Behind The Resilient Economy of Japan

The story of Japan’s economy are struggle, perseverance, and redemption. From becoming the first country in Asia and the first non-European country to become a major great power, the subject of Japan’s rise to economic success is a story certainly worth telling.

Japanese economy has multifaceted story. The country is rich with history and culture—and this is something that they have never compromised in their rise to economic power. Their strength does not lie in the comparison between the yen and the dollar or the pound or the euro. The strength of Japanese economy lies in the resilience of its people, as evidenced by its truly fascinating history.

The History of Japan’s Economy

Many historians considering as Japan have been rich in precious metals, all the way back in the 16th century. Some of their many exports include and silver, as the country was known to have had an overabundance. Thanks to its geographical advantage, where it is surrounded by volcanic activity, its lands are incredibly rich in more ways than one.

This made Japan a very popular trading spot be it with its Asian neighbors, but also with European travelers. However, what separates it from other countries that have the same geographical advantage as Japan is that they are not reliant on a single strength alone. Even before the emergence of the industrial era, Japan operated with a sophisticated feudal system in place and their respect for their history and culture allowed them to preserve integrity as they rose and developed throughout the year.

In fact, the Japanese were so dedicated to their sense of cultural integrity despite westernization, they entered a period of isolation called “sakoku” and in this era, they enjoyed some modicum of stability and evenly measured progress. However, even Japan cannot hide under the rising sun, As the world advanced so, did they. Urbanization, as well as outside influence, entered their society.

While they have remained true to their cultural identity, it should be noted that Japan’s empire and reach expanded to neighboring countries as well, which aided in their rise to economic power.

Their empire and power once held rule over Taiwan, Korea, the Philippines, Manchuria, and even some parts of Northern China. At the time, these were not only economically strategic conquests that were due to necessity but they were also strong political moves that showed intelligence and resilience.

The Type of Economy that Japan Has Now

Today, Japan is currently the third largest economy in the world. This country comes third only to the United States of America, and China. Pioneers in the continent, they were one of the first to become industrialized in the 19th century with other Western countries in Europe and in North America.

Their current economy follows an industrialized global free market, which makes for a competitive system wherein businesses of every industry compete for profit and gains.

They follow the capitalist structure of supply and demand for their pricing of goods and services. Despite the difference in value between the Yen, Japan’s official currency, and the American dollar, which is primarily accepted as the current global standard, Japan stands its ground as an economic powerhouse.

The Current State of Japan’s Economy in 2017

Japan, in terms of geographic size, is marginally smaller than that of the United States and yet it competes with such tenacity that it still holds remarkable in the world today, and it speaks volumes about the intelligence of the Japanese market.

Its current rate of growth and the state of its GDP (Gross Domestic Product) remains at a state of stability and progress. Currently, Japan holds 7.07% of the entire world’s wealth, with its GDP reportedly at 4.123 trillion dollars; in the lead is the United States of America with a GDP of 17.95 trillion dollars, and the Republic of China at 10.87 trillion. Japan is followed by South Korea with a GDP of 1.378 trillion dollars.

The lowest that Japan’s GDP reached in the global standing was in 1960, where their GDP was measured at only 44.30 billion dollars. It reached a record high of 6.203 trillion dollars in 2012.

Japan’s Economy Today

Japan’s economy is certainly one to look out for in this coming year as the industry proves to have defied expert predictions with its incredible growth from the previous year’s numbers.

In the first quarter of 2017 alone, Japan shows to have gained and fulfilled its first quarter earnings at a much higher pace than expected. Experts predicted a rise of only 0.4 percent quarterly gain, with an annual percent pace of 1.7. Japan shows its remarkable capacity to grow and exceed expectations as experts were surprised with its 0.5 percent quarterly annual gain and 2.2 percent annual pace.

With much of the improvement in the Japanese economy primarily being export driven, there is no concrete way to determine if this steady rise will recur within the coming quarters.

Experts say this trend of exceeding expectations is not to be a regular thing as the prices continue to skyrocket while the demand for new autos quietens in the west. There is also the loss of real wages, despite how well the state of the economy during the early months of January, February, and March. While numbers have yet to come for the second quarter of May, June, and July, the growth at this pace showed significant progress from the numbers seen in the last fiscal year of 2016.

If you own or work for a company that invests itself in winter sports and tourism, October, November and December, tourists flock withdraw from the bank to enjoy great ski resorts, upping the economy for places like Hokkaido. Depending on what month it is, Japan’s unemployment rate is usually low for the months leading up to April. August has the highest unemployment rate, which lowers by September.

Facts About Japan’s Economy

Despite being an Asian country in the East, Japan’s economic structure is comparable with the economic structure of the United States of America.

This is born from a mutual respect as even in history, Japan sent many of their best and brightest to America and Europe in order to learn from them so they may benefit from the Western society. Also promote the culture and history of the East. This exchange and dedication to the pursuit of knowledge escalated Japan into prioritizing the education of its people, allowing for the blossoming industry of mathematics and science in Japan.

It is through this effort that Japan has risen to the top of advancement in the field of technology, what with its extremely capable workforce and dedication to the betterment of their country and overall society.

It is through the advancement of their technology, all the while remaining true to their cultural identity as Japanese first and foremost, that they were able to boost their economic status to the forefront. Innovations in robotics and other electronics have made cities in Japan, like Tokyo, into consumer heaven, which bodes well for their own economy and cultural gain.

It has been so successful in its rise, partly due to its government’s cooperation—as Japan currently operates under a constitutional monarchy with a parliamentary government—and the strong work ethic that is instilled into Japanese culture. Their defense funding is also at a relatively small percentage, in comparison to the United States and China, which then allows them the freedom to move and progress into one of the most powerful technological economic powers in the entire world.

The Effect After WW1 on Japan’s Economy

Due to the conflict in the first World War, Japan made use of the time to create a trade surplus. This was possible to the absence of other European economic powers, which allowed Japan to develop their transportation and communications during this period.

The Great Depression in the 1930s, however, affected every major economic power in the world. However, Japan did not feel the hit as much as other more industrialized nations may have suffered. Japan worked on growing its agricultural, manufacturing, and mining industry. This in mind, this was gearing towards a shift from industrial progress to an advancement in their military power.

Soon after, Japan started to seize land from China—and so started the expansion of the Japanese empire.

The State of Japan’s Economy After WW2

In the early stages of the Second World War, the country’s economy expanded considerably. After all, one of Japan’s primary exports was that of its steel and its people with strong, remarkable work ethic, national pride, and loyalty. Its government also took to educating its people, leading to a more knowledgeable populace in the face of war.

From the production of steel at over 6.4 million tons, production rose up to 8.83 million tons. Aircraft industries in Japan then had the capability to manufacture as much as 10,000 aircraft in a year. This expansion was primarily beneficial towards large industrial conglomerates, and this rise would not last.

As the war went on, Japan’s economy suffered greatly under inflation. Most of its expenditures were concentrated on military funding, thereby reducing Japan’s hold on its occupied territories. By the end of the war, Japan’s losses were immense as they fought destruction and other cities suffered complete obliteration from bombings. The devaluation of their currency also hit them horribly and transportation to and from anywhere in Japan was very nearly impossible.

This many losses and the magnitude of destruction over the Japanese country led to an economic standstill and Japan very nearly had its slate wiped clean, right back to the state of its economic holdings in the late 1800s.

It is thanks to the literacy and work ethic of the Japanese populace. A few years after the war, Japan slowly rose back to the top of the global economic forefront. Its labor force was one to be reckoned with, and the Japanese government made intelligent, sound investments that allowed the country to bounce back from its heavy losses just decades before.

The News on Japan’s Economy

Japan’s rise back into the global economic forefront has not been the easiest route. In the early 2000s, Japan experienced losses and declines in their growth—this is primarily due to the global economic recession. Japan itself suffered a 0.7% loss in 2008 and a huge loss the following year at 5.2% loss in 2009.

However, Japan enjoys a certain level of stability in its economic structure due to its political stability—which cannot be said for many of its Western competitors such as the United States, the United Kingdom, and even other countries in the European Union. The government in Japan maintains a well-enforced rule of law/policy, which allows for a steady rise in the reformation of the Japanese economy.

With its primarily export-based orientation, Japan remains in the practice of placing non tariff barriers, which then raise the price groups when it comes to domestic sales. Their integrity also plays a barrier that stunts their economic rise, as their unwillingness to branch out in certain markets prevents from foreign competition, and therefore denying the capability for trade and export with these isolated economic sectors.

What System Does Japan’s Economy Operate In?

Japan maintains an economic system that can be compared to the United States of America. The capitalist in structure, they follow the law of supply and demand in order to set the prices for goods and services, while businesses in their respective industries fight and compete for profits.

Japan is also a nation that mainly deals with export for its economic growth, they are also one of the largest global suppliers of electronics and robotics like automobiles. Japan's open markets are one of the country's economy strong suits and trade is bustling economic growth.

The value of their imports and exports comes up to 37% of their GDP in total. Imports within the agricultural sector are ones that the government takes a certain level of restriction, as while they remain competitive when it comes to financial growth, there is a level of order that comes with the rule of law and so state involvement must come to act, despite the competitiveness in the global financial forefront.  

It’s no surprise how strong and resilient the Japanese economy is. They work all week, willing to go overtime on any day of the week, be it Thursday, Friday, or even Saturday. It surely contributes to economy’s discipline. All in all, Japan retains an orderly and resilient system while maintaining, rebuilding, and progressing all at the same time with the world.