Japan

Japan, through all these years, has held the distinction of being the most technologically advanced country in Asia. The world’s second-largest economy, ironically, is now going through the worst economic disaster it could ever dream about. (Asian Economic Crisis) If it is said that the crisis-hit countries in Asia such as Thailand, Malaysia and South Korea are experiencing a potentially lethal but short-lived sickness, Japan on the other hand is suffering from a slow wasting disease.

Numerous factors make or break an economy. For Japan, one of the primary reasons for its economic downfall is consumer thriftiness, an attitude normally seen as a virtue. What is the problem with it? Japanese consumers simply don’t buy enough that would encourage businesses to invest, even at outstanding near-zero interest rates. In economic terms this would be called a "liquidity trap," in which the accumulation of cash is the private sector’s priority. Since this is not happening, the Japanese economy falls further below its potential.

Japan is said to be stuck in a hermetically sealed society. Even with the clamoring for reform, the political elites deny there is anything wrong and run the country as a pension state focused on an aging population.

As stated, this internal problem has existed for a long time now. Just now is Tokyo passing a new legislation to create a new unit characteristic of a Resolution Trust Corporation. In the labor force among men, the jobless rate hit 4.3 % last May (1999). For men 15 to 24 years old, the jobless rate rose to 8.4 %.

With the causes of recession in Japan defined, we must assume that foreign investment has started pouring in to revitalize growth. In this strictly orthodox society however, little of these foreign exchanges are allowed. Foreign help for ailing companies must be given, but it is not allowed. Outsider CEOs must be assigned to help companies from further downfall, but such action also prohibited. Why is Japan allowing itself to remain stagnant?

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