Multinational Business in Japan and South East Asia Term Paper

Multinational Business in Japan and South East Asia - Term Paper Example Japanese economic growth following the American occupation wars remarkable for its magnitude, speed, and downright relentlessness. Between 1957 and 1984, Japan's gross national product increased from $3.08 billion to $1.261 billion, a 42-fold jump. Moreover, Japan's economy grew at an annual rate of 9 percent per year during the high-growth years of the 1960s. How was this economic miracle achieved? Japan has employed a version of "developmental capitalism" that allows for a much greater government role in promoting Japan's international competitiveness than is typical in Anglo-American liberal capitalism. Japanese business and government leaders started to develop and implement policies aimed at promoting national economic growth following the end of the U.S occupation of Japan in 1952. The government has positively influenced economic growth through wise macroeconomic policies. Business in Japan has maintained very close relations with the bureaucracy and politician.  Japan's gro ss national savings at its zenith reached nearly 40 percent in the post-war period. Between 1960 and 1980, the Japanese saved around 20 percent of their disposable personal income. The high level of savings of households provided banks and other financial institution with ample funds for heavy investment in the private sector. Japan has invested heavily in developing an effective education and training system. Companies are responsible for providing technical training to the persons they hire.  Japan's economic success can be explained by largely the Cold War and the relationship between the United States and Japan that it produced. The cold war rivalry between the United States and the Soviet Union led the United States to shelter Japan from the vagaries of international politics, permitting the Japanese to focus their attention and resource on achieving economic growth. Advocates of "free rider" in which the U.S-Japan relationship has supported Japanese economic growth. The Unit ed States provided cheap technology transfer to Japan following World War II and promoted the Japanese economic build-up through its international trade policy. From an economic standpoint, the contrast between the 1990s and the cold war years can be seen by looking at Japan's real economic growth rate. In 1992, Japan's economy entered a period of stagnation with economic growth rates much below the previous average. In retrospect, it is clear that the Japanese economy became dominated by a financial bubble in the 1980s and early 1990s. In May 1989, the government tightened its monetary policies to suppress the rise in the value of assets such as land. By the end of 1990, the Tokyo stock market had fallen 38%, wiping out 300 trillion yen (the US $ 2.07 trillion) in value, and land prices dropped steeply from their speculative peak. This plunge into recession is known as the "bubble economy". The post-bubble recession continued through the second half of the 1990s.