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Japan’s Economic Malaise

1. In the 1980s Japan was viewed as one of the world’s most dynamic economies. Today it is viewed as one of its most stagnant. Why has the Japanese economy stagnated?

In the 1980’s Japan entered into Stagflation. Japan has big boom-bust cycles depending on the manufacturing economy. Japan has no domestic steel production or even uranium or gas fields.

The problem with Japan, regardless of their discipline in the schools and domestic economy, the rent prices are extremely high in Tokyo, and people can only afford small 800 sq. foot apartments. They have a highly developed transportation and infrastructure, but they are heavily tied to the United States consumer demand for automobiles and other products. Japan owns 30% of the United States deficit.

One of the major reasons Japan is stagnating is because of South Korea:

“To call South Korea an emerging market, therefore, is a bit of an anachronism. The country is a rich, technologically advanced, mature democracy with an impressive record of innovation, economic reform,

and sound leadership. Yet South Korea is not exactly a developed market, either. The value of its exports plus imports (at $1.25 trillion a year) exceeds its national income (at $1.1 trillion). That openness, along with the lack of protection provided by a bloc such as the EU, subjects South Korea to greater market volatility than other major industrialized countries and presents some serious challenges. So, too, does its highly concentrated corporate sector, aging population, and politically dangerous neighborhood. South Korea may well be more dynamic than some developed economies, making it attractive to investors, but it is also much riskier.” [1]

[1]"Six Markets to Watch: South Korea." Global. N.p., n.d. Web. 25 Jan. 2014.

2. What lessons does the history of Japan over the past 20 years hold for other nations? What can countries do to avoid the kind of deflationary...
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