Globalization and Japan's Economy

JapanÆs economic model is characterized by a great appreciation of the yen, which started in 1985 after the Plaza Accord was announced, and a very large Japanese trade surplus (Shachmurove 47). Furthermore, JapanÆs economy is generally cast in terms of how it relates to the U.S. economy. Therefore, the exchange rate between the dollar and the yen and the balance between the two economies must be considered in any discussion of JapanÆs economic model; as the yen appreciates, American imports to Japan are likely to increase and Japanese exports to the United States are likely to decrease (Shachmurove 47).

At the time of the Plaza Accord, the United States was suffering from a $122 billion trade deficit, a current account deficit, and an overappreciated dollar; one objective of the Plaza Accord was to lower

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luence of China, so U.S. military power is seen as ôa necessary restraint on ChinaÆs ability to assert its national interestö (Umbach 52). Since the U.S. also perceives China as a threat, China having assumed the position that the former Soviet Union formerly had, U.S. relations with both China and Japan are watched with great interest by everyone interested in the Asian front (Umbach 52). Nature of JapanÆs Business System Hiroyuki Odagiri of Hitotsubashi University points out that since the most active innovators in any country are its private firms, ôa nationÆs innovation system cannot be free from its business systemö (2). He goes on to explain that JapanÆs innovation system and its business system are currently co-evolving and improving the business systemÆs formerly unfavorable stance toward startup activities (Odagiri 12). The government has adopted several policies to promote startups, such as providing subsidies and debt guarantees to support investment by small- and medium-sized enterprises (SMEs) starting new businesses and to develop and commercialize new technologies (Ogadiri 11). The government also provides tax advantages to individuals who invest in startup companies and has reduced the minimum amount of capital
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Approximate Word count = 3075
Approximate Pages = 12 (250 words per page)

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