Download Japanese Economy A 2011 Fall

Japanese Economy A
2012 Fall
Seinan Gakuin University
Noriaki EZOE
Professor Ph.D.
Economics Department
Seinan Gakuin University Japan
Mail address: [email protected]
Homepage address: https://w3.seinan-gu.ac.jp/~ezoe/
1
Chapter 1 Introduction
What you will learn in this Chapter
1 Japanese economy today in the international
comparison.
2 Some issues that the Japanese economy are
facing now.
3 Incomes and welfare of the Japanese today
4 History in Japanese development :Overview
2
1.1 Basic Information
Figure1.1 map of Japan
Total land area
Population
Religion:
378,000 sq.km
127.9 million
Shintoism , Buddhism,
Christianity (1%)
Ethnic diversity
Japanese (99%),
others (1%)
Life expectancy
86 years (women),
79 years (men)
Economic Data(2010)
GDP
479,179(billion yen )
Growth of real GDP
3.9
Trade Commodity export
67 400
Commodity import
60 765
Services
－1 622
Current Balance
17 016
Exports in percent of GDP
15.2
Imports in percent of GDP
14.1
currency August 2012
1US$ = 78Yen
3
Map 1
4
1.2 Japan : international comparison
• We look at the various information that are
published by the Japanese government.
Japan Institute for Social and Economic Affairs,
Japan 2011: An International comparison.
URL: http://www.kkc.or.jp/
5
2 Recent Issues in Japanese Economy
2.1 Economic Growth
Three periods of Japanese postwar economy
1 rapid growth period
(1950-1973, 9.3 percent),
2 moderate growth period (1976-1991, 4.3 percent),
3 stagnation period
(1992-2003, 1 percent)
(annual average growth rate in parentheses).
Figure 1.2 Growth rate of the postwar economy
Source: Iyota(2010),p.7
6
The Bubble economy and the lost decade
The boom of the late 1980s and early 1990s was driven by speculative fever
in real estate and stocks, known as the "bubble economy."
The bubble economy collapsed at 1990-91. The Nikkei Stock Average and the
price of land fell. After the bubble, the Japanese economy entered a long
period of stagnation.
Figure1-3 Land prices in Japan
7
Figure1.4 An recovery from GLOBAL CRISIS 2008
•
Source: Ministry of Economy, Trade and Industry,
Cabinet Office, Bank of Japan and OECD.
8
Figure 1.5 Improvement in the labor market
9
2.2 Recent issues in the
Japanese Economy
Followings are a few examples :(OECD Economics
Survey 2011)
• The Great Earthquake hits Japan on 3.11, 2011
• Fiscal consolidation (huge government debt)
• Deflation (deflation spiral=vicious cycle)
• Yen appreciation (foreign exchange rate)
• Population ageing (labor market)
• And more --10
Impact of Earthquake
• Damage estimate: 25trilion yen
•
•
•
•
•
•
Three suffered prefectures which account for about 4% of
nationwide economic output and 4.5% of Japan’s population.
Past disaster: the 1995 Hanshin-Awaji (Kobe) earthquake 9.6
trillion yen (2% of GDP)
A short-term loss followed by a later rebound (Figure 1.6)
The positive impulse from reconstruction spending.
Hyogo (the prefecture that includes Kobe) fell sharply in the
first quarter of 1995, but then rebounded strongly and by the
third quarter was 7% above its pre-earthquake level (Panel A)
However, the nuclear power plants DISASTER = electricity
supply SHORTAGE
11
Figure 1.6 The impact of the 1995 Hanshin-Awaji (Kobe) earthquake
12
Figure 1.7 The deteriorating fiscal situation in Japan
For general government, as a percentage of GDP
13
Figure1.8 Public debt in selected countries
the highest in both gross and net debt
14
Figure1.9 Tax revenue in OECD countries
Per cent of GDP in 2005. source:OECD(2008)
The share of taxes in GDP in Japan is one of the lowest
in the OECD area
significant scope to raise revenue
15
Figure1.10 long-run trends in the yen exchange rate
Average 1990-2010 = 100
16
Figure1.11 Recent exchange rate trends
2005 = 100
17
Costs of deflation
A deflationary spiral makes it more difficult to
get out of deflation
.
1 the real interest rate goes up ⇒dampen consumption and
investment.
2 asset price deflation ⇒ cause financial fragility
3 monetary policy do not work ⇒liquidity trap
4 deflationary spiral ⇒deflationary expectation entrenched.
The Japanese case may be the first example of liquidity trap since
the experiences in the Great Depression in the 1930s (T.Ito 2005).
Recommended Policy
• Bank of Japan to announce its inflation target and commit to its
attainment. (T.Ito,Paul Krugman )
18
Figure1.12 Consumer price developments
deflationary pressure
Year-on-year percentage change
19
Figure1.13 The share of non-regular workers is rising
20
Figure1.14 Japan's Population Pyramid (as of 2000)
21
Figure1.15 Population ageing in OECD countries
source：OECD(2008)
Population aged 65 and over, relative to the population aged 20-64(Working
population)
22
2.3 Japan’s New growth strategy
To create demand and jobs
Demand-side policies
Supply-side policies
1 Green growth
5 Science ,technology and
IT
Green innovation
2 Life innovation
medical, drugs
3 Asian economic
integration
Promote economic
partnerships
4 Tourism and local
revitalization
Increase R&D investment
6 Employment and human
resources
Establish new system
7 Financial sector
Create an integrated
exchange
Regional development
23
3 Incomes and welfare of the
Japanese today
3.1 GDP and National Income
- Spending is either for consumption, investment, or accumulation of foreign
wealth.
- Investment contributes to sustainable consumption.
- Consumption levels and national income.
3.2 Real income indices and revealed preferences
- Real income indices and revealed preferences
-Substitution
3.3 Nonmarket goods
-Shadow prices of nonmarket goods
-Comparing the value of nonmarket goods in Japan
and the United States
3.4 The distribution of wealth
3.5 The underground economy
24
4 The historical perspectives
History in Japanese development Overview
• Following is a Ohno’s lecture notes in GRIPS (the
National Graduate Institute for Policy Studies in Tokyo).
• “ Economic Development of Japan” 2011 July.
• His homepage address is:
• http://www.grips.ac.jp/teacher/oono/hp/lec_J.htm
• Kenichi Ohno [2006], The Economic Development of
Japan.
• http://www.grips.ac.jp/forum/pdf06/EDJ.pdf
25
The history of Japanese economic development
Ohno has paid a particular attention to the following
questions:
1 Why did Japan succeed in industrialization as the first
non-Western latecomer in the late 19th century? What
were the initial conditions that permitted it?
2 Interaction of external influences and domestic
capability in the industrialization process.
3 Interaction of economic and political/social factors.
4 How did the private sector respond to new challenges
and government policies?
5 How did the government support industrialization?
What mistakes did it make?
Japanese Economy
26
II. Samurai’s
Rule 1603
I. Emperor’s
Rule
X
III. Modern
-ization
Ohno
IV. Postwar
1867
Rapid
recovery
and
growth
NARA
Centraliz
ation
MEIJI
EDO
Jinshin War × 671
Taika Reform × 645
Clan
fights
HEIAN
Nobles,
Decentra
lization
KAMAKURA
MUROMACHI
SENGOKU
Hunting &
gathering
Internal
wars,
dynamic
& fluid
society
Tokugawa
Shogunate
Peace,
isolation,
conserva
tive class
society
xxxx
xxxx
Chinese culture &
Rice
Buddhism political system
WEST: guns &
Christianity
Westerniz
ation,
industriali
zation,
militariliza
tion
WAR
xxx
WEST!!!
US occupation
1945-52
Table 1-1 Outline of Japanese History
Period
Domestic Events
Hunting and gathering, some agriculture
Internal wars → Unification of Japan
Clan politics Tenno (emperor) consolidates
power Ritsuryo System―Emperor’s direct
rule based on laws & centralized
government; Buddhism promoted as state
Capital: Nara Heian
or
religion Court politics by nobles Manorial
(794-1192) Capital:
system (power decentralization) Rise of
Kyoto
samurai (warrior) class
Kamakura (1192- First samurai government New Buddhist
1333) Cap:
sects emerge Samurai government Two
Kamakura
emperors compete (north vs. south) Internal
Muromachi (1338- wars and rebellions Internal wars among
1573) Capital: Kyoto daimyo (samurai warlords) →Unification by
Ieyasu Tokugawa Tokugawa Shogun
Sengoku (-1603)
Government (samurai rule, agricultural
Edo (1603-1867)
The
tax, class system)・ Stability under strong
Age of Cap: Edo (Tokyo)
government・ Han’s promotion of local
Samur
industries・ Agriculture & handicraft
ai
develop・ Transportation, finance,
commerce, education upgraded, unified
national market ・ Merchants’ economic
power increases・ Unique popular culture
develops Debate over “open door policy” vs.
“antiforeigner military campaign” Han
samurais topple Shogun Government
Jomon (-3c. BC)
Yayoi / Kofun (3c.
Rise BC-5c. AD) Asuka /
and Hakuho (5-7c. AD)
Fall of
Nara (710-794)
Emper
External Events
←Rice production introduced
→Diplomacy with China (tributary)
→Intervention in Korea ←Buddhism
introduced (via Korea) ←Chinese
political system imported
×Diplomacy with China terminated
←Two Mongolian invasions
(failed) →Trade with China resumes
→Japanese pirates attack Chinese
coast →Active trade with
Southeast Asia ←First contact
with Europeans Guns & Christianity
introduced ×Closed door
policy―No diplomacy & trade allowed
(except China, Holland, Korea, Ryukyu);
Christianity banned ←America
opens Japan by military threat
(1853-54) Danger of colonization by
West
28
Moderniz
ation
Period
Domestic Events
External Events
Meiji(1868-1912)
Strong government under
emperor adopts open door policy
and rapid Westernization Fukoku
kyohei (strong economy & army)
Industrialization (strong private
Need to catch up with West →War
with China (Qing Dynasty, 1894)
→War with Russia (1904)
→Annexation of Korea (1910)
→Pursuit of Chinese interest
(Capital: Tokyo to
present) Taisho
(1912-26)
sector supported by government)
Democracy movement (short-lived)
Early Showa (192645)
Late Showa (194588)
Postwar
Recessions & economic crises (1920s30s) Military takes over
government Mobilization of people
& resources for war
→Invasion of Manchuria (NE China,
1931) →Full-scale war with China
(1937) →Pacific War (1941) Invasion
of SEA
Democratization &
War defeat (1945) ←U.S. occupation
(1945-51) Multilateral open door policy
demilitarization Economic
Joins IMF, World Bank, OECD
recovery from postwar crisis
Priority production system Rapid
industrialization (1950s-60s) Strong
private initiative MITI’s industrial
policy
Economic slowdown (1970s-) Bubble
burst, economic stagnation (1990s-)
Becomes No.2 economy (around 1970)
Becomes top ODA donor (1990-99)
Heisei (1988-)
29
References
• Dadid Flath [2005],The Japanese Economy, Oxford
University Press.
• Government of Japan [2010],The new Strategy: Blueprint for
Revitalizing Japan.
• Mitsuhiko Iyoda [2010], Postwar Japanese Economy, Springer
Press.
• Kenichi Ohno[2006], The Economic Development of Japan,
• GRIPS Development Forum.
• Japan Institute for Social and Economic Affairs, Japan 2011:
An International comparison.
• OECD[2011],Economic Survey of Japan,2011.
• OECD[2009],Economic Survey of Japan,2009.
• OECD[2011],Economic OUTLOOK ,2011.
30