This article presents a comparative study of the world's two most contrasting economies- the United States and Japan. There are many common grounds between the two nations as well as a wide range of differences. Of course, the United States commands a more significant presence among the world economies because of its position as an economic superpower. But it is interesting to note that the Japanese economy also offers several perspectives that would be of great appeal.
[...] It illustrates how this spending pattern can lead to a shift in demand towards fewer, higher value items and can actually involve expenditures that generate less economic activity in general. Conclusion The dollar has been falling against major currencies for some months now and stock market behavior indicates a degree of caution rather than very buoyant spirits. The bad news for the rest of the world economy is that there is still no other major source of potential dynamism that could take up the slack left by a less forceful expansion in the United States.2 In 2010, two decades after the bubble, Japan's equity market was trading [...]
[...] The Japanese, on the other hand, are more committed to their jobs and the difference between the earnings of a top honcho with a worker is lesser when compared to the US, where the difference is miles apart. The contrast in work cultures A classic case study of differing work cultures between the nations is depicted in the automobile industry. For over 40 years, Japan has evolved from manufacturing little tin pans to vehicles. The Japanese brands are known to be high in quality as well. [...]
[...] Post recession moves Comparing the US and Japanese bubbles Both the US and Japan experienced stock market and real estate bubbles. There are certain similarities and structural differences in the composition of both bubbles. Let us now look into the various factors that led to the formation of the bubbles and the subsequent bursting of the same. The Japanese Bubble On December Japan witnessed the peak of its stock market. This marked the height of its bull runs; while the real estate bubble occurred two years later, in 1991. [...]
[...] Similar to the Japanese officials, the US also increased public borrowing to help the private sector clear its debts and focus on a recovery in its business operations. Apart from this, the Federal Reserve also lowered interest rates to close to zero and kept a loose monetary policy. These steps were taken to avoid the mistakes committed by Japan; that of increasing taxes too soon and sending the economy back into the doldrums. Differing Paths to Recovery Two decades after Japan's bubble, the country still suffered lack of confidence and economic growth. [...]
[...] Contrast in savings mentality of citizens The savings mentality of the citizens of a nation is directly dependent on the nation's financial health. If a nation is completely dependent upon continued consumer spending, it is difficult to instill in the savings culture in the minds of the citizens. It must also be ascertained if the situation could be sustained at least for a medium term. After the financial recession of 2008, the stock markets recovered a year later. Market analysts were ecstatic at this slow but steady recovery. [...]
Online readingwith our online reader
Content validatedby our reading committee