Privatisations and the stock market bubble are also largely to blame for the recession where companies with little or no proven track record float on the exchange creating billionaires out of their owners but with the actual value of the company being quite dodgy. This policy has created a lot of paper money shareholders but if these were to attempt to cash in on their investment, undoubtedly the economy would crash in a spectacular manner. The crash also brought about governemnt intervention on a massive scale thus belying the fact that the state has to be completly left out of running the economy. American capitalism is fundamentally flawed and from what is happening now, it appears that the lessons have not yet been learnt.
Policymakers in Japan, the world's second-largest economy must transition their nation away from a manufacturing-dependent model for growth. What industry sectors might emerge as the new drivers of economic growth? Defend your answer.
Since the Second World War, Japan has been quite an economic powerhouse and has transformed itself from a pariah nation into one of the most successful economies in the world. It prospered chiefly through mass production of material objects such as cars and later on audio and video products as well as computers and games consoles. However with labour costs fast rising and becoming uncompetitive, the country’s economy needs to diversify substantially also to get it out of the recession which it cannot seem to be able to shake off.
Japan has always been traditionally strong in the banking sector although it is not really known as any sort of financial haven. This is an area policymakers could explore, as an attractive proposition for investors who wish to pour their money into the country by offering high rates of interest and good tax breaks. Traditionally known as hard workers, the Japanese can provide a splendid service to all those who wish to sink their money into the country and that could also be used to boost the economy.
Another area into which Japan may diversify is tourism which again is rather lacking in this country. Although Japan boasts a rich and varied history, its remoteness is obviously a problem in attracting tourists, principally from Western countries. However with today’s excellent air links, the tourism trade can be boosted substantially with proper advertising campaigns and similar promotions that should enable the country to compete in this area.
Do you think that the economic stimulus programs in the United States, Asia, and elsewhere are the right approach to pulling the world out of recession? Defend your answer.
The 2008 recession has perhaps been the greatest one in modern times and has probably exceeded the 1929 Wall Street Crash principally as it provided far greater losses and failures than that especially in banks and the property market. However this time round we have seen governemnt intervention on a massive csale to save the banks and other financial institutions especially in the Western world and asia.
Still, all this intervention and the subsequent burdens on the taxpayer seem not to have had the desired effect on the unquenchable thirst of financiers and investment bankers who gratefully gobbled up the billions provided to them by the state and continued with their risky prcatices like before as if nothing had happened. Banks continued to make massive investment profits on their investmnet arms after the crash and these profits were once again paid in huge bonuses to the select few. In some countries such as Greece, the country’s economy was in such a bad way through years of largesse that it is now on the brink of economic collapse.
The situation now is very much the same as it was pre 2008 and it appears that no lessons have been learnt from the crisis. Government intervention has been good and timely yet what needs to be done is to overhaul financial regulations to ensure that such a crisis never occurs again. It seems that the lessons of flagrant risk have not been learnt and a double dip recession is still looming alarmingly on the horizon.
Keegan J, Green (2011) Global marketing; Sixth Edition, Prentice Hall
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Coffey, Tomlinson, Bailey (2007); Crisis or Recovery in Japan: State and Industrial Economy, Edward Elgar Publications
Krugman P (2008); The Return of Depression Economics and the Crisis of 2008, W. Norton