ECONOMIC BUBBLE in japan

The second largest market economy in the world, Japan has a per capita income that ranks third.   In 1996, it registered a gross domestic product (GDP) of $4.63 trillion.  Following the collapse of the "bubble economy" in the early 1990's, growth in the GDP has slowed.  With the vision of creating a more efficient economy, Japan's government is currently promoting deregulation of numerous economic sectors.

HIGH-GROWTH ERA

Japan's postwar economy developed from the remnants of an industrial infrastructure that had suffered widespread destruction during World War II.  In 1952, at the close of the Allied Occupation, Japan was a "less-developed country," with a per capita consumption roughly one fifth that of the United States.  Over the next twenty years, Japan was able to become the first postwar-era country classified as "less-developed" to achieve "developed" status.  In 1968, Japan's economy became the world's second largest, behind only that of the United States.

The percentage of Japanese living in cities almost doubled between 1950 and 1970, thus increasing demands for services.  During the 60's, Japan's average for exports grew 18.4% per year.  This economic growth accompanied tremendous changes in Japan's industrial structure.  Whereas agriculture and light manufacturing used to be the mainstays of the economy, now it had shifted to heavy industry and services.  Dominating the industrial sector were iron and steel, ship-building, machine tools, motor vehicles and electronics

Although high growth rates were predicted for the 1970's, double-digit inflation, the Middle East oil crisis, and other factors, caused a recession which lowered future growth expectations.  This resulted in a reduction of private investment and economic growth slowed to an average of 3.6% from 1974-1979, a big drop from the 10% it had previously experienced.  There was a slight increase in the 80's to 4.4%, but it was not until recently that a positive change has come about, due to many factors, including the "bubble economy."

In spite of the oil crisis and what happened, Japan's major export industries remained competitive by cutting costs and increasing efficiency.  The energy demands were reduced and the automobile industry was able to improve it's position globally, by manufacturing lighter and more economical vehicles.  The second oil crisis in 1979 created a shift in Japan's industrial structure from emphasis on heavy industry to development of new fields, such as the computer, semiconductor, along with other technology and information-intensive industries.  This started a period of rapid growth