Benefits from 11th March 2011 - Essay Example

On 11th March an earthquake of magnitude 9.03 hit the Pacific Coast of Tohoku, Japan. It is regarded as the most powerful earthquake to ever hit Japan, resulting in thousands of deaths, injuries, nuclear accidents at the Fukushima Daiichi Nuclear Power Plant, and a severe blow to the Japanese economy. However, there was a silver lining to this disaster, in terms of the economic benefits enjoyed by other countries, such as the US and China. The essay will therefore be an exposition on how the international community benefitted economically from the after effects of the earthquake on Japan.

In her assessment of the economic consequences of the Tohoku earthquake, business reporter from BBC Saira Syed claimed that there were positive effects felt by the industries and manufactures in other countries. She mentions that “in terms of semiconductors, auto and steel companies, South Korean and Japanese companies are competitors," and “when Japanese companies shutdown factories and cannot produce their products, demand and orders will be on Korean manufacturers” (Syed). Also, “Australia is well placed to meet Japan's increased demand for energy products given the significant disruptions to the Fukushima power plant," and “Australia is a major exporter of thermal coal and liquefied natural gas (LNG).

Thermal coal and LNG exports will certainly grow as Japan's energy needs increase. Over the next few months, as construction and rebuilding begins in Japan, Australia stands to gain further. Australia exports iron-ore and coking coal which will be in high demand for steel making” (Syed). Sarah Stodola from Fiscal Times also made the claim that “Japan’s interrupted production could also give U.S. companies an edge,” and Keith Zeff in his “Insights: Impact of Japan’s Earthquake on the US Economy and Commercial Real Estate,” claims that because of the physical damage done by the earthquake to Japanese industries, “Japan will likely move some of these manufacturing capabilities to the U.

S” (Zeff, screen 1). He goes on to give the example of how Nissan is “considering moving some engine production to a plant in Tennessee,” because its plant in Japan is destroyed. He further states that the Japenese “factories that cease operating temporarily for repair or because of supply chain disruptions may find their customers have turned to other sources. This could mean that companies in other countries gain market share at Japan’s expense, and Japan’s loss could be permanent.

” From the research done by Syed, Stodola, and Zeff, it is clear that despite the damages Japan is facing because of Tohoku earthquake, other countries worldwide are benefitting from Japan’s temporary withdrawal from participating in world trade; Japan’s industrial and manufacturing competitors are coming in to fill the gap left by the Japanese industries in the global market. Kip Beckman in his article “The Impact of Japan’s Earthquake and Tsunami on the Global Economy,” states that the effects of the Tohoku earthquake and tsunami did not even make a significant dent on the global economy.

In his paper, he claims that “Japan accounts for around 7 per cent of global output; however its contribution to growth is far less because of the huge trade surpluses that it runs. This implies that, even if the economy tumbled into a technical recession, the effect on overall real global GDP growth would be muted” (Beckman); also, “Most countries in Latin America have minimal trade linkages with Japan since China has sharply increased its presence in the region. Exports to Japan comprise less than 3 per cent of Latin America’s total export sales” (Beckman).

The adverse economic effects of the tsunami and earthquake have therefore not crippled the economy in other countries since there is not much of a trade link between them. Lastly, it would be worthwhile to look at how the Tohoku earthquake and tsunami resulted in the shutdown of “eleven nuclear reactors operated by Tokyo Electric Power Co., Asia's biggest utility, Tohoku Electric Power Co. and Japan Atomic Power Co,” which according to Kirstin Korosec, caused “Japan turned to liquefied natural gas” (Korosec).

This, she states has made Japan the foremost importer of LNG in the world. “U.S. companies that had banked on LNG demand in the states were impacted as Japan, which willing to pay more for the energy source, bought up supply. Other Asian nations have followed and major oil and gas companies like Chevron (CVX) and Exxon (XOM) recognizing an opportunity have invested in massive LNG projects in the region.” Koresec also claims that “Japan also may have to turn to coal,” which means that companies such as “BHP Billiton (BHP) that operate coal mining operations in Australia, a major exporter of the fuel, will benefit from the uptick in demand.

Australia also has become a major LNG supplier in recent years and will likely benefit from increased demand for that fuel source as well.” It is clear that the energy crises that Japan faces as a result of the earthquake and tsunami disaster, other countries have to gain from their supply of fossil fuels to Japan. In conclusion, it would be safe to deduce that the Tohoku earthquake and tsunami though it wreaked considerable damage to the Japanese economy, these negative effects did not ripple across other countries in the global trade market.

Even when these ramifications did ripple out, they were not of the same devastating degree as they were experienced in Japan. Works Cited Beckman, Kip. "The Impact of Japan's Earthquake and Tsunami on the Global Economy." The Conference Board of Canada, n.d. Web. 23 Apr. 2013. Korosec, Kirstin. "Japan Earthquake: The Energy Players Who Stand to Benefit." CBSNews. CBS Interactive, n.d. Web. 23 Apr. 2013. Stodola, Sarah. "Japan Earthquake Could Benefit U.S. Auto Industry." The Fiscal Times, 22 Apr. 2011. Web. 23 Apr. 2013.

Syed, Saira. "Japan Quake: Economic Impact Felt across Asia." BBC News. BBC, 18 Mar. 2011. Web. 23 Apr. 2013. Zeff, Keith. "Insights: Impact of Japan’s Earthquake on TheU.S. Economy & Commercial Real Estate." N.p., n.d. Web.23 Apr. 2013.