many Asian countries have favored a floating exchange rate rather than depending on a unified currency, which would make forming a currency union difficult. If this is true, how would joining a currency union impact Japan’s economy?
Data and Analysis
In 2012 Japan’s Gross Domestic Product was 5.96 billion U.S dollars, accounting for 9.61 percent of the world’s economy and making it the third largest economy in the world. The Gross Domestic Product annual growth was reported at 1 percent. With ...

... middle of paper ...

....,n.d. Web. 22 Apr. 2014 http://www.philipallanupdates.co.uk/getdoc/9f623b1e-0355-4793-9c66 ab12424cd0d3/EMU- Jim-Lawrence.aspx
"Japan Balance of Trade." TRADING ECONOMICS. N.p., n.d. Web. 23 Apr. 2014. http://www.tradingeconomics.com/japan/balance-of-trade "Rates Table Converter 1.00 Japanese Yen Rates Table." Currency Exchange Table (Japanese Yen). N.p., n.d. Web. 23 Apr. 2014. http://www.x-rates.com/table/?from=JPY
"Reserve Bank of New Zealand." The Pros and Cons of Currency Union: A Reserve Bank Perspective. N.p., n.d. Web. 23 Apr. 2014. http://www.rbnz.govt.nz/research_and_publications/speeches/2000/0091114.html
Weisenthal, Joe. "Who Are Japan's Big Trading Partners, And What Do They Trade?" Business Insider. Business Insider, Inc, 22 Mar. 2011. Web. 22 Apr. 2014. http://www.businessinsider.com/who-are-japans-big-trading-partners-and-what-do-they- trade-2011-3

Show More
Related

  • European Union Dbq

    573 Words  | 2 Pages

    In conclusion, the European Union has “merged” the countries of Europe. It has developed a common currency called the Euro’s, and a Parliament located in Belgium, Luxembourg, and France. Also, ALL of the countries of the Union are affected when one country is affected. This is important because the continent of Europe had become very weak after the wars and they needed to strengthen, and the European Union keeps the countries of Europe strong and economically fit.

    Read More

  • Hirohito's Japanese Surrender

    1239 Words  | 3 Pages

    ...954. However, once Japan began to flourish, it has now become the world’s 14th richest country – having a GDP per capita of $32,640 (2006). Despite a major stock market crash in 1990, from which the country is recovering gradually, Japan remains a global economic power today and is now bidding for a permanent seat on the United Nations Security Council.

    Read More

  • The Kitchen By Banana Yoshimoto Analysis

    1209 Words  | 3 Pages

    Moreover, the context in which this book was written demonstrates that Japan is going through the financial affluence as well as the greatest boom since it is during the postwar period, much of the financial affluence had been caused by the consumerism in Japan. The author seem to be biased on this theme, despite the benefits consumerism has had on Japan, Yoshimoto goes ahead to give it a negative

    Read More

  • International Investment and the Risks Posed by Fluctuations in the Value of Currencies

    1191 Words  | 3 Pages

    Kuiper, J. (2011, May 18). What Is Currency Risk? About.com. Retrieved February 14, 2014 from http://internationalinvest.about.com/od/foreigncurrencies/what-is-currency-risk.htm

    Read More

  • Industrialization In Japan Essay

    1749 Words  | 4 Pages

    In conclusion, I tried to explain what experienced in Japan during the first years of rapid economic growth in terms of its social consequences. According to my argument, I tried to show imbalances which occurred with economic development in post- war Japan. In other words, economic development cannot appear as linear social development. Post- war Japan has witnessed positive and negative social consequences after implementing economic recovery. Therefore, we can say that society cannot always embrace economic development positively. Economic transformation brings its own waves and thus society fluctuates regarding its embracement. Japanese society received its share with this economic recovery during post- war period.

    Read More

  • External Environment Of Japanese Business

    1693 Words  | 4 Pages

    Export trends have been an important factor during Japan's present economic adjustment period, and the structures of Japanese exports, together with the imports, have been changing substantially in recent years. The changes in the country's export and import structures during the 1990s can be characterized by the following three key developments: (1) the weight of IT-related goods has been rising in both real exports and imports; (2) real imports of consumer goods from East Asia has been increasing; and (3) the US remains Japan's largest trading partner as a single country. Due to these factors, maintaining its comparative advantage became the priority in the current global economy.

    Read More

  • The Japanese Economy

    702 Words  | 2 Pages

    The Japanese Economy & nbsp;& nbsp;& nbsp;& nbsp;& nbsp; The prewar economy of Japan was a Socialist economy and the country was ruled by an emperor up to WW2 and after WW2 it started to lean towards a mixed market economy until what it is today, although its government is Socialist it is leaning towards a mixed market economy. & nbsp;    The Japanese economy is a mixed economy that leans towards market, it is like this because almost all businesses are run by private corporations or people. and that is the market of the economy. And the reason that they are thriving and are so competitive is because of the trade tariffs and quotas that the government has in place. These regulations include heavy taxes on some products.

    Read More

  • Japanese Identity

    3661 Words  | 8 Pages

    So, if Japan does not “belong” to Asia, does it belong to some other amorphous collection of nations, namely Europe or the West? Certainly in the modern post-WWII era Japan has seen phenomenal economic growth, even to the point of threatening the US as the primary global economic power during the height of the “bubble economy.” Some credit this success to the changes implemented during the US occupation. Undoubtedly without US assistan...

    Read More

  • Comparative Economics: U.K. vs. Japan

    1870 Words  | 4 Pages

    The U.K. and Japan seem natural subjects for comparison. British and Japanese observers alike have long been fascinated by the many parallels (and the even more numerous divergences) in the histories of these two island nations. Particularly interesting about these two was the "economic role reversal” which occurred between Japan and Britain over the course of the twentieth century. In 1900, the United Kingdom was the world's dominant colonial, financial and naval power, as well as a center of industrial production and technological innovation. Japan was a mere up-start, a precocious and aspiring, but still unthreatening, economic competitor in East Asia. The beginning of the twentieth century, and more accurately the 1950s, saw Japan and Great Britain’s economic “role” reverse. Although Britain has enjoyed healthy growth rates and rising standards of living over the past 100 years, it has been progressively eclipsed by Japan as an economic superpower and an international model. Indeed, Britain's accomplishments have paled in comparison to Japan's meteoric rise: while Japan has emerged as the outstanding economic "success story" of the twentieth century, Great Britain's relatively modest performance has been both discouraging and confounding.

    Read More

  • Reflection of Modern East Asia

    895 Words  | 2 Pages

    O'Bryan, Scott. 2009. Growth Idea : Purpose and Prosperity in Postwar Japan. University of Hawaii Press, 2009. eBook Collection (EBSCOhost), EBSCOhost (accessed December 4, 2011).

    Read More

  • Currency Wars

    647 Words  | 2 Pages

    Whereas the end result of the present-day currency war is uncertain, some variant of a worst-case scenario is nearly guaranteed if the world’s economic leaders don’t learn from the miscalculations and faults of the people that came before them. In Currency Wars, Rickards describes the web of failed paradigms, arrogance, and wishful thinking, in an attempt to lead to a more effective and informed plan of action when it comes to nations, governments, and currency wars.

    Read More

  • Micro and Macro Economics

    569 Words  | 2 Pages

    The main objective of economist is to maintain maximum output in production. In order to reach maximum efficiency, there are three questions that economists have to address. What to produce? Who are we going to produce these goods for? And, how are we going to produce it? All of these questions were answered by Adam Smith, a famous economist. Smith believes that there is such a thing as an “invisible hand” of economics that acts as the decider to all the basic three economic questions (Group Presentation).

    Read More

  • Japan and Japanese Culture

    1178 Words  | 3 Pages

    Japan is one of the greatest countries in the world and it has offered many things as well. The Japanese have given the world a better understanding of their culture and history along with a good look at the future from a technological standpoint. They have developed and created the future for their country that has allowed them to be prosperous and powerful. They once isolated themselves from the rest of the world, but now they share their knowledge with other countries in order to create a better understanding of the world. Through their trade and creative thinking they have become one of the world’s largest and powerful countries and have allowed their economy to flourish and prosper.

    Read More

  • Imperialism In Japan Essay

    915 Words  | 2 Pages

    Imperialism on Japan had benefited Japan, there was a huge growth in agriculture, and the economy strengthened. The government attached great importance to transport development, for it recognized its infrastructural value to the economy and general strength of the nation. From a poor agricultural country, Japan has become the richest industrial state in Asia. Japan has famous the world over for precision goods, cars, and huge tankers. Japan’s factory workers are no longer grossly exploited; employers provide welfare schemes, recreational and educational facilities and housing, nowhere is change more clearly seen than in the structure of Japanese society.

    Read More

  • The Foreign Exchange Market

    1006 Words  | 3 Pages

    Japan’s rising yen and the decline of the US dollar, East Asia Forum, 2011. Available at:

    Read More

More about Pros and Cons of Joining a Currency Union: Japan

Open Document