U.S. & Japanese Economy - Essay Example

The Japanese invasion on Pearl Harbor on December 7, 1941 set forth a chain of events which led to one of the most horrific events in human history, Hiroshima. The clear bomb that exploded in Hiroshima, Japan destroyed the island's economy and natural resources (Historyplace). In the aftermath and after the end of World War II the United States realized that their military counterattack was too severe and it should have never occurred. The US voluntarily with pressures from the United Nations decided to help the Japanese nation recover economically from the consequences of acts of war.

This paper discusses the economic relationship between the United States and Japan emphasizing the time frame of the 1980's decade. Japan is an island with 127.4 million inhabitants who enjoy a gross domestic product per capita of $31,267 and one of the highest life expectancy rates in the world (CultureGrams, 2008). The good standards of living the Japanese enjoy in the 21st century are due to the economic strategies the government of Japan and the prime minister selected in 1982, Nakausone Yasushiro, help built.

The economic cooperation between the two nations was influenced by the willingness of Japan to help the United States establish diplomatic relations with various Asian such as Pakistan and Turkey. This opens the doors for the Japanese to increase its level of imports to the United States. The United worldwide had been building up trade deficits with many nations due to their high level of involvement in international affairs and mainly because of the consumerism of its people promoted by the same capitalistic system its government build.

The Japanese yen gained a lot of value in relation to the US dollar which helped Japan purchased many goods including high-tech machinery and plenty of inventory and supplies along with other intellectual technological transfers that was instrumental in Japanese economic model of using innovation to dominate the technological marketplace. One of the key industries whose development was accelerated in the 1980's that helped Japan increase gross domestic product was the car manufacturing industry.

From 1981 to 1985 the Japanese total exports of cars to the United States increased from 1.68 million cars per year to 2.3 million car units per year, an increment of 37% in just four years (Aizcorbe, 2007). The rising price of gasoline was one of the main factors many customer began to preferred buying Japanese fuel efficient models over American muscle cars, ironically in today age the American car industry is now imitating the trend the Japanese started to implement in the early 1980's implying the Japanese economic vision in this industry was two decades ahead of its time.

Another factor that helped the Japanese economy was the use of sound industrial ecological applications which helped the nation achieve significant energy efficient improvement in the 1980's attributed to technology substitution for energy (Watanabe & Fukuda, 2006). The overall trade between Japan and the United States during this period of time heavily favored the Japanese nation. Embargo's and protective tactics began to be placed against Japan by the United States. This did not stop Japan which diversified its manufacturing operations into new business segments that allowed the nation to proliferate its export of products and services to other nations of the world.

Japan is a key allied of the United States which during the 1980's continued the cold war in an effort to decimate the Soviet Union which eventually they accomplished. The United without realizing gave rise to new player and helped convert Japan from a developing nation into the G8 member it is today. During the 1980's the trade advantage Japan enjoyed over the United States surpass the 40 billion mark at all times, which in essence made Japan the top creditor of the United States at the time.

During the 1980's the economies of Japan and the United States moved in opposite direction. Japan was a rising star making strategic investment and taking advantage of the purchasing power disparity it enjoyed over the United States to exploit this advantage. The United States phased a prolonged period of contraction during the 1980 characterize by various economic issues such as inflation, devaluation of the housing market, and the Wall Street crash of October 19, 1987 commonly referred too as Black Monday among other factors.

The United States at the time did not realize it because they did view Japan as an economic threat, but it was the US policy that ended up destroying a lot of local industries in the long run which were replaced by Japanese manufactured items particularly in the electronics sector. While the Americans at the time continue to look for wars that did not exist and intervene in internal affairs that only drained the funds of the nation, the Japanese made a concentrated effort to strengthen their economy for the Internet Age which was soon to come and the subsequent Convergence Age we are currently living in the 21st century.

The economic success in the 1980's of Japan was possible due to the sound economic policies, principles and strategies the country applied. Japan saved its money in order to have funds to lend to the borrowers which included its main commercial ally the United States of America. The nation invested its excess funds after separating the saving and yearly budget in infrastructure and technological investment that would help them attract private investment from corporation that would establish operations in Japan due to the highly competitive business environment and state of the art facilities the government created.

The United States route during this time was horrendous since they accomplish was increase their debt with Japan and many other nations and the investment in the local economy existed, but should have been much higher in order to prepare the nation for the latter decades. A sound economic strategy looks ahead a minimum of 30 years into the future. Economic history is very important for aspiring minds to study since it provides the roots of the recurrent problems that continue to manifest themselves as well as the keys for the solutions our society needs to continue to progress in the future.

ReferencesAizcorbe, A. (2007). Japanese exchange rates, exports restraints, and auto prices in the 1980's. Monthly Labor Review. Retrieved May 4, 2008 from http://www.encyclopedia.com/doc/1G1-164523218.html CultureGrams (2008). Country Profile: Japan. Retrieved May 5, 2008 from CultureGrams database.Historyplace.com. Pearl Harbor, Hawaii, December 7, 1941. Retrieved May 5, 2008 from http://www.historyplace.com/worldwar2/timeline/pearl.htm Watanabe, C. , Kayano, F. (2006). National Innovation Ecosystems: The similarity and disparity of Japan-US technology policy system towards a service oriented economy.

Journal of Services Research, 6(1). Retrieved May 4. 2008 from EBSCOhost database.