The economy of Japan is the third largest in the world after the United States and the People's Republic of China but ahead of Germany at 4th. According to the International Monetary Fund, the country's per capita GDP was at $32,608 or the 23rd highest in 2009.
For three decades from 1960, Japan experienced rapid economic growth, which was referred to as the Japanese post-war economic miracle. With average growth rates of 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s, Japan was able to establish and maintain itself as the world's second largest economy since 1968, until supplanted by the People's Republic of China in 2010. However, in the second half of the 1980s, rising stock and real estate prices caused the Japanese economy to overheat in what was later to be known as the Japanese asset price bubble. The economic bubble came to an abrupt end as the Tokyo Stock Exchange crashed in 1990-92 and real estate prices peaked in 1991. Growth in Japan throughout the 1990s at 1.5% was slower than growth in other major developed economies, giving use to the term Lost Decade.
The problems of the 1990s may have been exacerbated by domestic policies intended to wring speculative excesses from the stock and real estate markets. With government efforts to revive economic growth throughout the 1990s unsuccessful, Junichiro Koizumi adopted policies to promote exports, effectively raising GDP on an average of 2.1% annually from 2003 to 2007. Subsequently, the global financial crisis and a collapse in domestic demand saw the economy shrunk 1.2% in 2008 and 5.0% in 2009.
A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population. Although many kinds of minerals were extracted throughout the country, most mineral resources had to be imported in the postwar era. Local deposits of metal-bearing ores were difficult to process because they were low grade. The nation's large and varied forest resources, which covered 70 percent of the country in the late 1980s, were not utilized extensively. Because of political decisions on local, prefectural, and nation levels, Japan decided not to exploit its forest resources for economic gain. Domestic sources only supplied between 25 and 30 percent of the nation's timber needs. Agriculture and fishing were the best developed resources, but only through years of painstaking investment and toil. The nation therefore built up the manufacturing and processing industries to convert raw materials imported from abroad. This strategy of economic development necessitated the establishment of a strong economic infrastructure to provide the needed energy, transportation, communications, and technological know-how.
Deposits of gold, magnesium, and silver meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry. Iron ore, copper, bauxite, and alumina must be imported, as well as many forest products.
Economic history
An 1856 ukiyo-e depicting Echigoya, the current Mitsukoshi.
Economic history of Japan
The economic history of Japan is one of the most studied for its spectacular growth for three times. First was the foundation of Edo (in 1603) to whole inland economical developments, second was the Meiji Restoration (in 1868) to be the first non European power, third was the defeat of the World War II (in 1945) when the island nation rose to become the world's second largest economy.
First contacts with Europe (16th century)
Nanban trade
Renaissance Europeans were quite admiring of Japan when they reached the country in the 16th century. Japan was considered as a country immensely rich in precious metals, mainly owing to Marco Polo's accounts of gilded temples and palaces, but also due to the relative abundance of surface ores characteristic of a volcanic country, before large-scale deep-mining became possible in Industrial times. Japan was to become a major exporter of copper and silver during the period.
Japan was also perceived as a sophisticated feudal society with a high culture and a strong pre-industrial technology. It was densely populated and urbanized. It had Buddhist “universities” larger than any learning institution in the West, such as Salamanca or Coimbra. Prominent European observers of the time seemed to agree that the Japanese "excel not only all the other Oriental peoples, they surpass the Europeans as well" (Alessandro Valignano, 1584, "Historia del Principo y Progresso
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