The Bubble Economy of Japan

Essay by freedomroadUniversity, Bachelor'sB, September 2008

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The Economy of Japan had experience a tremendous growth since the end of the Korean war. The growth of GNP in 1967 and 1968 was above 10 % (double digit growth period) which exceed countries such as Britain, France and Germany. Theeconomy experienced a boost is due to many reasons, such as: enlargement of industrial facilities, massive adaptation of western technology and education,lower the military expense to 1% of GNP, relation with power nation, human resources and their spirit to achieve "zero defect program". But after the firstand second oil crisis that occur from 1973 onward. The economy move downwardspartially due to the poor management of economic policy. Although the governmenthad attempt to adjust the economic policy but the recovery was slow. As thesoaring of yen continues the demand for export has increase tremendously. Withthe concern of the United State of this problem, president Reagan and the G5have signed an agreement with Japan called "Plaza Agreement" , the agreementstated that the exchange rate of Japan and Deutschmark can appreciate againstthe U.S.

. Since then the yen value began to appreciate, Japan was goingthrough a period of trade balance adjustment. While Japan is prepare to gothrough a period of trade balance adjustment, it will also suffer a period ofrecession, so the government strongly encourage business activities tostrengthen the economy in order to prevent backwash effect. It was this eventwhich boost up the GNP and raise the exchange rate. With this exchange rateadvantage it stimulate business activity on housing and stock investment whichcreated a bubble economy. During this period almost the entire country wasinvolve in land speculation or other speculate activities. In this essay itwill prove that land speculative activities had create many negative impacts tothe Japanese society and economy. Firstly, it will describe the cause of landspeculation. Secondly it...