An Overview of the Japan Economy

Last post I decided to write about a current event on Japan, and their current situation on deflation. On this post, I've decided to write an overview of the Japan economy in order to get familiar with each aspect of their economy.

First of all, Japan is located in the Eastern part of Asia, where it is indeed an island surrounded by the Pacific Ocean and the Sea of Japan.

CIA Factbook reports that Japan is the second largest economy in the world, behind the United States. In Japan, the word keiretsu is referred as manufacturers, suppliers, and distributors. Keiretsu is one of the notable characteristics of the Japan's post-WWII economy. Another notable characteristic is the guarantee of lifetime employment for most of the workers. A comment I have about this is that it's somewhat different from the United States. There is no guarantee ever about lifetime employment with certain businesses. There is always the chance of getting fired, or laid off. However, due to the pressures of global economy, the guarantee of lifetime employment is no longer becoming a guarantee. There is now the sense of competition.

Japan is dependent on raw material imports and fuel imports. This makes sense because of all the Japanese cars that are made, they need fuel somehow. Also, the consumer products that are Japanese brands, they need raw materials in order to make final goods. In class, we learned that Gross Domestic Product is the value of all final goods and services produced within a country in a given time period. These final goods, such as motor vehicles, count toward their GDP.

Japan's agriculture is very interesting. The Japanese people are very self-sufficient in rice, and it's even part of their culture. However, CIA Factbook reports that Japan imports 60% of its food in a caloric basis. CIA Factbook reports that 1.6% of the Japan's GDP comes from agriculture. Therefore, they rely on importing food from other countries. Japan also is one of the largest powers in the fishing industry, and it is reported that they account for 15% of every fish caught around the world. That is a lot of fish.

I will be posting up more blogs about other aspects of Japan's economy every week. I hope you all will look forward to them.


Source:

CIA World Factbook (2010) - Accessed January 31, 2010.

For more information, visit https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

Japan Government Warns of Deflation

On January 20th, 2010, there was an article on Reuters.com about Japan's suffering economy. Throughout the whole world, times are tough as there are many people without work. Therefore, the government of Japan is warning that deflation is inevitable. Every nation is trying to improve from the world-wide recession that threatens people's lives. Japan, so far, has been lucky as they crept out of the recession during the second quarter in 2009. However, because their recovery can easily be broken, deflation and recent job losses may disrupt their recovery. Therefore, the government is in negotiations with the Bank of Japan in order to come up with an answer to conquer deflation. Because consumers' demands are decreasing for goods that are wanted due to deflation, it will definately weaken companies' profits. The people are skeptical by waiting until things go further down in price before they buy them. All in all, capital spending has been reaching an all-time low, which is bad news for the economy.

My reflection on this article is that it somewhat reminds me of the lecture about opportunity cost in Macroeconomics. The Japanese people are choosing to spend their hard-earned dollars on food instead of the latest gadgets, hoping they will come down in price. Therefore, the gadgets are the opportunity cost. However, the people should start spending their money on goods, because if they don't, it might halt the economy all together, so that people might lose jobs again. Sometimes, waiting for goods to go down in price is often a long extended wait because businesses will not lower prices unless it comes in their benefit. People should start spending their money to help out the economy recover.

Kajimoto, T. (2010). Japan govt warns of deflation, sticks to economy view. Reuters: US Edition. Retrieved on January 22, 2010 from http://reuters.com/article/idUSTKB00666920100120