In Focus of Japan - Essay Example

In Focus: Japan I. Overview Japan gained its as one of the most prominent countries because of its economic performance. Currently, Japan is the second largest economy in the world. The country is also known as one of the world's leading economies and a major economic power because of its place in international trade. Japan is named the sixth largest exporter and importer among other nations. The Japanese characters making up Japan's name literally means "Land of the Rising Sun" referring to its eastward position relative to China. The country is composed of 3,000 islands the largest of which are Hokkaido, Honshu, Shikoku, and Kyushu. The country is famous for its mountainous islands and volcanoes. Mount Fuji, Japan's highest peak is also popular due to its perfect cone (Japan 2006). Japan has an estimated 127.4 population in 2005. In the previous decades there was a population boom due to scientific, industrial, and sociological changes. However, the recent years saw the decline in population growth rate. Currently, it is constantly decreasing at a rate of 0.05% annually. This posts some concerns in the Japanese society as it implies an aging population. The country's major religions are Shinto and Buddhism with Christianity accounting a meager 0.7%. Japan has a high literacy rate of 99% and an equally high life expectancy-77 years for males and 84 years for female (Japan 2006). Japan is a highly industrialized nation with only 6% of the population engaged in agriculture. This exposes the country to the dilemmas faced by all developed economies which include "overcrowded cities, congested highways, air pollution, and rising juvenile delinquency" (Japan 2006). II. History of Japan The legends of Japan tell a story of Japan's foundation in 600 BC by the Emperor Jimmu who is a direct descendant of the sun goddess and the ancestor of the present ruling imperial family. However, archeological research reveals that the first inhabitants of Japan "migrated over land bridges" from Northeast Asia about 300,000 years ago. Another maintains the occurrence of "migration by sea" from Southeast Asia during a period of general migration toward the Pacific Ocean (Japan 2006). The first civilization of Japan appeared during 100,000 BC, which is characterized by hunter-gatherer societies. About 405 AD, it is said that the Japanese court officially adopted the Chinese writing system while the sixth century witnessed the introduction of and adoption of Buddhism. These two events "revolutionized Japanese culture and marked the beginning of a long period of Chinese cultural influence" (Japan 2006). Japan's history shows contact with the Westerners only during 1542 which was due to a Portuguese ship's unexpected landing in Japan. This was followed by the influx of traders from different countries like Portugal, the Netherlands, England, and Spain together with Jesuit, Dominican, and Franciscan missionaries. However, this was stopped when "Japan's shogunate suspected that the traders and missionaries were actually forerunners of a military conquest by European powers. Renewed contacts were established during the Meiji restoration in 1880. Japan also held a significant position in human struggle. The country fought with China and Russia. During World War I, Japan fought on the side of the victorious Allies. The World War II, on the other hand, led the loss of Japan's overseas possessions. Japan regained its full sovereignty on April 28, 1952. III. Major Industry Japan gained its popularity in the global arena due to its strong economic performance. As mentioned above, Japan is the second largest economic power following the United States. Japan's industrialized, free market economy is the world's third largest in terms of purchasing power parity and second in terms of market exchange rates. This economy by far is one of the most efficient and competitive in the areas of international trade. It is estimated that Japan will record a GDP of $4.167 trillion and $32,640 per capita. Japan's key success factors are summed up in the following sentence: "Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation have helped Japan advance with extraordinary speed to become one of the largest economies in the world" (Japan 2006) The GDP of Japan is comprised by the revenue generated by its sectors. The country's largest sector based on GDP contribution is the manufacturing industry which accounts for 123.5 trillion yen or 24%. Next is the community, social and personal services which shared 90 trillion yen or 18%, real estate and business services at 69 trillion yen or 14%, and wholesale and retail, restaurants and hotels at 62 trillion yen and 12% (Embassy of Japan 2006). The manufacturing industry of Japan is highly dependent on the importation raw materials and fuels from the country's trading partners. Japan is recognized as the world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemical, textiles, and processed foods. Because of its economic stability, foreign investors are taking advantage of the opportunities in the nation. This makes the economy a home to some of the largest and most well-known multinational companies and famous brand. These include General Electric Company, PepsiCo, Inc., The Coca-cola Company, Citibank, McDonalds Corporation and Hewlett-Packard, Inc., among others. Globally, Japan conquers a very large share in the global high technology industries like semiconductors, industrial chemicals, machine tools, media and aerospace. The country is also highly efficient in the construction industry, making it one of the economy's most powerful sectors. The construction industry was able to do with the help of multi-billion-dollar government contracts in the civil sector. Robotics is also known as the country's key economic advantage (Economy of Japan 2006). Being one of the biggest contributors of the GDP, the service sector becomes a significant feature of the Japanese economy. The service industry recorded the highest growth rate during the 1980s in terms of GNP at the expense of other industries such as agriculture, forestry, mining, and transformation. Though the Japanese industries are noted for their efficiency and competitiveness, agriculture lags behind. The agricultural sector comprises only a small portion of the nation's economy. This industry is also highly protected and subsidized by the local government. However, the agricultural sector of Japan is considered as the most productive as it records the highest levels of productivity per unit area. IV. Economic Issue A country's Gross Domestic Product (GDP) is an important indicator of its performance. The most common measure of GDP is called expenditure method which aggregates the country's consumption, investment, government spending, and net exports. Consumption denotes household expenditure for goods and services while investment refers to business spending on capital. Government spending is comprised of public expenses to finance projects to the benefit of the whole economy. Examples are bridges, schools and other public infrastructures. Net export, on the other hand refers to the inflow and outflow of goods and services in the economy. It is computed as the difference between exports and imports Source: IMF The current situation of the Japanese economy is far from its previous performance. After skyrocketing mounts in output levels growth to started to taper off and entered a slowdown. Table 1 shows that though there have been mounts in Japan's GDP, its growth rate is generally in a declining phase (Table 2). Source: IMF Japan has been recognized as one of the strongest and efficient economies in the world as it recorded the highest growth rate during the time span of 1960-1980. However, the Japanese economy experienced a dramatic slowdown since the early 1990's due to the collapse of the "bubble economy." Table 2 shows that the economy posted positive growth rates before the financial crisis in the 1997. The Asian financial crisis has been an epidemic which contaminated almost all the continent's economies. Experts have tried to explain this predicament of Japan and attributed this decline to the "country's failure to reform what is considered to be a badly designed and unviable financial system propped up by the state" (Chandrasekhar & Ghosh 2002). The changes in the financial system of Japan after the 1980's began from the demands of the United States. "First, international banks and financial institutions wanted Japan to open up its financial sector and provide them space in its financial system. Second, once these external agents were permitted to enter the system, they wanted a dilution of the special relationship that existed between the government, the financial system and the corporate world in Japan, since that implied the existence of an internal barrier to their entry and expansion. Third, these agents, along with some Japanese financial institutions adversely affected by the deceleration of growth in the system, wanted greater flexibility in operations and the freedom to 'innovate' both in terms of choice of investments and instruments of transaction" " (Chandrasekhar & Ghosh 2002). The decline in the GDP of Japan is an economic issue which became widely debated. Some experts expressed their concerns on the overall effect of this slowdown in the Japanese economy as well as on other Asian economies. However, heterodox economists maintain that Japan is currently far stronger than is usually appreciated. References Chandrasekhar, C.P, & Ghosh J. (2002). Explaining Japan's Decline. Retrieved 10 June 2006, from http://www.networkideas.org/news/jul2002/news09_Japan_Decline.htm Economy of Japan (2006) Retrieved 10 June 2006, from http://en.wikipedia.org/wiki/Economy_of_Japan#Macro-economic_trend Embassy of Japan (n.d.) FAQ on Japan. Retrieved 10 June 2006, from http://www.us.emb-japan.go.jp/english/html/faq/11/economy.htm#1 Japan (2006) Retrieved 10 June 2006, from http://en.wikipedia.org/wiki/Japan#Economy International Monetary Fund (2006) World Economic Outlook Database. Retrieved 10 June 2006, http://www.imf.org Read More