The Japanese Bubble Economy
After the Second World War, Japan experienced an amazing and thriving economy. The United States’ Marshall Plan helped rebuild the Japanese economy and “created an opportunity for Japan to export manufactured products to the increasingly affluent United States” (Colombo). Japan, which was at the time comprised of “zaibatsu,” or financial conglomerates, began competing globally by mastering Western goods, and “selling them back to the West for cheaper prices” (Colombo). By the 1970s and 1980s, Japan had become the global leader in revolutionary electronics, which created an international trend “similar to the Apple iPod and iPhone craze of recent years” (Colombo). During this post World War Two period, “Japan experienced attractive economic growth to place itself as an economic powerhouse” (Tolia). Eventually, this economic miracle would come to an end and create a miserably failing economy for the Japanese. What had happened was that the seemingly perfect economy had secretly been “bubble-forming.” At the end of the flourishing period, the bubble collapsed and caused an economic catastrophe in the housing market, stock market, and financial market in general. In this essay, I will analyze some major causes of the bubble’s formation, and its demise. I will also analyze the Japanese government’s attempt to recover from the catastrophe. Overall, The Plaza Accord, Japan’s economic law, and its corporate structure led to the formation of the bubble, while the government’s attempt of financial deregulation halted the nation from recovery after the bubble’s collapse.
In 1985, The Plaza Accord “was a pro-growth agreement signed by what was then known as the G-5 Nations” (Twomey) including the United States ...
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...ng in human nature that makes us unable to learn from history.” The truth is, that all of the causes of the economic bubble also contributed to the “overconfidence and overexuberance in Japan’s economy” (Colombo). This overconfidence allowed those factors to worsen the economy to an even greater degree because bubbles are worsened by the public consensus that prices will only rise. To make matters even worse, the government intervention after the collapse of the bubble was delayed and inadequate. Japan’s ideas were logical and potentially beneficial, if only they had been actualized a little earlier. Additionally, Japan was in need of a more authoritative law enforcement and a more compliant society. If Japan would have acted earlier and had these conditions, then its chances of recovery from the collapse of its economic crisis would have been significantly greater.
The Japanese government believed that the only way to solve its economic and demographic problems was to expand into its neighbor’s territory and take over its import market, mostly pointed at China. To put an end on that the United States put economic sanctions and trade embargoes. We believed that if we cut off their resources and their source of federal income than they would have no choice but to pull back and surrender. But the
After World War 1 Japan had a hard time adjusting to the new world. “While its economy was still primarily agricultural, rapid population growth (to over 80 million) had diminished the amount of land suitable for farming. Many people lived in small houses, lacking running water. In a nation about the size of California, only one of every six acres was farmland. This put great pressure on Japanese government to find more space and land for its people.” (America Enters World War II page 12). Japan attempted to change its agricultural-based economic system to an industrial based system. “But the international system of trade barriers and tariffs, established by the United States and other industrial powers to protect domestic manufacturing, hindered Japan’s industrial expansion.” (America Enters World War II page 13). Many of the materials Japan needed were found in neighboring countries that were controlled by European powers. Japan began to question it’s right to Asian markets and raw materials. “J...
Japan in modern times is one of the most technologically advanced countries in the world. This “modern” image that Japan hasn’t been around forever, Japans decision to change from an old traditional country to a westernised one came in 1868, and it took only 50 years for the improvements to be made. In order to successfully modernise Japan had to make several sacrifices, risks and well planned out strategies. These developments can be explained in 5 areas: the Meiji Restoration, Government, Industrialisation, Education and Armed Forces.
In the late nineteenth century, Japan’s economy began to grow and industrialize. Because of the scarcity of natural resources in Japan, they relied on imported materials from other countries. In September 1940, the United States placed an embargo on Japan by outlawing exports of steel, iron, and aviation fuel, because Japan took over north...
During the Meiji Restoration, Japan transformed into a strong industrialized nation by adopting the Western political, cultural, and technological ideas. Japan was the “only non-Western country to industrialize in the nineteenth century and that, moreover, she did so in an extremely short time” (Sugiyama 1). Japan’s social, political, and economic aspects were all affected by the Western technologies to transform Japan into an industrialized nation (Wittner 1). By adopting the Western ideas during the Meiji Restoration, Japan has turned into a powerful industrialized nation by becoming an “international political player in the 1880s” (Wittner 1).
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
...ty for one that better suited its capitalistic tendency. That opportunity came in1868 when the Meiji imperial rule was able to overthrow the Tokugawa regime, setting off a political, economic, social and cultural change that transformed Japan. As Japan embraced modernity with full force, some began to realize the negative impact of modernization on the rural life, social structure and most importantly on its culture, blaming it on the western influence on its modernization. Thus as Japan neared World War II, it embraced a new sense of modernization, one that was separate from westernization, creating a nationalistic and fascist government policy. Japanese society is characteristic of plurality and opposing value systems coexisting. As new ideals and institutions arise, Japan sees itself transforming and changing at the hands of internal and external forces.
Imperialism has not only influenced colonial territories to better themselves or to further the mother country’s realm of power, it also had a significant impact on the people’s culture, education, environment, and political systems. Japan and Britain were two imperial systems that countered each other in many facets but also had strikingly similar qualities that had helped them become strong imperial powers that needed one another to continue their position amongst others.
The 21st Century has witnessed Asia’s rapid ascent to economic prosperity. As economic gravity shifts from the Western world to the Asian region, the “tyranny of distance [between states, will be] … replaced by the prospects of proximity” in transnational economic, scientific, political, technological, and social develop relationships (Australian Government, 1). Japan and China are the region’s key business exchange partners. Therefore these countries are under obligation to steer the region through the Asian Century by committing to these relationships and as a result create business networks, boost economic performance, and consequently necessitate the adjustment of business processes and resources in order to accommodate each country’s employment relations model (Wiley, Wilkinson, & Young, 2005). Cognizant of the fact that neither Japan nor China has given up on its external (protectionism or parity) adjustment tools, it is posited that they can nonetheless coexist since both “produce different things and in different ways” and as such avoid the cited perilous US and Mexico competition; but due to globalization, the operating environment portends a convergence or divergence of Industrial Relation (ER) strategies between China and Japan (Lipietz, 1997; Zhu & Warner, 2004).
If one strips the story to its generalities rather than specifics, it is easy to relate this to World War II through the attack on Pearl Harbor and subsequent actions. Japan had relatively recently entered onto the world stage and faced issues that plagued other youthful nations. Japan required expansion to feed its growing populace. The easies...
...high power status, Japan had to have a self-reliant industrial common ground and be able to move all human and material resources (S,195). Through the Shogun Revolution of 1868, the abolition of Feudalism in 1871, the activation of the national army in 1873, and the assembly of parliament in 1889, the political system of Japan became westernized (Q,3). Local Labor and commercial assistance from the United States and Europe allowed Japan’s industry to bloom into a developed, modern, industrial nation (Q,3). As a consequence production surplus, and food shortage followed (Q,3). Because of how much it relied on aid of western powers, Japan’s strategic position became especially weak. In an attempt to break off slightly from the aid of the west Japanese leaders believed that it would be essential for Japan to expand beyond its borders to obtain necessary raw materials.
After the failed International Trade Organization, Rodrik discusses the Bretton Woods Agreement, the transition from the General Agreement on Tariffs and T...
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).
Inflation is the rate at which the purchasing power of currency is falling, consequently, the general level of prices for goods and services is rising. Central banks endeavor to point of confinement inflation, and maintain a strategic distance from collapse i.e. deflation, with a specific end goal to keep the economy running smoothly.
Japan’s rising yen and the decline of the US dollar, East Asia Forum, 2011. Available at: