Future of Japanese Economy Essay Example | Topics and Well Written Essays - 2250 words

Future of Japanese Economy - Essay Example Though, very soon they recovered it with 10% average of economic growth in 1960s, 5% during 1970s and closer to 4% in 1980s, but after that, growth slowed down remarkably3. Strong working mentality, good government-industry relationship and implementation of advanced technology were the most favorable reasons responsible for making Japan stand on to the platform of one of the largest economy in the world from post WWII till 80s. Resultant of overinvestment in late 80s and crisis in world oil supply brought another challenge to their economy4. It became necessary for Japan to switch from mobilized productionism to more substantial welfare economy. However, the oscillation between successful drive of the export in late 80s and bang in economy after 80s hazed that requirement and mobilized economic system disappeared very soon5. After the fading away of stock inflation and land prices, an excess of production capacity remained. This factor lowered the profitability of the production and on the other hand, bad loan weakened the financial activity. Government's effort in recovering that downfall was not up to that level and it's clear from the statistics of economy for the duration of 2000-20016. Hence, it is inferred that Japan is in a state of distorted industrial policy and in urgent need of a revolution. The main aim of this paper is to address the main obstacles that Japan is facing and then to state the possible solutions to overcome them. Obstacles in Japanese Economy Japan is facing resistances now-a-days that it had never encountered before. Growth rate which used to be in two digit figure just after war, now expectation growth is below 1% which is too unsure. Country that had incredible unemployment rate till 1980s has now rose to 4.8%. Present crisis of its economy consists of short or middle-term problems like; financial difficulty, trade cycle and public finance. Other than that long term problems are there which are related to going into matured stage of progress. One of the important aspects of Japanese economy is its iron triangle which dominated the people by managing their particular interests. However, due to the changing of technologies and human preferences that system is losing its supremacy. After 1990s when the economy condition is at matured stage, safety and stability becomes the main points of concern; but 'iron triangle'7 sometimes might block the transformation in the required direction. The creation of societal life is supposed to be the center of long term task of Japanese economic society. The population of Japan is expected to reach its peak in 2007 and then turn to decrease which may lead to the composition of population over sixty-five to surpass 20% in the target year of the total population and after that reach the high plateau over 27%-30% after 20 years. This effects the shifting in arrangement of consumption in industries. But, the question here comes whether pure market economy will be able to adapt this shift in consumption as market is driven by profit seeking