Apart from the government intervention the recession has caused the Japanese
to rethink their whole management structure. This now means instead of the rest
of Europe trying to model themselves on Japan, Japan has started to model itself
on the Western way of running a company. More specifically the American way. One
of these tactics is restructuring where the “social contract” between companies
and their employees has been revamped. So out goes the loyalty and hard work
from the workers and the employers no longer offer life long jobs. This in turn
has the effect on households to rethink their financing. Because jobs are easier
to gain or loose money is much more carefully managed. The effect is drastic,
even peoples holiday locations and benefits are affected by this change. Like
with most economies it was true with Japan when they went into their recession
their imports became low and their exports increased. This is because of the
recession it became cheaper for other countries to purchase from Japan and it
became more expensive for Japan to purchase from abroad, the yen was very weak.
Now that they are breaking out of their recession their trade, their imports and
exports have increased (although it is more common for exports to decrease) with
Asia.
They are trading far more in IT equipment which may prove to be their
saviour, their trade with China has also increased in textiles products. Japan
took some very strong and drastic spending to recover its economy which has
caused them a fiscal deficit, The Government has relied far too heavily on their
fiscal policy which helped them out now but what about later. And although they
did use monetary policy (lowering interest rates) to increase spending it had
little effect. Their companies are going through a major “reconstruction” which
will affect their “fixed expenses” and affect the unemployment for the worse in
the short term. In Japans case government intervention has had a positive effect
and without it the economy would have certainly gone in a major slump but in the
end the government is not powerful enough to sustain the economy by itself, it
needs help. This help should come in the form of the businesses that make up the
economy. It is a good thing that the Japanese firms are looking outside of what
they know because it can only lead to improvement. A mixed economy is a right
economy.
Words: 1082
