Globalization and Japan's Economy

Asian economies and business systems are increasingly being influenced by the dynamics of globalization. The Japanese model in particular is going through a slow and problematic process of transformation that includes a hollowing out, or kudoka. This paper will examine the Japanese model in terms of the country's political economy, strategic orientations, and the nature of its business system. The causes of Japan's economic crisis will be identified and key areas of reform examined. Finally, the Japanese model will be evaluated with respect to the degree of its convergence with the Anglo-American model.

Japan's 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, Japan's 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 Japan's 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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Category: Economics - G