They got overtaken by Germany a country with 50% lower population and the gap is widening. Their gdp per capita is below some Eastern European countries and way below other developed countries that used to have similar gdp per capita. Yen’s devaluation is getting faster so in the future I don’t think Japan can even be called a first world country anymore. What exactly caused this? I know Japan has been in recession since the early 90s but this last few years seem to be extra harsh on Japan
In: Economics
Japan started in 1950 without many factories and homes. They borrowed money and built these factories and homes and because they were really needed they were making lots of money. But by the 1980s they had enough of these, but they were in the habit of borrowing money to make factories and homes, so they kept doing this. By the end of the decade they had too many factories and homes and these new ones weren’t making any money, they were sitting empty, but people still had debts they borrowed to pay for these factories and homes that weren’t making any money. These were very large debts. So Japanese cut back their spending so they could pay back these loans. But because they all cut spending they were selling less to each other and making less money. So it took them a very long time to pay back their loans during which time there economy hasn’t grown much.
This is what called a investment lead growth model, turning into a balance sheet recession.
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