Financial Daily from THE HINDU group of publications
Thursday, Dec 05, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Economy


Bursting of Japan's `bubble' economy

G. Chandra Shekhar

OSAKA (Japan), Dec. 4

IT is the story of a roaring Asian tiger that dominated the global business jungle for long years suddenly finding itself transformed into an ageing groaning weakling, unsure of its economic future.

Japanese are ruing the last decade - the 1990s - as a `lost decade'. The economic machine that changed the world and the way international business is done today is almost dysfunctional. Faced with boom conditions for over two decades since 1970s, despite oil shocks and rising competition, Japan grew into a powerful player in the global economic and political arena. The country's quest for sustained strengthening of competitiveness, particularly in hi-tech industries, was widely known.

The world keenly watched Japan even as its business systems became subject of great interest in the western world. Fuelled by sharp business acumen, strong cultural values and technological advancement, Japan's economic growth was the envy of many developed nations - more incomes, more demand, more investment, more employment _ all leading to more growth. Rapid economic growth of the 1980s had dramatically altered the lifestyles of citizens. Rising incomes transformed the once-conservative society into splurging consumerists.

Something went wrong in the early 1990s - the bubble burst; and Japanese academicians are not ashamed of terming it the `bursting of the bubble economy'. With the bursting of the economic bubble, the country moved from recession to long depression, called Heisei Depression.

Today, Japan is facing a series of problems. Commercial banking system is burdened with extraordinarily large accumulation of bad debts because land prices have crashed by nearly half and most banks advanced monies against land as collateral during boom time.

Companies losing their competitive edge in the global market are restructuring. But for the common man, the word restructuring has become a cruel euphemism for "firing from jobs'', as Prof Hirofumi Ueda, Associate Professor at Osaka City University, said.

Personal consumption growth is almost flat as everyone is looking for bargain prices. Opening up of the external trade has meant larger influx of low priced imports from abroad - especially from Asian countries led by China.

Worse, the age profile of the Japanese society is changing. In 1975, less than 8 per cent of the population comprised senior citizens; today, the size has grown to 17 per cent. Japan's GDP growth rate has tended to zero over the last few years. Small and medium enterprises are closing down. Consumption habits of citizens are undergoing changes, not for the better though.

Adding to the woes of the citizens is the unstable political system and financial difficulty the Government is finding itself in. "We need to address several problems simultaneously," according to Prof Ueda. Assessing the impact of globalisation; strengthening Japanese industrial competitiveness; stimulating personal consumption; and improving national finances are some of the areas that need the urgent attention of policy makers and the industry.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Bursting of Japan's `bubble' economy


Putin has corporate India wide-eyed
`Close ties key to strength in global tech market'
India, Russia sign pacts to increase level of trade
L&T likely to take stake in Jaipur-Kishangarh project
KTDFC cuts interest rates
`Recent finds make NELP-IV attractive'
KPCL signs pact with 6 washeries for coal supply
Govt hopeful of more funds from IPPs
Steel dues may be recovered from export proceeds
Direct tax receipts slow down in April-Nov period
Vizag industries facing water crisis
Doordarshan bets on cricket
Bluedot stamp for caring corporates
Garment exporters told to send US cargoes by ship
Govt to review Centaur deal if found illegal
Move to privatise CSL opposed
Punjab Tractors sale will trigger open offer in arms
JC Bamford FDI proposal among 20 cleared
Dean Foundation scouting for corporate support
Energy Conservation Act — Industry given 5 years on power consumption norms
Tooltech show opens today
PM to open investors' meet on Jan 18
Bangalore Silk Expo 2002
Trade barriers stall exports worth $100 b from developing nations
Farm, allied products boost export growth — Plantations, leather fare poorly
AP Govt to evolve health tourism package
CSE scam probe: Broker Singhania in custody


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line