To analyze the characteristics of the Japanese economy, you should see how the current change compared to the past, and what is different from the foreign country. The rapid expansion of the Japanese economy was brought about by the expansion of the manufacturing industry in the 1950s and 1960s. In the manufacturing industry, it becomes possible to mass-produce production facilities by large-scale production, development of production technology and development of efficient production management methods, and by household consumption by consumption, it will expand the gross domestic product It was. After that, once the domestic economy matured enough to overcome the economic downturn, it was time to extend overseas exports, export products produced in Japan, earn income. In the past, steel, shipbuilding, chemistry, electronics, machinery, automobiles became the main industry after that. Economy continues to grow till about 1990, with the economic recession starting in 1990, turning back to recovery around 1995, but growth has stopped after that. From inflation to deflation around 1995.
Japan's economic growth occurred in the 1960s and 1970s. Originally from that time back from the postwar reconstruction, the leeway for growth was great aiming for developed countries, but there are factors to actually grow. This growth factor is attributable to three factors: (1) population distribution, changes in the geographical distribution of the population, (2) changes in the industrial structure, and (3) changes in the international economy. The first factor is the increase in population, especially in young people. The increase in the number of young people has led to an increase in labor input into the secondary industry due to the increase in the labor force population. As the population increases, the purchase market for goods also grows. The purchase of houses increases, and the number of household electric appliances put in it increases. With the improvement of living standards, the purchase per capita itself will also increase. At that time, many housing complexes were built, and it became a receptacle for young people and local people. Companies are relatively large, since the population is relatively large relative to other countries, even if they oppose only the domestic market. The young generation was hired by the secondary industry, the purchasing power increased and the domestic market also increased due to the rise in wages. In the process of industries shifting from primary industry to secondary industry, the rural population moved to urban areas, and the increase in urban population, which became nuclear families, resulted in housing demand and demand for daily necessities. The secondary industry became easier to collect workers and the transition from primary industry to secondary industry advanced rapidly. Productivity is higher than agriculture in the manufacturing industry, labor intensive industry, eventually the capital-intensive industry has grown. With the change in industrial structure, the transition from primary industry to secondary industry with high productivity contributed to high growth.
Among secondary industries, from "labor-intensive industry" to "capital-intensive industry", in the manufacturing industry "scale economy" effect is strong due to the increase in enterprise scale, the increase in size of enterprises, the increase in export growth It pushed up. In the manufacturing industry, we introduced technology developed in advanced countries such as the United States, and gained competitiveness by selling it cheaply from foreign countries. In Japan, quality control has progressed, even with similar products, it was able to compete that the price was a bit cheaper than that made in foreign countries, without failure. In domestic large enterprises, the cost reduction by robotization also progressed. With the introduction of technology and learning effect by manufacturing experience, even if the domestic market matures, export has expanded overseas and kept growth. As a result, the growth engine of the Japanese economy was technological capability, satisfaction of the domestic market by the large enterprise manufacturing industry that produces high quality products, and expansion into overseas markets. GDP growth age of 7 to 8% in the high growth era, then 3 to 5% stable growth era. Corporate capital investment and exports contributed to the growth of GDP. An increase in production amounted to investment demand, capital accumulation was made through mechanization of the manufacturing industry and transition to a capital-intensive industry. Increased productivity through capital accumulation, increased domestic consumption and exports. Real estate price, one of the capital, rose. The rise in asset prices has led to the expansion of loans, and also triggered investment. The turning point was the collapse of the bubble in 1990, after which it has become a long-term downturn.
Between 85 and 90 years, asset prices soared. Especially the stock price, real estate price rose. GDP also grew, but it is around 5%, not a high figure compared to the high growth era. The rise in asset prices produced asset effects that the wallet was relaxed due to the increase in assets involved, resulting in high consumption and excessive investment. Activation of consumption is positive for the economy, but it is expected to increase consumption expectations and facilitate bullish production plans. Excessive capital investment itself will improve productivity, but because of the large investment amount, it is inefficient, and improvement in productivity is low for investment. In mass production investment, sales increase is a prerequisite. Real estate investment requires land use commensurate with investment, but if it is for resale purpose, if it can be expected to rise even if it does not match the investment amount, there is purchase demand and price rise continues. However, if prices rise so much that land use can not match the investment amount, demand for actual demand will be lost and prices will begin to decline. Consumption has elements of eating up demand, excessive consumption has the effect of suppressing future consumption. When the economy turns downhill by some chance, excessive equipment only produces demand, so it gets idle, and excessive labor is a cost factor. If the economy expands rapidly, future expectations will increase, but the actual demand is limited except for the asset price aiming for the price increase, and eventually the economic expansion will cease. The question is, once it stops, if the economic overheating goes down to a certain extent, it will return to the orbit of stable growth again. If it overheats, companies have bad assets and excess facilities that have fallen, which is a heavy business performance.
Even if the bubble collapses, if you get into a stable orbit again after a certain period of time, you can continue economic growth again. In fact, however, after a bursting of the bubble, the downturn will continue for a long time. It took time to compress the excess debt that the company had. If the demand recovers and the sales increase, it leads to the reduction of the debt, otherwise the debt can not be compressed, and companies that can not afford will keep ahead of new capital investment. Property prices continued to fall. In order to eliminate three excesses (excessive employment, excessive facilities, excessive borrowing) in the bubble era, companies were obliged to defend their management (balance sheet adjustment), and growth investment such as research and development and capital investment was refrained .
As the times advance, the world economy has become more borderless. In Japan, the economy was circulating in Japan in the past. Items that were in demand in the country were produced and supplied domestically. Only things that can not be procured domestically, such as resources and energy, were imported, and the exported goods remained in a part of the things produced domestically. As the domestic population increased and living standards improved, the output increased and the economy grew. As the economy further grew, the output of industrial goods increased, but the import of raw materials also increased. Production technology will rise, and if more mass production becomes possible, production beyond domestic demand will be possible. More than the amount covered by domestic demand was exported, and producers were able to expand production and profits without being subject to domestic demand constraints. In this way both imports and exports have increased, but the world market is bigger than domestic, and the export of industrial products has increased more than imports. As exports increased, the trade balance became surplus, resulting in the appreciation of the yen on the foreign exchange market. Overseas expansion advanced mainly by large companies, with the aim of preventing the influence of the appreciation of the yen and production at low cost.
The Japanese economy, which seemed to recover after the collapse of the bubble economy, has been in a long-term downturn since 1998. Real GDP is low growth of 1 to 2%, and for nominal GDP, it is almost zero growth. The characteristic of the domestic market is that the population composition is aging. It is no exaggeration to say that the aging society is the fastest growing country. The aging population has reduced the labor force. This not only leads to a decline in production due to a decrease in labor input, which is a factor of production, but also a decline in the number of people receiving wages, resulting in a lower income level and a lowering of consumption. The shrinking domestic market will lower the performance of domestic demand type enterprises, domestic sales being the mainstay. The secondary industry will find an active way to export and the tertiary industry will find a way to go overseas. Even if companies export overseas and export and overseas performance is good, the domestic market is not impaired, and corporate domestic capital investment is also sluggish. Deflationary conditions continued for prices.
Historically, the Japanese economy is
has changed. Economy has slowed from high growth, low growth, zero growth and growth rate year by year. Transition from primary industry to secondary industry, transition from light industry to heavy chemical industry and high-tech industry brought high growth. When domestic consumption began to be produced and domestic consumption ceased, sustained economic growth by exporting overseas markets. However, as the cost of domestic production increased and the international competitiveness of exports declined due to the appreciation of the yen, movements to close domestic plants and relocate overseas increased. The surplus labor force was absorbed by the tertiary industry. Although the tertiary industry expanded, the secondary industry has shrunk correspondingly, and today it is entering a state of not growing.
Looking at the Japanese economy with statistics, you can see the clue of "Why was Japan zero growth over the last 20 years?"
In Japan, the nominal value has been growing rapidly until 1991, low growth until 1997, and has been flat since 1998. It is a nominal GDP close to the real life feeling, and the condition that it does not grow at all for more than 10 years continues. Looking at the real value, the high growth until 1991, the era of low growth until the Lehman shock since 1992 continues.
The labor force population (the productive age population), which is the potential labor input to the macroeconomic economy, tends to decline starting in 1998. Among them, even in terms of the number of employed people excluding unemployed people, it is a downward trend with a peak around 1997. A decline in the number of workers leads to a decline in production (GDP) due to a decrease in labor input in the macro economy. Furthermore, it is a cause of stagnation of personal consumption due to a decrease in salary. On the other hand, the non-labor force population is increasing year by year.
Since the collapse of the bubble (1991), working hours are decreasing. The labor input in the macro economy is a value of working hours multiplied by the number of workers, but since 1997 both working hours and employment numbers have declined, resulting in a decrease in labor input .
Employer remuneration rose sharply until 1991, then low growth, since 1997 it has picked up slightly in 2005-07 but it is a declining trend. Even with regard to disposable income of working households, it rises by 1998, but it has decreased since 1998. Consumption expenditure of workers' households is on the declining trend in 1997. Consumption propensity declined until 1998, after that it has become a slight upward trend. In other words, savings increased until 1998, but since 1998 the amount of savings has decreased.
Both commercial and residential land prices have been decreasing since the peak in 1991. Looking at TOpIX, the stock price peaked in 1990, and after that, although the up and down movement is repeated, the upper price is constant and the lower price has been changing with devaluation. Both financial assets and deposits and savings have grown steadily until 1998, but have been flat or declining since 1998.
It has greatly increased until 1991, flat from 1991 to 1997, decreasing since 1998. This is consistent with the trend of consumption expenditure of working households.
Even though there are temporary up and down movements like the number of employees, both the estimated population and the number of employees are on an increasing trend every year, there is no change in trends that will decline for a long time like Japan, It has been rising all the time until the shock. Individual consumption expenditure and retail sales have been rising all the while until the Lehman shock. Both wages and disposable incomes have been rising all the time until the Lehman shock. Look at the stock price and real estate which are asset prices. Stock price (Sp 500) has been rising all the time until the time of Lehman shock except for the decline in 2002. Housing appraisal value, which is real estate, has been rising through 2007. Total asset prices of households have also risen on average on average despite the up and down movement. The rise in asset prices constitutes the driving force to increase personal consumption as an asset effect.
Looking at the statistics above, it turns out that all the statistics turned to a decreasing trend with peaks in 1998 and 1998. With the timing of entering the deflationary era (1998), the labor force population has decreased, the number of employed people has decreased, and the disposable income also turned to decrease. As a result, household consumption expenditure declined, and retail sales also declined. So why did employer compensation and disposable income begin to decline? Looking at the total salary by industry, many industries have remained flat or declining since 1997, but especially in wholesale and retail food and drink restaurants, they have declined greatly, especially in 1997. Even with working hours showing the degree of operation, drops in wholesale and retail food and beverage stores are big. After 1998 the gap between declines with other industries has become bigger. Social changes such as a decrease in the labor force population and the number of employed people caused the personal consumption to stagnate and the retail sales declined. As retailers have been sluggish, the wages of retailers have declined, they are in a vicious circle that results in a decline in disposable income and further a decline in personal consumption.
I can divide the Japanese economy into three periods. Initially it is the high growth era towards the bubble until 1990. Until 1990, the economy grew steadily, both nominal GDP and real GDP were high growth. Inflation advanced and the interest rate level was high, personal income, consumption expenditure, land price and stock price rose. The second period is a stagnation period after the collapse of the bubble. In the early 1990s, economic activity has declined greatly, but considering the reaction of the bubble, it can not be said that the Japanese economy is entering a downward trend. Indeed, in the latter half of the 1990s, it is gradually picking up. From 1990 to 1998, despite the decline after the bubble, it can be said that it is generally the low growth era. From 1998 onwards, the economy has entered a period of negative economic growth. Nominal GDP, personal income and consumption expenditure turned into a declining trend at around 1998, and the price was also in the era of deflation.
Why did the trend of the economy change since 1998? I will make a hypothesis. From 1998, employer compensation and disposable income have begun to decline. Looking at which industries have declined, the retail industry is largely decreasing. Looking at working hours as a degree of operation, retailers are decreasing. Since the slump in the retail industry reduced the disposable income and the propensity to consume less likely to change, it may have resulted in a decline in consumer spending and a decrease in deposits and savings. The decline in consumer spending will result in a decline in retail sales, which resulted in a further slump in retail in a vicious circle. Income declines, consumption declines, retail sluggishment appeared at the same time, but what was the first opportunity?
Wages change according to age. The so-called wage curve. It declines after peaking at the age of 50, and it decreases greatly after the age of 61. Employers' remuneration seen in the macro is the sum of the average wage of each age multiplied by the population of that age. Therefore, the total amount of employee compensation is influenced by the temporal change of the population by age and the wage by age. Since the 1990s, the aging of population is proceeding with population composition. If the generation with the largest number of people exceeds 50 years around 1998, the total amount of employee compensation decreases from the wage curve. It is thought that this was the cause of a vicious circle of income decrease → consumption reduction → retail poor → income decrease.
As a characteristic of Japan, the Japanese economy is susceptible to the manufacturing industry. In particular, the performance and corporate behavior of automobiles, electric machinery and machinery, which are export industries, affect the entire economy. Even if the tertiary industry is growing, the international competitiveness of manufacturing exports has declined, and the manufacturing industry has been shrinking due to overseas relocation of factories has become an obstacle to the economy.
In the manufacturing industry in Japan, after strengthening the technology by introducing technologies from foreign countries, securing cheap labor by rural population into urban areas, increasing domestic market by improving national income and corporate development , The production volume was expanded. Even if the domestic demand ceased, even as production expands further by exporting, productivity gains due to technological innovation combined, the manufacturing industry in Japan became the core entity of the Japanese economy. Features of the Japanese manufacturing industry are: (1) production of high-quality products through diligent labor; (2) low cost, improved productivity through ongoing review of automation / robotization and production processes; (3) precision processing technology and high-tech technology Strengths and others, high international competitiveness. Even as the domestic market stagnates due to the declining birthrate and aging population in recent years, exports have increased due to the development of the world economy, and until recently the Japanese economy has been towed. However, recently, problems of the manufacturing industry itself, environmental changes surrounding the manufacturing industry have lost the characteristics of the Japanese manufacturing industry, which has been regarded as a strength, and is losing international competitiveness. Let's analyze this point.
The biggest challenge is that the international competitiveness of the manufacturing industry is declining. Personnel expenses will rarely go down once it rises. The cost of labor in Japan, which became an economic superpower, has risen internationally. Especially, the difference is remarkable compared with China, Korea and Taiwan which are exporting similar industrial products and becoming "competitors". Before the manufacturing industry developed in emerging countries, industrial products were made in developed countries. Among the developed countries, Japan's production cost is relatively low, production technology is high, even a similar product made by other developed countries was cheap and high quality. For this reason, international competitiveness is high and exports to developed countries have been increased. In addition, the height of production technology was able to quickly commercialize ideas born overseas, and was able to offer a large amount inexpensively. Even though I could not be ahead of other countries with originality and idea, there was superiority in commercialization and sales. However, even in emerging countries, it has become possible to create products that are similar to those made in Japan. Emerging economies are cheaper to manufacture than Japan, and they have caught up with Japan which had been ahead of them and came to catch up. In Japan, it is possible to divide up as long as it can produce advanced and advanced products that can not be produced in emerging countries, but at the present time it is not possible to find new products.
As a result of economic growth in emerging countries, manufacturing industries have also developed in emerging countries, and mechanization and large-scaling have progressed. Often emerging countries are targeting overseas markets rather than domestic markets and have come to compete with Japanese products in the global market. Nevertheless, the manufacturing industry in Japan increased exports to overseas, but also in overseas it became possible to produce products of the same quality as in Japan, more labor costs are cheaper, closer to the consuming area more production base The acceleration of the movement to establish the factory advanced overseas. As exports and overseas expansion expanded, the yen appreciation advanced as the movement of foreigners earning overseas to convert them into yen and returning them to the domestic market. Due to the appreciation of the yen, international competitiveness declines, and personnel expenses seen in dollar terms increase, domestic manufacturing industries have become increasingly harsh environments.
Japan's technology is accumulated through long trial and error and skill accumulation, and it is aimed at reducing workers' processing technologies, manufacturing equipment optimization, parts combining technology, lighter, thinner and shorter by high manufacturing technology, product quality Management, adjustment and finishing were strengths. However, as a result of technological innovation centering on recent digital technology, high-tech products can be easily made with simple combination of high-tech parts. To be able to produce similar quality products in countries other than Japan has resulted in simple price competition in the international market. There is no price difference between raw materials, energy and machinery and equipment other than personnel expenses, but personnel expenses in emerging countries are significantly lower than in Japan, and the difference in personnel expenses has become a difference in price competitiveness intact.
The hollowing out of industries is progressing. This problem has existed for more than 20 years ago, but it has further accelerated this decade. The hollowing out of the industry is not only the domestic manufacturing industry newly establishing factories overseas, but also reducing and abolishing domestic plants. Since companies are going to expand their growth, overseas expansion is a natural flow, but if the domestic factories are reduced or abolished, production shifts rather than scale expansion. For the enterprise, even if it aims to expand profits by optimizing production, it is negative to the domestic economy. First, let the factory employees lose their domestic employment. Secondly, orders from plants such as suppliers to domestic plants, distributors who receive factory shipment are lost. Third, if the factory goes away, commercial facilities and real estate with employees as target customers will be affected. Municipalities reduce tax payments from factories as well as population declines. The factory relocation that has a negative influence in this way also has a trend that can not be avoided in the export-type manufacturing industry, as the yen appreciates in recent years, competition with emerging countries and the optimization of production bases on a global scale . Therefore, the problem is whether the manufacturing industry is relocated more than overseas relocation of factories, industries other than the manufacturing industry serving as employment receivers, service industries, etc. are absorbed so much.
In the age of high growth in Japan, agricultural workers declined, but the manufacturing industry got accepted. Agriculture shrinked, rather than accepting the extruded labor force by the manufacturing industry, in the development of the manufacturing industry, it absorbed large amounts of agricultural talent in a pulling form. However, as a result, there was a flow of people from the rural areas to the urban areas, and the rural areas were depopulated. Transfer of labor from low productivity agriculture to high productivity manufacturing industry was positive in the overall Japanese economy. The depopulated region has been getting a negative side of depopulation by focusing heavily on tax revenue which increases as the economy develops. On the other hand, in hollowing out industries in recent years, there is no employee recruitment in the service industry, a highly productive service industry can not be found from a highly productive manufacturing industry, tax revenues do not increase in overseas relocation of companies, The situation can not be compensated for. However, the trend of globalization is inevitable, the problem is that there is no service industry with absorbing employment, which becomes a receiver, rather than relocation of the manufacturing industry, the productivity is lower in the service industry than in the transferring manufacturing industry . Because of the declining population, we can not expect high growth of commercial, wholesale and food and beverage business, which are representative of service industry. Even if you increase productivity you can not think of a way. IT has advanced sufficiently, and the effect of IT conversion can not be confirmed.
Globalization of the world economy is progressing. The past was an economy closed in each country. There are few exports and imports, few foreign investment and foreign investment, domestically produce and consume domestically. There, we did not compare wages and price levels with foreign countries. Globalization means a movement in which one economic cycle is formed throughout the world that goods, services and funds are exchanged across national borders, rather than circulating in the individual economies. If the world as a whole is an economic zone, companies must optimize production locations and selling places in the world, what has traditionally been optimizing production and sales locations within that country become. Optimization is to select a sales location where the most profitable can be expected, and considering the distribution route, while considering the technological capabilities and infrastructure equipment, it produces it in the place with the lowest production cost. Of course, there are a number of points to consider, not only in terms of sales and costs, but also political system, security, institution, law, regulation, technology level, infrastructure situation, future economic trends etc. Generally, in emerging countries where personnel expenses are cheap, there were many considerations. However, in recent years, due to the improvement of technical capabilities by introducing foreign equity attracting measures, legal and regulatory barriers, improving infrastructure equipment, introducing technology, modularizing products, and importing production machines, low production costs It was technically possible to produce equivalent production in developed countries. If so, the worldwide optimization further progresses. "Local production of local consumption" to be consumed at the place of production is also an example of optimization to minimize distribution costs.
Amidst such a movement, overseas relocation of manufacturing industry is proceeding in Japan. It is produced in a country whose production cost is lower than that of Japan. The Japanese economy was originally produced domestically and sold domestically. After that, it produced more than domestically consumed, expanding exports. Companies who thought domestic production could not maintain competitiveness in the global market made a production base in a foreign country, imported to Japan and increased sales in the world market. Overseas, the flow of the overseas relocation has been made at the beginning, the sales base, then the production base, further the R & D base, and the headquarters functions also overseas. Because domestic production can not be profitable because it is reason to oversea production, rather than creating overseas production bases while leaving the domestic production base, domestic production scaled down. This is causing the domestic economy to stagnate. Overseas relocation of production by Japanese enterprises Foreign companies continue to optimize sales bases of production bases throughout the world, regardless of whether they make production bases overseas. , Then Japanese companies will also decline international competitiveness if they do not promote globalization. In the first place, the expansion of Japanese companies overseas is the same as foreign companies entering the same country. It is the same as a foreign company conducting business in another foreign country. With globalization, it becomes difficult to define Japanese companies and companies in the United States. Simply, the head office is located in Japan or the United States. In the world, we have a headquarter in the best place, a factory and a sales base. Such a time is coming. Both Japanese companies and US companies are no longer tied to the Japanese economy or the US economy. Because every company is competing in one world market. The economic trend of the global market will affect the business performance. In Japan where personnel expenses are high, attractiveness as a production base is thin. The birthrate and aging of the population make the attraction as a sales base thin. As a result, Japanese companies aiming for a global market will shrink domestic sectors and go abroad. The problem is not to expand overseas while leaving the domestic sector. Also, even if globalization progresses, foreign companies do not advance into Japan.
Why is Japan under deflation? Japan has already been in deflation for 10 years. Until then, it continued economic growth. Why has growth stopped? From the 1950s to the 1940s, the economic growth rate was close to 10%. Instead, the inflation rate was high, and it was in keeping with the rise in income levels. As incomes and prices rise, corporate sales rise and call for investment. Such economic growth lasted until the oil shock in the second half of the 1940s. In the 1950s, the growth rate fell below 5%, but it continued to grow. When entering Heisei, growth has stopped, and recently it has become negative growth. In the past ten years the Japanese economy had little growth. The US economy continues to grow by 4 to 5%, it is symmetrical as compared to the growth of 1 to 3% in Europe and 7 to 8% in China. In Japan, prices have declined in the last decade, and the state of deflation continues.
In Japan, consumer prices continue to decline since 1995. In the world of the world, it is usually inflation and it is extremely peculiar to the economic policy of each country as to how to control inflation. It can be said that consumers have a good view that prices are falling. If the price goes down, you can purchase more items. But it is a premise on the assumption that salary will not change. For households to which consumers belong, wage income is often the source of funds. If prices go down, sales will fall, which will lead to lower corporate earnings and lower wages. As economic globalization progresses, political economy is becoming one market. In the international commodity market such as raw materials, energy etc., it is rising year by year. Why is Japan suffering from the declining consumer price despite being bothered by inflation in other countries? Here, I will organize what is called "prices".
Prices include consumer prices, producer price, and GDP deflator. Consumer prices are the price trends of consumers' purchasing, final consumer goods and consumer services, the producer price index, the price trends of raw materials, energy, intermediate products to be purchased by producers, GDP deflator Shows price trends of goods and services produced in Japan. Economic changes that affect consumer prices are: (1) the price of international commodities such as raw materials rises, (2) the ratio of food and clothing decreases, the proportion of durable consumer goods for entertainment rises, (3) the ratio of service industry increases There is no rise as much as other developed countries, (4) an increase in imported goods with low prices, (5) the yen appreciation of the exchange rate, and so on. The rise in international commodity prices has the effect of boosting consumer prices such as rising gasoline prices, but mainly affects producer price. The rise in the ratio of durable consumer goods is an effect of suppressing inflation by lowering the weight of foods with severe price fluctuations. Also, for durable consumer goods, as performance improves due to technological innovation, prices are considered to have declined due to the calculation of consumer prices, and expansion of weight leads to price declines. In the service industry there is no price competition with overseas products, it will be a resistance to price decline. If the ratio of service industry is low, there will be no dropdown resistance. As imports produced in emerging economies with lower labor costs increase, not only will themselves lower consumer prices but also price declines of domestic products are triggered due to price competition. The yen appreciation of the exchange rate lowers the price of imported goods. Economic changes in recent years work in a direction to lower consumer prices.
However, recent economic change is a trend of the world, especially developed countries, why is Japan falling only? This is not the only phenomenon in Japan. It is a common phenomenon in developed countries. In the US, in the 1980s sudden inflation was hit. After that, however, the inflation rate has continued to decline, now it is about 2% less. Similarly, other developed countries had a high inflation rate in recent years and it is in a state of low inflation. Japan's inflation rate is negative because the inflation rate start position is lower than other developed countries and the inflation rate has declined like other countries, so only Japan has fallen to minus. The most significant effect was the effect of expanding durable consumer goods. Technical innovation of products in this field is intense as described above. If the performance improves even if the selling price actually does not fall, it will be calculated as a price decrease and the consumer price will fall. However, this is a computational thing, consumers trying to buy durable goods can not buy with a small amount. The actual selling price has not changed so much in the past and now. Japan is price down and other countries are not because in Japan the weight of this durable consumer good is high. This is a computational reason, nevertheless the supply-demand balance collapsed, not the result of shortage of demand.
Frequently asked allegations that lack of demand causes price declines. Let's consider this with the demand curve and supply curve. Demand shortage means shifting the demand curve to the left while fixing the supply curve. Then, the intersection of the demand curve and the supply curve moves to the lower left. Since the intersection points indicate the market price and the production consumption, both the price and the production consumption will decrease. However, real GDP, which represents production consumption, is gradually rising, though. A combination in which the price falls and the production consumption rises occurs when the supply curve shifts downward from the demand curve. The downward shift of the supply curve means an increase in possible production and a reduction in production cost due to production innovation. The increase in imports from emerging countries, the yen appreciation of the yen and production innovation are affecting. In the bubble years (90 years), Japan was one of the most expensive countries in the world. In the price rankings of cities in the world, Tokyo was always top class. In the case that the economy is closed in Japan, that is, when there is no import / export, there is no need to compare the price internationally, and three people with high labor costs, high salary, high price level coexisted. However, as the globalization of the economy progresses due to the increase in exports and imports, imports from countries with low labor costs, cheap salaries, and cheap commodity prices increase, and the price level falls. It can be said that Japan is the adjustment process from the state of the world's best price level, while developed countries are low inflation while Japan is negative.
What will the economy bring about growth? Here, growth is GDP increases. As GDP consists of consumption, investment, government expenditure and net export, it is sufficient for each element to increase, but it is considered that government spending is decided by the will of the government, and an increase in spending leads to deterioration of fiscal Economic growth is desirable due to expanding consumption, expanding investment, and increasing exports. Growth accounting is the decomposition of each factor into contribution to GDP growth. In Japan, the contribution of investment was great in the age of high growth. In the recent low growth era, the growth factor is an increase in exports. The change in GDP represents the cycle of the economy, which is a change in investment and a change in exports. Personal consumption accounts for the largest proportion at 60% of GDP, but contribution to change is small. Personal consumption does not change too much even when the economy circulates. In the United States, the proportion of personal consumption is 70%, and GDP moves according to the trend of personal consumption. In emerging economies, in general, the proportion of personal consumption to GDP is low, growth factors are brought about by investment and export increase. Which factors contributed to growth can be obtained by statistical analysis, but why investment and exports have increased, how can they be increased is unknown. GDP represents production output, so production is generated by labor input and capital injection, so you can increase labor and capital. The increase in labor is subject to constraints on the increase in population, the increase in capital is the increase in investment.
The impact of falling birthrate and aging population appears in two ways. One is a decrease in the labor force. Even if the capital input amount does not change, if the workforce decreases, the potential output (theoretical output) decreases. Secondly, fewer people get income by labor, the total household income will decrease. Reduction in income leads to a decrease in household savings and a decrease in consumption. For example, suppose that the potential production volume is 100, enterprise income is 30, household income is 70, consumption is 60, investment is 20, government expenditure and trade balance is 20. Assuming that capital volume, science technology and labor productivity do not change, let's say that the potential production volume has decreased from 100 to 80 due to the decrease in the labor force. If the demand trend does not change, enterprise income will be 30 → 20, household income will be 70 → 60, consumption will be 60 → 50, investment will be 20 → 15, government expenditure and trade balance will be 20 → 15. The decrease in household income appears statistically as a decrease in savings rate. Declining income is a decrease in savings. If production declines, investment will also decrease correspondingly. Since the private balance + government balance = the current account balance, if the government's balance is unchanged, the current account will decrease as the private balance (corporate income + household income) decreases. This is a case where it is assumed that the capital amount, science technology, labor productivity do not change, and investment in the previous term is expected to increase capital volume, progress of science and technology through research and development and time course, improvement of labor productivity by education and training As it is, it can not be said that incomes, investment, consumption, the current account balance everything will be reduced unconditionally.
Economic growth sees the growth of real GDP. Because real GDP is the sum of personal consumption, investment, government expenditure, import and export, whether real GDP grew or not can be determined by growth of personal consumption, investment, government expenditure, import and export, which are elements. Looking at past statistics, you can see what contributed to growth. Investment was the driving force in Japan's high growth era. Even in current emerging countries, investment is such. Investment is not only the "consumption" aspect of purchasing goods and services by companies, but also by making more investmentsProduction of goods or production at lower cost becomes possible, leading to promotion of export and improvement of income. In other words, it has aspects of both supply and demand. Another driving force is export. Even in the era of high economic growth in Japan, export growth has also led to economic growth in the current emerging countries. However, unlike investment, there are many parts that are determined by the growth of overseas demand, and even if exports grow, future supply will be improved, and future incomes will not increase. So, how can we make corporate investment more active? Speaking economically, investment is funded and raised, so low interest rates will encourage investment. Each country has lowered the interest rate by economic policy. Investing is about expecting return over investment. Even if funds procurement is easy, investment will not increase unless you can expect a return that exceeds investment. In theory, there is the possibility that the investment will increase as the expected return will be 3% or more if the interest rate is 3% to 2%, with 2% or more being better. However, this is a case where a return is definitely obtained, and in the presence of uncertainty there is a possibility that the return may be negative, and we believe that the effect of inducing investment by interest rate reduction is low. Expected returns are formed by revenue expectations. Revenue expectations are not persuasive without data backed up. One of the expectations of earnings is the increase in the population. If per capita consumption is the same, the increase in population boosts overall consumer spending. When the population increases, the young population usually increases. The young population, as a labor force population and getting salary, is very active. It also provides inexpensive labor.
Improvement of productivity is being said as a driving force for economic growth of Japan. However, since the definition of "productivity" is ambiguous, it is a word which is likely to cause misunderstanding. If we can efficiently produce goods and services with less effort, it feels like it will cost less and producers will gain more profit. Meanwhile, because more products can be produced, the supply-demand balance will collapse and this will lead to lowering of selling prices. Furthermore, if the same production volume is maintained, the necessary capital and labor will be reduced, which may have an impact on labor market and capital investment. Even so, if productivity is defined as "capital and labor force necessary to produce the same thing", improvement in productivity is considered as effective use of rare capital and labor , It is possible to produce more goods and services. However, actual "productivity" calculation is often measured by capital productivity divided by labor productivity divided by labor input and capital product amount divided by added value produced by production. In addition, it may be seen in terms of total factor productivity that adds value added by total input. In any case, the denominator is the input amount, but the molecule becomes added value and is influenced by the magnitude of added value. Value added is in monetary units, equivalent to sales. In other words, if the demand increases and the sales increase as a result of the demand, "productivity" will improve. In other words, improvement and reduction in "productivity" is a change in sales rather than a change in production technology. The Japanese economy, which is analyzed as having low productivity, is often doing calculations that sales are actually declining due to a recession. In this case, to raise productivity, increase sales. Productivity is also a ratio. It is said that the additional value gener- ally generated by the additional input referred to as the marginal product decreases with increasing input. (Law of gradual diminishing returns) Therefore, even if molecules are lost due to productivity calculation, for example, by reducing workers and working hours, if the denominator decreases further, the production The sex improves. It is because of this reason that productivity may be improved during a recession period. In this case, change in productivity is the result, productivity is Even if you try to improve it, it will not be the case. Discussion on productivity tends to be a discussion on the supplier's point of view. As productivity improves, the production volume generally increases. Without demand, inventories will only accumulate or will only lower prices, which will not lead to economic growth. If cost reduction is expected more than a price decline, it will be an incentive for producers' production increase, but in order for productivity improvement to become economic growth, many produced products are consumed and producer income is It is necessary to promise a virtuous circle such that producers who have increased incomes further produce and further consumers as consumers further increase.
There are three main methods of measuring productivity. Total factor productivity, capital productivity, labor productivity. In production activities, capital and labor are used as input factors, and products are produced by production techniques using them. If this is expressed as a production function and divided by the capital which is an input factor, the product per unit working time is calculated by dividing by the product per unit capital, the total working hours (one working hours times the number of workers) . Total factor productivity is a factor that expresses the ratio between capital and labor input and product. When looking at the macro economy, a simple way is to use GDP per unit capital divided by GDP by capital stock and GDP per unit working time divided by GDP by GDP in many cases. In terms of international comparison, Japan's total factor productivity shows similar growth in recent years in other developed countries. Labor productivity varies greatly between manufacturing and non manufacturing industries. The labor productivity of the manufacturing industry is high among developed countries. Especially, cars and electric machines are expensive. Meanwhile, the labor productivity of the nonmanufacturing industry is quite low in developed countries. However, rather than having low productivity, it is more prominent in nonmanufacturing industry, especially in nonmanufacturing industry, compared to other developed countries, so even if the same added value is produced, it is a value divided by total working hours Is small. For the same reason, Korea's labor productivity is low. Productivity is an indicator of efficiency, not an absolute level. Economically, the absolute value created more than efficiency is important. Efficiency has meaning only in the case of optimal resource allocation without idle resources and it is not true in real economy. For example, even if the working hours decrease due to the improvement of labor productivity, if the reduced time does not go into other production activities, simply increasing the leisure time will not raise the level of production.
Measure Japan's productivity. In the manufacturing industry, the productivity of the nonmanufacturing industry (service) industry is low, while the productivity of the nonmanufacturing industry (service) industry is low in Japan, while the productivity of automobiles, electric machinery and machinery is high, It is inferior. How can I improve productivity? Under the definition that productivity is inherent, to minimize the scarcity of capital and labor input necessary to obtain production volume, all companies are currently working on reducing costs to maximize profit There is little room for improvement from the present situation. The room for improvement is that productivity of the economy as a whole improves as companies and industries with low productivity withdraw from the market and capital and labor are transferred to high productivity companies and industries. In the OECD data, we compare total factor productivity of developed countries. According to this, TFP has been rising all the year since 2000, as in other developed countries. However, TFP is a black box-like coefficient that compensates for the difference between the amount of capital and labor input and GDP, and the actual state is uncertain. In terms of labor productivity, which is GDP per unit working hour, it is significantly inferior to other developed countries. This is because working hours are higher than in other developed countries, and when you divide GDP by working hours, the value becomes smaller. The low labor productivity in Japan is due to the length of working hours. Especially the working hours of nonmanufacturing industry is long. To raise labor productivity, you can shorten the working hours, but then the production volume itself will fall. Because there are Japanese business practices, labor productivity does not rise easily easily. In recent years, IT has advanced rapidly. IT investment was introduced to improve work efficiency and productivity. However, whether IT has improved productivity has not been well verified. Certainly, although it became convenient in daily work, productivity is added value (price conversion) generated, and unless added value increases even if it becomes convenient it does not mean that productivity has improved .
Japan was called the trading nation. The current account balance is a combination of the trade balance and the income balance, but the trade surplus became surplus and the current account continued to be in surplus. The surplus in the current account means that Japanese companies earned money overseas due to trade and investment. Revenue from the private sector and household sector will increase by the surplus. However, in recent years, export growth has slowed down from import growth due to the fact that the competitiveness of exports of industrial goods began to disappear due to the high cost of domestic labor costs and the appreciation of the yen and the overseas relocation of factories advanced Became. The trade surplus has come to shrink the surplus width. However, instead of increasing the income balance, the income balance has expanded contrary to the surplus of the trade surplus. This is due to an increase in overseas factory relocation and financial investment, resulting in an increase in dividends and investment interest from overseas subsidiaries.
In the macroeconomic formula, gross national product = domestic consumption + domestic investment + government expenditure + current account balance. In another expression, gross national product = private sector income + household sector income. Domestic consumption and domestic investment have been sluggish since the collapse of the bubble economy, but the current account surplus keeps the gross national product, private sector income and household income income increasing. It is said that the aging of Japan will advance further in Japan, but let's see the influence of it. As the retirement generation increases, household income decreases statistically. On the other hand, the scale of consumption does not change very much. As a result, the savings rate, which is the expenditure / disposable income, decreases. Reducing the savings rate will reduce household savings. Household savings will be used to purchase government bonds through bank deposits and the deficit of the government sector will be covered. Corporate saving also goes through the purchase of government bonds through financial institutions and the deficit of the government is buried.
If the current account deficit does not change (not increase) the level of domestic consumption and domestic investment, the decrease in gross national product, the private sector income and the household sector income will decrease. Purchases of government bonds decline and long-term interest rates rise. What I would like to pay attention to here is that the current account deficit = the increase in long-term interest rates is not necessarily the case. Declining labor population will reduce domestic production. If the total population does not change as much as the workforce, consumption will not change and goods exported will go to domestic consumption or import will increase. If domestic production income also decreases as the labor force decreases, savings will decrease. However, even if the labor force population declines, savings will not decrease unless domestic production income decreases. Regardless of changes in the current account balance, if savings are reduced, purchases of government bonds will decrease and long-term interest rates will rise. Since the fiscal balance is in the deficit, if the current account surplus, household balance + enterprise account balance is also surplus, even if the current account deficit is not large, the household balance + enterprise balance will be in surplus. The balance referred to here represents not the stock from the past but the asset increment of this term. If a certain percentage of the increment of assets goes to purchase government bonds, it will compensate for the deficit of the fiscal balance by a certain amount. However, if the fiscal balance does not change, the decline in the current account will reduce the household balance + enterprise balance and the amount of money spent on purchasing government bonds will also decrease, resulting in an increase in long-term interest rates.
Without money, companies can not invest. Money may be own cash (internal retained), capital increase / corporate bond (direct finance) or bank borrowing. Retained earnings, capital increase and corporate bonds depend on the company's business performance, business customs, institutions, and laws. Customs · Laws are considered to be fixed. Since corporate performance is totally related to economic conditions, it can be changed over time, but it is not easily controlled externally.
If you see the state of the economy in terms of production (added value), what is consumed is produced. That is, production amount + import = consumption + investment + export. Consumption is done by ordinary consumers and investment is consumption by enterprises. Production volume is converted into monetary value and expressed, so it is also income. If all the income is returned to the consumer, it goes to consumption or savings, so income = consumption + savings. From the production formula, saving = investment + export - import. Since export - import = trade balance, savings - investment = trade balance. For a while, the Japanese economy produced a large trade surplus, but the difference between savings - investment produced less investment than savings.
Here is the bank loan to pay attention to. In the past, bank borrowing was the main focus of corporate funding. In recent years, the ratio is gradually decreasing, but in small and medium-sized enterprises it is a central financing tool. In bank borrowing, the interest rate has a great influence on corporate borrowing decision making. Suppose there is an investment case. ROI can be calculated by predicting expected profits generated as a result of investment. If the return on investment is higher than the interest rate, borrowing is decided and if borrowing is low, borrowing is not done. Taking the aggregate decision of the company's decision here, if the interest rate rises the total borrowing decreases.
Lending rates (loans / deposits) are on a downward trend in Japan with remarkably low interest rates in developed countries, both policy interest rates and long-term interest rates. Let's see the relationship between interest rates and loans. It is said that interest rates and lending volumes are generally determined by the supply-demand relationship between the demand side company and the supply side bank. Draw a supply curve and a demand curve with the loan amount as the horizontal axis and the interest as the vertical axis. If the bank becomes active in lending, the supply curve moves to the right, the interest rate decreases and the loan amount increases. Here we consider the meaning of moving the supply curve to the right. Given that interest rates are given given by the bank as selected, moving to the right means that you want to borrow a lot even at the same interest rate. This is whether banks have increased the amount of funds, whether they are able to procure cheap money, or have increased risk appetite. If the default rate of interest is p, the bank's return is R = (1-p) rI. If the default rate of principal is p, the bank's return is R = (1-p) rI + p (-I). Investment I can not be secured at no cost, it costs procurement and machine costs. When it is included in the equation, R = (1 - p) rI + p (- I) p - vI. As p decreases, R of return increases and I also increases. In ordinary goods, the factors on the supply side are raw material prices, labor costs, productivity, etc. However, in the case of banks, there are risks of financing and risks. Funding costs and risks move supply curves. On the other hand, companies that are on the demand side borrow funds from banks and turn them into working capital or invest in facilities. Let y be the future economic condition forecast, the return of the enterprise is R = E [u (I, y)] - pI. As interest rates rise, R falls, and demand for funds I also declines. If the future economic condition forecast y rises, R also rises and I also rises. Factors on the demand side are expectations of business performance and forecast of economic conditions. Both are predictions of future returns and there are uncertainties, so they can be regarded as risks. After all, the demand curve and the supply curve move depending on the risk in the plane on which the horizontal axis shows the loan amount and the vertical axis shows the interest level. As a result, the loan amount and the interest rate level change.
Japan has entered the low growth era for more than 20 years now, after the collapse of the bubble economy. Looking at nominal GDP, it has not grown at all. This is a phenomenon only in Japan in developed countries. But other developed countries are also close to low growth rather than high growth. On the other hand, many emerging countries have high growth. What is bringing high growth? It is commonly said that they are advancing industrialization from agricultural countries, expanding exports, growing domestic capital investment, and having a lot of foreign investment. By industrialization, capital and labor force move to industries with high productivity, increase international competitiveness by introducing technology, earn by export. Of course, personal consumption in these countries has also increased, but the proportion of personal consumption in GDP is low, and exports and corporate investment are driving drivers in the calculation of GDP. Until now infrastructure and technical capabilities have been a challenge, industrialization is becoming easier with investment from overseas and introduction of technology. In emerging countries, personnel expenses are cheap, and if technologies comparable to developed countries are available, they can be made cheaper than developed countries and sold in world markets. Domestic consumption will also increase as factory workers' wages increase as sales increase due to exports. However, these things are possible because they are emerging countries with low room for industrialization and cheap personnel costs, so there is less room for industrialization in the developed countries, and labor costs are also higher in developed countries. In other words, examples of emerging countries will not be helpful. Economic theory also has a limitation that when capital accumulation is achieved to a certain extent, the cost of maintaining capital increases, opportunity wear increases, no more capital increases any more. In other words, it can not continue to grow, and eventually it will be in the low growth era. Regarding the population, it has not increased in developed countries. In Japan, the era of population decline is entering. Will it be impossible to grow again? Here are two ways. One is a way to keep and maintain high per capita GDP like small European countries. Another is the way to achieve some degree of growth even in developed countries like the United States. The common point of the former is that the population is small and it can not be applied to Japan Yes. The latter is helpful, but why is it applicable to Japan? In the US, there are many immigrants and the population is steadily increasing. It is the world's largest market, with capital, money and human resources coming from all over the world. For this reason, stable growth can be expected for latent GDP calculated from capital and labor force. Another feature is that unlike emerging countries, transition from secondary industry to service industry advances, not industrialization, service industry, IT industry is the center. This point seems to be helpful for Japan. For a long time, Japan has been producing technology that is cheap to introduce technology from overseas, mainly manufacturing industry, and has been selling overseas in Japan. When the population did not grow and the domestic market matures, the export ratio became high and it became the export-oriented economy, but it caused the yen appreciation of the exchange rate and forced to compete at a cost disadvantage in the world market, export Sustainable growth can not be expected in the dependent constitution. So Japan's tasks are as follows.
The Japanese economy has been in a downturn for a long time. The cause of this change is the environmental change surrounding the Japanese economy. Due to the sudden change in the environment, households, companies, and governments, which are economic agents, can not overcome this change and overcome it. Because households and companies can not deal with it, the government is required to support household-business correspondence by economic policy. Basically, it is desirable for the private sector (households, enterprises) to demonstrate their ability to respond to environmental changes on an economic basis. It is advisable not to support the government permanently but to support it in a manner that supports it in the short term until it is able to support it in the short term and the ability of the private sector (household, business) to respond.
Listing up the environmental changes surrounding the Japanese economy will be as follows.
In Japan, the declining birthrate and the aging population are progressing. The degree is the best among developed countries. Declining birthrate and aging means both population reduction and aging of population age distribution. There are two effects on the domestic market.
Since around 2005, the population of Japan has turned moderate despite its moderate decline. Assuming that per capita consumption does not change, the decrease in population will decrease the consumption in Japan as a whole. Individual consumption per capita does not change so much for capital investment, import and export, and government expenditure, which increase and decrease according to the economic situation. Japan is the only country with a declining population in major countries. In the United States, the population is steadily increasing. In emerging countries, the population growth rate tends to be higher than in developed countries. The increase in population will grow the economy through an increase in domestic consumption, but the declining population in Japan is a factor in the economic downturn.
MeasuresAs the population increases, population growth measures will exceed the category of economics, so consider how to increase per capita consumption. Even if the population declines, if consumption per capita increases greatly, consumption in Japan as a whole can keep increasing. As household income is constant and consumption increases, savings decrease and liabilities increase. Consumption will not increase unless disposable income increases. Eventually, if the economy improves, corporate performance improves and there is no wage increase, it will not lead to consumption. Consumption will increase if it grows economically, but if consumption increases it will grow economically and it will become a truly circle. The aging population is increasing for middle-aged and elderly people, but the middle-aged and elderly population has anxiety in the future, so it tends to save money ahead of consumption. From this, employment and wage countermeasures, social security policies are important. Since it will be fiscal expenditure, it can be said that it is difficult to establish effective policies. If it is difficult to revitalize the domestic market, policies leading to higher wages by extending exports and improving corporate performance are effective.
In order to secure sales, companies tend to target products / services that are thick for the age group (large population of that age group) as a target customer layer due to age structure. In the past, commodities for young people who are income generating and active consumers were the leading characters. Electrical appliances, automobiles, sports, leisure, housing and so on. Now that the aging of the population has advanced rapidly, the number of young people is decreasing and the number of elderly people is increasing. The company's product development has not been able to respond to this rapid aging, and the shift from products for young people whose market size is decreasing to products for the elderly whose market is increasing is not progressing. For elderly people, there is nothing I want. In the retirement generation, there is no income other than pension, there is no expectation for future income growth, and consumption is suppressed compared to the young generation because of the uncertain life in old age. These things lead to sluggish consumption.
MeasuresProduct development that responds to changes in the needs of the world is largely due to corporate efforts, and it can be said that it is not within the scope of the government's economic policy. Given subsidies for the development of products for the elderly, government interference with private corporate activities can be an obstacle to fair competition. It would be good if we could propose uncertainty about old age life by social security policy, but fiscal burden will expand.
The declining birthrate and aging population will affect not only the demand side but also the supply side, especially the following two aspects, to the Japanese economy.
Production age population refers to the population of aged 15 to 60 in the age group that can participate in economic activities. As the aging progresses, the population over the age of 60 will increase, but the population of young people will decrease and the population of the productive age will also decline accordingly. This population means the maximum number of people who can participate in economic activities, but this decrease will lead to a decrease in the actual number of employed people. Production is brought about by people's labor, and a decrease in labor input directly leads to a decrease in domestic production. In some manufacturing industries, mechanization and automation progresses, and the reduction of labor input by capital input is compensated to some extent, but in other industries (service industry etc), reduction of labor input directly leads to decrease in production volume.
The producible population is beyond the scope of economics because it depends on the population composition of the country. Policy to increase labor population and number of employed people is required. The working population is a combination of the number of employed persons and the number of unemployed people and can be said to be a population with motivation to work. By incorporating elderly people and women into the workforce which have been low in the workforce until now, the labor force can be increased. Basically, depending on the efforts of the company side, employment and labor policies such as extension of retirement age, employment support for the elderly, establishment of free employment forms, etc. are required. In order to increase the number of employed people, macro policy is necessary in order to create new employment by the increase of new capital investment, measures to revitalize capital investment and to increase employment by improving corporate performance. In the manufacturing industry, the scale of absorption of employment is large, it is a challenge to secure export promotion measures and production competitiveness at domestic plants.
For companies, expectations for shrinking the domestic market due to the declining birthrate and aging population have become established. If this happens, it will be impossible to expect business to expand due to an increase in employment and new capital investment, and sales will not be expected, and corporate input (capital, labor) will be suppressed. Changes in investment are reflected directly in the calculation of GDP. Suppression of employment will restrain consumption through household income and sluggish wages. This also affects GDP, and it is a factor to control economic growth.
MeasuresPolicies that change expectations for shrinking domestic market to expand expectations are required. We are also expected to indirectly expand the asset price rising measures and inflation expectations. It will also support employment policies and measures to promote capital investment. However, changing expectations is not easy. You only need actual data with confidence. It can be said that expectations come out only when economic growth actually lasted for a certain period of time.
Economic globalization is progressing. The movement of people, goods and money has become active among the international communities, the domestic economic cycle of domestic consumption, production and sale in the Japanese market has become inadequate. Emerging economies that are growing not only in developed countries but also in developing countries are emerging.
Industrialization has progressed in emerging countries, and it has come to compete with Japanese manufacturing industry in overseas markets. Things that Japanese companies have had a large market share are getting smaller. For labor-intensive industries, emerging economies with low labor costs are advantageous, and even in capital-intensive industries, digital products etc. are easy to introduce technology, and Japan's share in this field has declined. Due to the growth of emerging-market companies, the share of Japanese products in overseas markets is decreasing. In emerging countries, we are strengthening ourselves by introducing technologies from abroad and we are now able to sell products similar to Japanese manufacturing industries in overseas markets. Especially in digital products, technology introduction is easy, mass production using cheap labor power has taken away Japan from the market. As the yen appreciated, overseas earnings have declined. Furthermore, due to the appreciation of the yen, the inflow of cheap overseas products is increasing in the domestic market. The business model of the manufacturing industry in Japan (earning by exporting domestically produced products) became out of order. Sluggish exports in the absence of domestic market growth will reduce domestic production. In order to secure competitiveness in overseas markets, there are an increasing number of companies switching to overseas production, which is not affected by the appreciation of the yen and has low labor costs. As a result, domestic investment and employment are decreasing.
MeasuresYou have to come to feel the benefits to those who produce domestically rather than overseas. In order to secure competitiveness in domestic production, it is necessary to make foreign exchange stable at the weak yen level, to stabilize the low level of personnel expenses, material expenses, energy costs in Japan, improve productivity, differentiate from overseas products due to technological innovation It is. Personnel expenses in the country are high, there is technology growth in emerging countries, there is no policy with immediate effect. Foreign exchange policy is the only one with the greatest influence and immediate effect. If we can keep the exchange rate stable at the yen low level, domestic competitiveness will be maintained and domestic investment and employment environment will be adjusted.
Imports of industrial products are increasing in Japan due to industrialization of emerging countries. Originally, emerging countries products are inexpensive and can be imported at a lower price due to the appreciation of the yen. As domestic sales share grows, domestic companies' performance will decline. Performance worsening will reduce domestic investment and employment. This will be a factor to suppress GDP growth.
MeasuresAdding restrictions on imported goods is not preferable from the viewpoint of free trade. However, if foreign exchange fluctuates too much, the price competitiveness of domestic products rises by correcting to the depreciation of the yen. However, the price rise of imported goods is not beneficial for consumers. Therefore, it is a reasonable measure to revitalize the domestic economy by emerging exports from the viewpoint of free trade rather than measures to deal with imports.
In countries where the economy is generally growing, inflation is inevitable. In Japan, deflation continues for more than 10 years, and it is unique in comparison with other countries. The following are the negative factors that deflation will have on the economy.
Under deflation, not only is the price of goods go down. If only prices are going down, real income will increase and consumption will not go down. There are two aspects of declining prices. One is that it has become possible to produce and sell at a lower price with technical innovation on the supply side. The other is when the demand declines and as a result the price falls. In the latter case it means economic downturn. Deflation is a problem as a matter of economic conditions that prices go down rather than price falls. As deflation is declining overall economic activity, as the price declines, the sales decline, the wage decrease, the consumption drops linked, it also causes a decline in sales, so that the economy can not escape from the slump in a vicious circle I say.
MeasuresIn order to cut off this vicious circle, it is necessary to reverse either sales, wages, or consumption declines. Increasing wages even though sales are declining leads to a deterioration in business performance and the possibility of realization is low. While wages are declining, expanding consumption is not easy. Therefore, the policy to raise sales remains. Even if domestic consumption is sluggish, if overseas markets are expanding, sales can be increased by overseas expansion and export. As a result of the performance of the exporting companies, wage increases, which leads to domestic consumption expansion. Another is inflation. If inflation happens, sales will rise even if the absolute amount of consumption does not rise. As wages increase, wages also rise. Although it is not necessarily an increase in real wages because inflation is inevitable, it becomes a trigger to cut off a vicious circle of reductions in sales, wages and consumption anyway.
The expectation for price declines means that money value is increasing against goods if you return. Increasing the value of currency more than things creates incentives to own money, rather than possessing goods. If you wait a while for things, it will be cheaper, so you should suppress consumption except for necessities. You will be able to have money without using it. The decline in demand suppresses corporate production activities and makes the economy sluggish.
MeasuresAs long as the anticipated decline in prices is strong, enterprises will be reluctant to expand their capital investment and employment, households expanding their consumption. In order to convert to inflation expectation, it is effective to become inflation actually, but if the company and households are convinced that "it is now deflation, but it will eventually become inflation" according to the government's policy, the expectation will change . The government 's inflation policy is a policy to lower the value of money against goods, that is, a policy to increase the supply of money. An increase in the supply of money generally raises the asset price and brings about consumption and investment expansion due to asset effect. Also, if the value of money falls, the yen will weaken, and as the price of imported goods rises, inflation will become more likely.
As for the increase in the value of money, it is possible for the company to think that it is better for companies to have money by investing money rather than selling goods and getting money. Under inflation, the value of money falls over time, so repayment becomes easier and borrowing becomes active. On the other hand, under deflation, repayment is less likely to be made and borrowing is suppressed. Looking at real interest rates taking price fluctuations into consideration, interest rates will remain high under deflation and corporate investment activities by borrowing will be restrained. Money accumulates in the economy and the economic cycle of investment, labor, production, consumption is sluggish.
MeasuresEconomic stimulus by rate reduction by monetary policy becomes useless if interest rate level becomes near zero. It will be difficult to lower further. In deflation, the real interest rate will stop high. Consider another method. It is an inflation policy. If inflation occurs with the nominal interest rate stabilized, real interest rates can be lowered. Activate borrowing and promote corporate capital investment. If the real interest rate can be reduced below zero, the burden of borrowing will be lost, leading to an increase in borrowing, an increase in investment and consumption.
As the proportion of elderly people increases, fiscal expenditure on social security expenses (medical, pension) will increase. On the other hand, the proportion of young people decreases and tax payment does not increase. Therefore, the fiscal deficit will increase. If the budget deficit is not kept to a certain extent, the economy will be adversely affected.
When the budget deficit grows, the government and households forecast that the government will be obliged to reduce expenditure and tax increase soon to reduce the deficit. Expenditure cuts and tax increases will suppress consumption and investment and become negative to the economy. When economic growth expectations weaken, savings increase in preparation for the future, and current investment and consumption are suppressed.
MeasuresReducing the fiscal deficit by fiscal reconstruction is the first. However, reductions in government expenditure will result in a decline in demand, which will be negative to the economy in the short term. Whether we should aim for fiscal rebuilding even if we control economic growth is controversial. Even if the fiscal deficit decreases in the short term, even though it is negative to the economy, there is a view that there will be no future expenditure cuts and concerns about tax increases and it will be positive in the long run, while on the contrary it temporarily expands fiscal budget It is also thought that the deficit should be reduced by increasing tax revenue. Rather than seeking to expand the fiscal position, the point is to establish both short-term fiscal policy and long-term economic outlook firmly and not to let enterprises and households have future cuts in expenditure and tax hikes.
Expansion of fiscal deficits means an increase in debt owed by government bonds. As debt expands, companies and households are concerned that concerns may be hindered by repayment. When risk is conscious, long-term government bonds are sold and long-term interest rates rise. Not only will the Government increase interest payments on government bonds, but it will also suppress private investment by raising interest rates.
MeasuresSuppressing the outstanding balance of government bonds in the market is the first. However, the interest level is not determined only by the supply-demand relationship of the government bond market. If stabilization of the financial system holding a large amount of government bonds, empowerment of the future decrease in the outstanding value of government bonds by the economic growth policy and fiscal consolidation policy can be honored, even if the outstanding balance of government bonds increases in the short term, the influence on the interest rate Becomes small. It is also effective to influence the market interest rate and the supply-demand relationship of government bonds by monetary policy such as lowering the policy interest rate by the Bank of Japan and buying government bonds.
If the risk of government bonds is conscious, long-term government bonds are sold, and the credit of financial institutions holding large amounts of government bonds declines. This becomes anxiety about the financial system, and it will negatively affect the economy through such as stock price decline and suppression of financing.
MeasuresWe will adjust the issuance of government bonds while looking at the supply-demand situation so as not to cause excessive price fluctuations such as the plunge of government bonds. In order not to create financial instability, we monitor the financial system at all times, whether or not financial institutions take excessive risk. The measures will be to prepare systems and institutions from normal times so that the Bank of Japan can supply a large amount of working capital to the financial system in the event of a crisis.
Changes in population and population composition are mismatches with the structure of traditional industries. In the past consumer's main force was young people. However, in recent years, the market size of young people oriented products has shrunk, and in return the commodity market for elderly people is expanding. The manufacturing industry of final consumer goods has shrunk, and the medical and nursing care fields are expanding the market size. The change on the demand side is large, but the supply side has not been able to keep up with it.
MeasuresAlthough it is conceivable that the government designates products and services in the growth field and supports subsidies, low-interest loans, experts dispatch, etc. to that field, it can be converted to goods and services tailored to changes in the times It is basically a voluntary approach by the company side. As for the policy of the government, we mainly focus on side support such as deregulation of the relevant field, support for education and training of workers.
The progress of globalization will encourage division with overseas products and services. We must cultivate domestically growing industries with domestic markets with overseas companies and competitiveness with overseas markets.
MeasuresTo ensure the competitiveness of domestic enterprises in the global economy, advance infrastructure development leading to an increase in domestic capital stock. We support research and development support and support overseas expansion of companies. Support education and training for global human resource development.
The problem in Japan is that nominal GDP does not rise. The decline in nominal GDP is that it not only shows that the economy does not grow, it also has no future growth expectation. As a result, willingness to capital investment in the domestic market will be diminished, which also affects employment. As asset prices do not rise, we can not expect asset effects. Since the price is determined by supply and demand, lowering the supply is undesirable because it reduces equilibrium. It is necessary to eliminate deflation by raising demand. On the demand side, private consumption, capital investment, government expenditure, export. Exporting is to increase the international competitiveness of Japanese products. Government expenditure can not be increased considering the financial situation. Capital investment depends on whether there is growth expectation in Japan. Investment will not be made unless there is an investment opportunity where returns can be expected even if it can raise funds at low interest rates. The last remaining is personal consumption. If there is expectation for an increase in personal consumption, capital investment will be encouraged. It is certain that the declining birthrate and aging society will prospect in the future. The declining birthrate and the aging population predict that the Japanese market will not grow and keep companies' willingness to invest in capital investment. There are three problems in declining birthrate and aging population. One is that the absolute number of population is decreasing. The declining population is that the number of consumers decreases, the market size is reduced and the demand is reduced. The second point is a decrease in the workforce and fewer people getting income. If there is no income, that person 's expenditure is suppressed. Demand will be reduced. The last point is that changes in the population structure are changing consumers' preferences, the amount of consumption. Young people are mainly consuming so far, there are many products for young people. As the product composition does not change and only the aging progresses, a mismatch with consumer needs occurs, causing consumption to decline as there is no desired item. Also, depending on age, the absolute amount of consumption also changes. From these points, the declining birthrate and aging population will have a negative impact on private consumption, which will also affect domestic capital investment.
The declining birthrate and aging itself is not within the scope of economics. Therefore, I would like to consider how to achieve nominal GDP growth on the premise of a declining birthrate, an aging society, and a declining population. As mentioned earlier, the domestic market is in excess of deflationary supply, but suppression of supply is reduced contraction. For growth, we must increase supply, increase domestic consumption, and increase overseas exports. In order to increase overseas exports, even if the exchange rate is appreciating yen, we must develop internationally competitive products, that is, products that are uniquely differentiated that are not price competitive. First, it is a product with high added value through research and development. The other is to increase exports of services rather than products. It became possible to export services from domestic to overseas with IT conversion in recent years. Moreover, even if converting business overseas, if profits are returned to Japanese companies, they will increase domestic income, encourage domestic consumption and lead to growth. As demand increases, companies find investment opportunities and increase supply through increased capital investment. Demand, that is, it is reduced to increasing domestic consumption. So how do you increase domestic consumption? It is on the premise of a declining birthrate, an aging population, and a declining population. We must increase consumption per capita beyond supplementing population decline. Since it is a declining birthrate and aging population, it is necessary for elderly people to earn income. We must develop consumption for the elderly and expand the senior market.
Japan has a higher ratio of manufacturing industry than other developed countries, and the shift to service industry is delayed. The service industry provides exactly the service to customers, is to raise the quality of life and gain mental richness rather than material wealth. Compared with the manufacturing industry, the advantage of the service industry is that the purchasing frequency is generally dispersed, the fluctuation of demand is small, the quality of service is diverse, it does not become simple price competition, by selling quality of service, it is cheap Competition with overseas products can not be avoided, but it has the advantage that it can compete even if personnel expenses are high, enriching the life by the development of the service industry in the first place. Let's see concretely how to develop the service industry. Although it is said that domestic markets will mature and shrink as the population ages, the market continues to expand. Senior generation market, overseas market, especially emerging markets. We can expect service development targeting this market. Expected fields include service industry education, finance / insurance, accommodation / travel, entertainment / hobbies, communication / broadcasting / internet, software development, housing, medical care, nursing care, health, eating and drinking, temporary staffing / housekeeping agency, consulting , And new energy projects. Among the innovation fields are environmental energy technology, software / content technology, biomedical technology.
The request for the collapse of the bubble in 1990, the decline in real estate prices continues. Before the bubble, there is a myth that real estate does not fall, and ownership of real estate has benefited not only the benefits of direct use but also the rise of asset value. It continued to rise almost rightward until 1990. As the economy grew until then, as the economy grew, the direct use value (the discounted present value of the profits obtained from the real estate) increased and at the same time the rise in utility value amplified expectations for price increases, further price increases It produced a cycle that became a driving force, resulting in sustained price increases. Factors of price increases, Increase in direct profits obtained from real estate, and expectation for price increase caused by rising profit. The motive for purchasing real estate is mainly the use as a residence, the use as a building for business, and the purchase for speculative purposes. In the use as a residence, it receives restrictions on the income level of the purchaser, so even if the economy grows it can only accept the high price of income growth. In the case of use as a business building, the value of use increases with the growth of the economy, but there are cases where the value increases from rarity depending on the location. In the case of purchase for speculative purposes, the focus will be on how the value will change in the future rather than the current value of the real estate, so it is determined by the future price forecast rather than the absolute level of the price. From the late 1980's, the price rise became noticeable. The price rise exceeding the economic growth exceeds the increase of the direct profit obtained from the real estate, and the fact that the high market price is established means that the price expectation is strong. Even if you purchase at "high price", you only have to be able to sell at "higher price". The rising price turns into a decline, it will happen at some point. Market prices may even decline without any trigger. What can become a chance is a change in the economic situation for purchasing buyers considering the change in purchasing layer considering the use as a residence and the use as a business building. When using it as a residence, demographic change of income and income change of purchasing layer bring about change of demand. In addition, rising prices also reduce demand. Housing purchasers make sales decisions by comparing their absolute values and prices. Even as prices rise, the absolute value as a residence does not change, so a rise in prices will lower demand. The buyer who wants to use it as a business building decreases the direct profit obtained from the real estate by the extent that the economic situation has changed (deteriorated), so the price falls correspondingly. But what actually happened was a sharp decline. This indicates that the price rise was not due to the direct profit rise, but was formed by the price rise expectation. Let's also look at the relationship between supply and demand. The sharp fall in the price is caused not only by the decrease in demand but also by the rapid expansion of supply. To sell real estate, you can not sell unless it is in a form that can be used by buyers, such as vacant rooms, grounds, and immediately reusable. Although it is possible to suddenly reduce supply such as cancellation of sales, it is physically difficult to suddenly increase supply. The rapid expansion of supply is a testament to the fact that previous demand was based on speculative motivation to hold real estate in a state that it can be immediately sold. The other is the time difference in the supply of real estate such as buildings. For real estate such as building, it takes time to plan sales plan, construct, and actually sell. In the event of setting bullish sales plans at the time of economic growth, setting supply quantity and price, if demand drops against expectation, supply quantity It can not be controlled immediately. Since supply can not be matched to changes in demand, it is oversupplied and it is easy to accelerate price reduction. For this reason, due to something triggered, it will change from "Rising expectation" to "expectation of declining" at the boundary, resulting in a sharp drop in the price. As a characteristic of the change in real estate price, it is a change that is different from general market price. Price formation by the market mechanism is one in which "price is reasonable" is found through the supply and demand of the market after the plunge, and the price is stable. In this case, if the economic situation improves, prices will ride again. However, in the case of real estate, it will not stabilize at the "fair price" after the plunge, and when it rises greatly before the plunge falls, it often keeps going down slowly. The price depends on the supply and demand, but the condition that "proper price" can not be found lasts for a long time. Characteristics of real estate prices rise sharply at some point after a certain rise, after a peak, followed by a sharp fall, and then the situation continues to decline gradually for a long time. Analyze price changes after the collapse of the bubble. Think of three purchasing motives: use as a residence, use as a building for business, purchase for speculation purpose.