The Bubble Economy of Japan
The Economy of Japan had experience a tremendous growth since the end of the
Korean war. The growth of GNP in 1967 and 1968 was above 10 % (double digit
growth period) which exceed countries such as Britain, France and Germany. The
economy experienced a boost is due to many reasons, such as: enlargement of
industrial facilities, massive adaptation of western technology and education,
lower the military expense to 1% of GNP, relation with power nation, human
resources and their spirit to achieve "zero defect program". But after the first
and second oil crisis that occur from 1973 onward. The economy move downwards
partially due to the poor management of economic policy. Although the government
had attempt to adjust the economic policy but the recovery was slow. As the
soaring of yen continues the demand for export has increase tremendously. With
the concern of the United State of this problem, president Reagan and the G5
have signed an agreement with Japan called "Plaza Agreement" , the agreement
stated that the exchange rate of Japan and Deutschmark can appreciate against
the U.S. . Since then the yen value began to appreciate, Japan was going
through a period of trade balance adjustment. While Japan is prepare to go
through a period of trade balance adjustment, it will also suffer a period of
recession, so the government strongly encourage business activities to
strengthen the economy in order to prevent backwash effect. It was this event
which boost up the GNP and raise the exchange rate. With this exchange rate
advantage it stimulate business activity on housing and stock investment which
created a bubble economy. During this perio ...