Japan is one of the world's leading economic powers when concentrating on its Gross Domestic Product of four point two trillion United States dollars. Its economy is only second to the United States in terms of production. However, Japan has not always contained a relatively strong economy. The Japanese's economic strategies have boosted economy to new heights since its fall during the second world war because of their unorthodox manner of business etiquette, innovative strategy, and strong relations with stable economies such as Canada and the United States. The rise to the top did not occur without a large struggle as many problems did occur after the Second World War left Japan economically devastated. Japan's journey has left them at the present with recession conditions.
Following world war two, Japan's economy was absolutely devastated. From 1937 to its defeat in 1945 Japan poured all of its strength into the war. The industrial sector was diverted into a swollen military production sector. The strongest and swiftest workers were placed in the military, and quite often sent to die on the front lines of the war. The citizens who stayed in Japan often worked in military factories, and faced the constant threat of air raids. Once the war was over there was not a need for the military industries that were created and a thick number of four million citizens became unemployed.
The new unemployed total had then reached thirteen point one million people. After the war Japan was on the verge of bankruptcy in its international payments. The trade deficit had expanded drastically and the balance of payments equilibrium was completely destroyed. Since Japan was allocating all of its resources into the war and to begin with was not a country with many raw material they had no choice but to import an excessive amount of raw material in order to produce military hardware. Even so, the war did award JaPan with some benefits. The industries developed during the war became the major postwar industries, such as the steel and transportation industries.
Wartime technology was reborn during the postwar as Japan became one of the world's leading countries in the technology industry. Japan's technology advances made it more competitive. These technological developments included advancements in the production of steel by utilizing new technologies. The increase in electrical power produced by the Sakura dam, as well as increased technologies in the area of shipbuilding; automobiles, electrical machinery, sewing machines and cameras helped put Japan on a path to being more competitive. Through massive restructuring and the creation of niche markets such as Mitsui mining being split up into Mitsui coal mining and Mitsui metal mining, Japan was able to establish a base for its future economy. The Japanese have a very different method of thought from everyone else in the world.
In the beginning of this century, Japan lost its ability to feed it citizen's and began to panic. They had money to import food however, due to their morals they would rather conquer than pay money and give in. The country comes together as one to try to gain control as a nation. There is very little if any competition among Japanese companies when it comes to the foreign market. Japanese corporations do practice a form of conventional economic competition, but all within their own borders. This is what is known as the "one set" philosophy.
Each company produces a set of various products. For example, all beer companies produce a lager, and draft and a dry beer. This is only inside Japanese borders. Economists state that it is impossible to specialize in everything, but the Japanese have an urge to be on the top in every field.
Even in the schools children are pressured to be the best. It is a very competitive environment and if they can not cut it their career goals will not be anything but an ever-lasting dream. The whole society is based on being the best at what ever it may be. Although recently the new younger generation is shifting towards a conserve r society, less work and more play is the credo for this new breed of human beings. Married couples as well as single, free thinking individuals are no longer willing to let their jobs consume their lives, they take two day weekends and escape to quite places like a beach. The Americans complain about declines in their steel industries but few Americans believe that it is a problem to import CD players and TV's.
The United States government does not have any form of a plan to create a domestic CD player or anything of the sort. This is where the Japanese are different from the rest of the world. The key is that within the country of Japan companies, and corporations competitive with each other or not they stick together to ensure the success of their country; the United States on the other hand does not compete with the rest of the world as one for it is the companies and corporations that compete individually representing the United States. As well, the Japanese capacity to produce high quality products is very emphasized in the world market. This is what permits them to ask themselves why import if we can produce a higher quantity with a better quality for a cheaper price For example in 1985 a Boeing 747 crashed into a mountainside while flying from Tokyo to Osaka. The plane was purchased from the United States and the crash was due to a faulty repair job performed by Boeing engineers.
I quote from a Japanese pollster, Taka yoshi Miyagawa, "the Japanese people think we should make by ourselves whatever concerns human life." Another case in which Japanese pride is well demonstrated is when the space shuttle the Challenger exploded. For a year afterwards the Japanese repeatedly said, "if we had built it; it would not have happened!" This goes to prove how highly the Japanese's think of their craftsmanship. However, in 1988 they refused to use an American vaccine, which protected children against measles, mumps and rubella all in one vaccine. The Japanese Ministry of Health and Welfare instead coordinated three of the country's vaccine making companies to produce an alternative to the American vaccine. The Ministry made it mandatory to be vaccinated. The refusal of importing the American vaccine caused much grief.
The American version had little if any side effects but the Japanese version caused outbreaks of meningitis c causing death and paralysis. Once these outbreaks were reported the vaccine was not mandatory but optional. Still this just goes to show the different ideals of Japan. In short the Japanese and even the whole east of Asia believes that the inconvenience of importing to the consumer is less damaging in the long run than the weakness of a nation's productivity base. This truthfully explains the Japanese and East Asian mentality. The idea of the invisible hand is one ideology brought on by the deceased capitalist Adam Smith.
He stated that there should be no government intervention in the economy. The producers of Japan Produce goods for the people who buy certain products which appeal to them. Adam Smith said that the producers would have to adapt to consumer needs since the consumer will only purchase what they want to. Therefore, the economy will take care of itself through guidance from the consumer, hence a consumer run society.
Adam Smith's theories are very much a reflection of Japan's economy. The Japanese Canadian Relationship began with aspiration of exports to Japan, development and increased efficiency in Canadian agriculture, industrial and fishery sectors. The overall incentive was the growth of national income through better, more profitable and more certain export opportunities. Canadians viewed the trade agreements as an opportunity to improve productivity and competitiveness abroad and at home.
Canadians had two main goals for the agreement; to secure a substantial further reduction in the level of foreign tariffs facing our exports and to reduce and bring under control NTB's inhibiting Canadian exports. Canada reduced protection on industries to boost efficiency and lower consumer costs however kept protection where it was still needed. The results of the agreement yielded a comparable reduction of Canadian tariffs- forty percent of Japanese, United States and EEC tariffs together helped along with comparable reduction of Canadian tariffs. Agreements were made to instate international discipline to government procurement policies. The biggest gain of the conference for Canada was with United States exchange of tariff concessions. A deal with the United States was made that stated that there must be an injury to their economy as a precondition to imposing countervailing duties.
What Japan gave us were tariff reductions in machinery, chemicals, automotive and transportation equipment. There was another agreement signed covering subsidies, countervailing duties, government procurement, technical barriers to trade, import licensing, (clear publication of procedures and simplified administrative practices) customs valuation and dumping. The agreements also brought into perspective future opportunities for both countries; one which was optimistic. Tariffs and other trade barriers are in the process of being reduced, and improved framework for international trade co-operation through numerous agreements was falling into place, less trade restrictive measures were being used by governments, and there was greater transparency in the system and less uncertainty for the business community. Due to the transparency in the Japanese market, Canada's role in the Japanese economy became one of the largest consumers of machinery, cars, steel, and electronic products.
Canada also plays the role of supplier of raw materials to Japan. Canada sells natural resources to a quickly expanding country with ever expanding needs for raw materials with which to fuel their thriving industrial sector. Canada's exports to Japan include lumber, wheat, corn, and products that are land intensive. Arable land in Japan is scarce and extremely expensive and fifty-six percent of the forest area is privately owned. The land that is used is very commonly on steep hills, where decades of reworking the soil has left it in stages of plateaus on which rice patties and farmland are held. The arable land is divided into many small farms averaging three point five acres in size.
Most of the land is over used since the farmers overwork it trying to get as much out of as possible. Thus, Japan must rely on outside sources of agriculture to supply its people with the necessary products such as wheat, corn, and other grains. Canada's position directly across the pacific from Japan made it a variable partner for trade in these commodities. The USSR is in closer proximity with Japan; however, political differences and problems made Japan view the USSR as an extremely unstable and undependable source of agriculture. As Japan drastically increased its capacity to produce and to consume, it became a major part of the worldwide economy.
However, as strong as the Japanese is, it is nonetheless susceptible to problems. There is a current recession in Japan caused by many factors, one of them being fiscal tightening representing an increase in government revenues and decreasing government expenditures. Other factors contributing to the Japanese recession included Asian economic turbulence and a Japanese banking system deprived of strength. The magnitude of the fiscal tightening was too large for the Japanese economy. Japan was not able to absorb the fiscal tightening due to the economic crisis in some Asian countries and because of the failure of major financial institutions. After nearly four years of expansion from 1987 to 1991, the Japanese economy went through a recession starting in 1991 and lasting for thirty-two months.
This recession ended in March of 1993. The recession of 1991 to 1993 was the second largest recession in the postwar period. The government made efforts to reactivate the economy and introduced seven fiscal stimulus packages in four years from 1992 to 1995. The Bank of Japan cut the bank rate to 0. 5 percent in 1995 and has since kept it at this record low. The government undertook a major tax reform in 1994 and cut income taxes through the tax schedule and through increases in standard personal and employment income deductions.
Therefore by decreasing revenues the government attempted to promote spending. As a result the national debt increased by about six percent of the Gross Domestic Product. Another reason for this increase in debt was that the private sector was unresponsive to the stimulus. One of the reasons for sluggish business investment within Japan was due to the unstable nature of the economy and a thus a flight of capital to the United States and other stable markets. Manufacturing industry investments increased during the 1995- 1996 period, which was a sign to economists that the economy was back on the path of self- sustaining expansion. However the investment boom which was confined to a few machinery sectors was sort lived.
Investments by construction and real estate firms continued to decrease, dragging down the economy. These private sector companies were increasingly investing their capital abroad in the form of direct investments which was leaving less and less money being inside Japan to stimulate production, increase jobs and therefore increase the money supply. To worsen the situation, a significant increase in import penetration observed from 1993 to 1995 was snuffing out domestic production. The decreasing amount of household consumption in the 90's reflected the weak state of the economy. Unemployment grew, which raised concerns about job security and reduced people's willingness to consume. Weak demands for goods and services began to affect employment.
Employment in manufacturing started to fall; however the difference was absorbed by the construction industry which soon became overloaded. The construction industry soon followed suit. The unemployment rate reached high national levels. Due to corporate restructuring as well as other factors, male labor unemployment grew forcing the women of the households to try and find jobs, which was contrary to traditional values illustrating the severity of the situation.
As the Japanese economy struggled to rise from the ashes, it built itself an economy based on technology, which is evident especially in the machinery, transportation and steel industries. In addition, Japan is one of the world's leading research platforms for new technologies in robotics and electronics, making Japan a self-sustained ever-expanding country. Japan has stayed on the leading edge of the world riding a wave of technology, which will definitely carry it into the next millennium. Broad-based technological firms combined with innovative, even unorthodox, business strategies are the supporting columns of this immense notion.
It is very possible for the Japanese people to overcome the conditions brought upon by the recession through the policies they have adopted, different from our own, and become the number one leading country in Gross Domestic Product. This would put Japan in the spotlight of the rest of the world, and maybe then, we will begin to consider many of the different ways they do business.