Contemporary history of Japan and UK Japan is the first Asian country to industrialise its economy and become on par with the advanced west. This is all down to a very strong and determined work ethic and their technological aptitude. They place very high emphasis on education and with a comparatively small defence allocation (1% GDP) they have one of the most technologically advanced economies in the world. Japan enjoyed real economic growth for three decades with a 10% average in the 1960s, 5% in the 1970s and 4% in the 1980s.
However, growth slowed markedly in the 1990s to an average of 1. 7% due largely to inefficient investment and an asset price bubble in the late 1980s. In March 2011, Japan was hit with their strongest-ever earthquake, and a subsequent tsunami, which caused major devastation, killing thousands and damaging several nuclear power plants. The catastrophe disrupted the country’s economy and its energy infrastructure, and severely strained its capacity to deal with the humanitarian disaster (https://www.
cia. gov/library/publications/the-world-factbook/geos/ja. html).
The UK was the first nation to industrialise by the mid nineteenth century she was considered the most advanced economy in the world. The British industrial revolution was founded on the basis of the market or capitalist economy. Adam smith is the father of the capitalist economy, he identified some key features of this system in his book “The Wealth of Nations” 1776, the features were: private ownership of resources; the price mechanism allocating scarce resources; laissez faire; competition; profit motive; and consumer sovereignty the Prior to 1979 the British approach to macroeconomic policies was very Keynesian.
Britain joined the European Rate Mechanism (ERM) of the European Monetary System (EMS) which meant that the British pound was tied to the EU exchange rate (Woodward, 2004). Britain’s financial policies were influenced by the collapse in oil prices during the early part of 1986. This meant that the level of tax revenue was reduced and the government was forced to delay any major reductions in income taxation. The collapse meant that government could only manage a 1 percent reduction in the basic rate (Woodward, 2004). 992 saw the end of Britain’s membership of the ERM which also brought about a major recession, affecting those who had benefited from the economic boom of the 1980s. Thatcherism saw the privatisation of many state owned entities, including British Airways, British Telecom and British Gas amongst others. The global economic recession of 2009 saw Britain plunder into deep recession, which lead to rising inflation and unemployment. Current economic situation
Japan’s economy is sustained by its highly educated and well motivated labour force (Rosser and Rosser, 2004). For decades employers have guaranteed lifetime employment to their employees, hence the reason for Japan’s employment stability. This guarantee over the past few years, have been eroding because of dual pressure from global competition and changes in the demographic domestically (https://www. cia. gov/library/publications/the-world-factbook/geos/ja. html).
Nakajima et al (2000) stated that Japan’s economic growth since the burst of the economic bubble in 1990 has been minimal, with an average GDP growth rate of less than 1 percent in the 1990’s. Rosser and Rosser (2004) pointed out that Japan was the first nation of non-European origin to industrialise and experience modern economic growth. Its slogan “Japanese spirit and Western ability” sums up Japan’s approach to economic development. They succeeded by maintaining the Japanese culture which inculcates a good work ethic with western technology.
Japan’s fiscal policy has attracted attention because of the relatively low levels of government spending and taxation (Rosser and Rosser, 2004). Rosser and Rosser (2004) stated that many believe that Japan’s relatively low level of social transfer payments encourages savings and hard work. Japan’s economy like most of the developed economies has been in recovery after the global financial crisis of 2009 but the recent earthquake and tsunami has dealt a major blow to their economic growth and recovery.
It is argued that Japan has run out of steam and its economic miracle is over. Japan seemed destined in the 1980s to take the number one spot as the world’s leading economy but given recent economic failures this seems highly unlikely in the foreseeable future. The UK economy enjoyed major improvement in its financial stability during the 1980s. However, there was a high price to pay as unemployment rose sharply in 1981 and 1982, with unemployment levels rising to over 3 million in 1983 and remaining above that level until mid 1987 (Sentance, 1998).
In 2001-2002 the UK’s GDP growth slipped as the global downturn, the high value of the Pound Sterling and the bursting of the ‘new economy’ bubble hurt manufacturing and exports. Despite being one of Europe’s strongest economies the UK’s growth rate is 1. 6% and unemployment is 7. 9%, this is as a result of the most recent recession that started in the US in 2009, which hit all the major economies, more so the UK because of their close economic links to the US economy.