Type: Economics
Pages: 5 | Words: 1235
Reading Time: 6 Minutes

Japan’s economy is rated the second in the whole world. The first economy in the world is the United States economy. The gross domestic product or income of Japan’s workers is ranked at position 18th in the whole world. Tokyo’s wages are rated amongst the Worlds best when it comes to cities. Japan has developed greatly in the past three decades. Through this rapid economic growth, Japan was able to take position three in the economy of the world. During the 1980s there was stock sliding in Japan and as a result, the economy of Japan overheated. This growth suddenly dropped as a result of the stock exchange crash in Tokyo city. This resulted to slow economic growth in Japan during the 1990s. These negative effects led to a reduced GDP in the subsequent year (Franks 1).

The government tried tirelessly to boost their economic growth but all their efforts were in vain. This was further worsened with the fall of the world’s economy making Japan’s economy to be a serious matter. The new policies of Junichiro Koizumi contributed a lot in improving the fallen Japanese economy. These new principles revived the Japanese economy to about 2.1%. Despite of these improvements some other factors which included the financial global crisis, as well as the domestic demand crisis, led to the further economic drop. Therefore the Japans economy was characterized by subsequent fluctuations. Japan is not rich in natural resources like some many countries because of its geographic location. The absence of fundamental economic resources that can support its economic is some of the hindrance to its economic growth. Political influence and some other factors led to the failure in exploitation of its only natural resource which is the forests (Beauchamp 121).

The two main natural resources in Japan are fishing and agriculture. The extensive utilization of these resources has not been easy because of the much toiling that had to be done. The two natural resources form the basis of Japanese manufacturing as well as the processing industries that mainly deals with importation.  One of the major factors that have been of much help in boosting its economy is the proper infrastructure that is in place. As a result of this there is the needed technological know-how as well as the energy and other factors necessary for economic development. In spite of this recommendable effort Japan solely depends on other nation for valuable resources that are essential for coming up with modern industries. Some of the current Japanese economic issues are associated with the former administration of Koizuni. Koizuni administration attempted to change the investment laws associated with sectors of foreign investment as well as privitazation. This change was done in order to trigger the Japanese economic growth.

The new laws are slowing becoming effective in boosting the Japanese economy though one of the hardest realities which are a great challenge to the economic growth is the Japanese population of the aged people. The privatization of the postal systems of Japan is a major threat to its economy. The reason for the much worry about the future is that the postal system that was privatized includes the insurance and business associated with collecting deposits. This initiative of the former administration led to much political strives in the representative house that resulted to dissolution of the parliament. Currently the savings deposits of the postal offices are being utilized to projects of public works. The money in use is very much and as a result the Japanese experts foresee that these extra moneys will be used to further privatization.

The efforts of the monetary authorities to depreciate the value of the yen in the economic market are not yielding much fruits. Due to the high value of the yen the domestic businesses of the country are not protected. The most recent records reveal that the total amount of the yen in circulation is about seventeen trillion which is much more than the US dollar. This is very risky to the Japanese economy. There are some benefits that Japan has gained from the appreciated value of its currency for instance increased GDP of individual employee. Japanese has not been involved in buying currency because its appreciated currency has curried out that obligation. The effects of the aging population to the future of the economy of Japan are much. Old people increase the dependency rate whereas there is reduced production because out put reduces drastically as people grow in age. There is the risk of reduced work force if there will be no people to replace those that are retiring.

It’s evident that the Japanese economy has stagnated for a long period. The recovery of the staggering economy has taken long than expected. Economic analysts have identified a number factor that they think are the cause of the stagnated economy. One of the factors is surplus savings. This is a problem since there is reduced consumption compared to the extensive saving resulting to economic stagnation. For an economic to grow there has to be relatively high rate of spending in relation to the available income. This surplus savings were of great help during the former administration which enhanced privatization but the serious impediment that led to reduced demand of the Japanese products stagnated the economy growth after a period of increased economy (Francks 1).

The selfish interests of the Liberal Democratic Party led to serious biasness in the Japanese economy. This attitude has made it so hard for the current administration to implement the needed reforms that will put Japan to its initial place in the world’s economy. The LDP party has insisted in remaining in power though they have failed to solve the great issues and in turn bring the awaited reforms. Some of the major challenge to economic growth in Japan is lack of the political power and will to bring the much awaited reforms. This is attributed to the fact the policy markers are not good managers as reflected in policy mistakes that has been done. Some of the issues that have not been handled well with the management include deposition of NLPs as well as the appreciated value of the Japanese currency. Therefore the in efficiency of the management team involved in formulation of policies has resulted to delayed recovery of the Japanese economy (Hook 268).

Major of the Japanese financial problems has come about as a result of complex structures that have been impediments which cannot be easily overlooked. This issue has further become complex because of the close association between some major financial departments which are supposed to bring the needed reforms. As a result of these there is no transparency or the needed accountability that is essential to any economy. Another factor is that the management systems that were being used many years back are still in use and with this you don’t expect any reforms to be made fast enough to handle the issues that keep emerging. The appreciation of the yen is a problem that cannot be easily resolved. The appreciated currency has become a stumbling block to cleaning up of the mess in the Japanese economy. Due the challenges that cannot be easily eradicated Japan continuously receives low income from its dollar investments. Japan economy still holds a remarkable position in the world though its issues are enormous because of the mistakes that have been made by the people in power (Morrison, Labonte and Sanford 53).

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