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					THE JAPANESE ECONOMY
ECONOMIC PERIODS OF JAPAN
 The high-growth period (early 1950s through
 the early 1970s), GDP growth close to 10%

 Thetransition period (early 1970s until
 around 1990), average yearly growth was
 about 4%

 The present period of stagnation (beginning
 in the early 1990s), during which annual
 growth has averaged only about 1%
        Post WW2 Real Growth
  14%
  12%
  10%
   8%                                                           Stable growth period                       No growth period
   6%
   4%
                  High growth period
   2%
   0%
  -2%
  -4%
        1953

               1956

                      1959

                             1962

                                    1965

                                           1968

                                                  1971

                                                         1974

                                                                 1977
                                                                        1980

                                                                               1983

                                                                                      1986

                                                                                             1989

                                                                                                    1992

                                                                                                            1995

                                                                                                                   1998

                                                                                                                          2001

                                                                                                                                 2004
Shift from political to Yen floats   2nd Oil Shock
economic agenda
                            1st Oil Shock      Bubble collapses
HIGH GROWTH
   Capitalist-labor compromise

   Strong private-sector facilities investment based
    on a high personal savings ratio

   Income doubling plan

   Shifted from agriculture to heavy industry
HIGH GROWTH
 Investments     in education, equipment and
 R&D

 Interest   rate regulation
     Rates were not determined by market forces

 Indirect   financing
     74.1% of financial sources were provided
      through banks (U.S. – 28%)

 Very   high levels of Productivity
     Growth in productivity was almost 9%
RESTRUCTURING
 The   oil crises

 Shift   to a service based economy

 Banking    deregulation

 Trade   friction

 High    levels of foreign investment
RESTRUCTURING
 Reckless   borrowing by banks

 Reductionin the growth of productivity to
 4% yet higher than 2.3% of U.S.

 Signing   of the Plaza Accord,1985
     Strong Appreciation of the Yen

 Real estate, stocks and capital investment
 artificially pumped by the authorities
THE ASSET BUBBLE

Causes
     Structural
       Banking structure
       The post war economic model

     Monetary
         Sharp appreciation of the Yen
Consequences
     Excess investment in properties
     Over-expansion in capacity
     Lavish consumption
     Rise in outward FDI
40,000
35,000
30,000          Nikkei Stock
25,000          Average 225
20,000
15,000
10,000
 5,000
     0
         1983
         1984
         1985
         1986
         1987
         1988
         1989
         1990
         1991
         1992
         1993
         1994
         1995
         1996
         1997
         1998
         1999
         2000
         2001
         2002
         2003
         2004
         2005
         2006
         2007
         2008
(1982 = 100)
  400
                Average land
 350

 300
                price index
 250
                Source: Japan Real Estate
                Institute
 200

 150

 100            Note: Land prices in
  50            6 largest cities began
                to rise in 2006.
   0
       1982
       1983
       1984
       1985
       1986
       1987
       1988
       1989
       1990
       1991
       1992
       1993
       1994
       1995
       1996
       1997
       1998
       1999
       2000
       2001
       2002
       2003
       2004
       2005
       2006
       2007
BURST OF THE ASSET BUBBLE
 50% drop in the stock index and real estate prices
 13 Bank Failures and many Bank Runs

 Injecting liquidity by buying up unconventional
  assets
 Zero interest rate policy

 Fiscal measures
JA
				
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posted:8/21/2010
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Description: This presentation explains in detail the past and the current state of Japanese Economy.
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