Japanese Economy

In order to understand the Japanese economy, it’s very important to note that the country has little to no natural resources, as it is a relatively small island compared to its population. Because of the geographical situation, the Japanese economy relies heavily on its exports to other countries. In U.S. dollars for easier understanding, Japan currently has a GDP of $4.15 trillion, the 4th largest in the world. It makes sense to have a large amount of purchasing power, as the Japanese have a reliance on buying raw materials from other countries. The labor force is divided up into three sections, with 4% in agriculture, 28% in industry, and 68% in services. The unemployment rate, although not nearly as bad as the United States, is at 5.1% according to the 2009 records, which I’d assume it only grew in the year 2010. Their external debt as of June 30, 2009 is $2.132 trillion, and is the 8th highest when compared to other nations of the world. It’s easy to see that the Japanese economy is very advanced, and is growing at a very fast rate as well. For the Japanese, however, that isn’t purely good news. The value of their currency, the Yen, has been increasing dramatically in comparison to other currencies of the world. This leads into probably one of the most current important issues surrounding the Yen. The key to understanding why the Japanese want their Yen to be devalued is because their economy relies heavily on imports and exports. If, for example, 1 yen was valued at 10 U.S. dollars, then a Japanese product that cost 5 yen to make will sell for $50 in America. However, if the yen increased to 5 yen per 10 dollars, then the same product would only bring in $10 to the Japanese economy after the currency exchange. One of the reasons why here in America we are able to purchase exported Chinese goods at low prices is because the Chinese government, although at the expense of the country’s standard of living, artificially keeps the Yuan at a low value. The Japanese are a democracy though, so it poses a problem on how much the government should intervene in the free economy to artificially lower the value of their currency. Overall, the Japanese are doing incredibly well in the economic sector. That said, having their currency backed up by U.S. dollars, and having the U.S. being one of their largest purchasers of exported goods, the Japanese are being hurt by the global economic crisis. Other than the looming currency war, however, Japan seems to be doing just fine relative to other structured nations.

http://www.economywatch.com/world_economy/japan/
https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html