Contemporary Issues in Japanese and Korean Economy

This article analyzes the role of the government in economic growth in Japan and Korea. It explores the policies and strategies implemented by the government to enhance economic growth. The article also discusses the scope for further improvement in the economy.

Running head: CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
Contemporary Issues in Japanese And Korean Economy
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1CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
Do you agree with the claim that the Japanese and/or Korean governments cannot do more
to enhance the growth of the Japanese and/or Korean economies?
Introduction
The main purpose of this assessment is to analyze the role of the government in economic
growth in a country. The assessment considers the economies of Japan and Korea which has
developed significantly over the years. The government plays a vital role in formulating different
strategies which are focused towards economic growth and development. In many cases, the
plans which are formulated by the government are not appropriate and the same has direct
impact on the economic growth and development of a country. The analysis will be considering
the economic growth which is achieved by Japan and Korea. The assessment undertakes a
critical assessment of the present growth rate in both the economy.
Overview of Economic Growth in Japan
The economy of Japan can be regarded as a highly developed economy and another main
feature which can be identified about the economy is that the economy is market oriented. As per
the recent estimates of the economic status of the country, the economy is regarded as the third-
largest in terms of nominal GDP and forth largest in the world in terms of purchasing power
parity. The economy has faced certain contraction phases as well as certain expansion phases.
Another aspect which can be associated with the economy of Japan is that there is high
inflationary situation present in the economy.
As per the estimates of 2004, the economy was able to make a turnaround from the
condition of stagnation which had affected the country during the crisis of 1990s. The economic
crisis situation is apparent from the analysis of the GDP growth rates which showed a swift

2CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
decrease in GDP estimates of 1.5% which further decreased in 2000s to around 0.9%. The
growth rate in the economy stayed lowed during the period of 1990s and 2000s and the same is
registered to be between 0.3% and 1.9% respectively.
Figure 1: (Gross Domestic Product of Japan)
The above figure shows fluctuations in GDP of Japan. The fluctuation in the graph line
effectively shows increase and improvement in the estimates of GDP from the year 2015. During
the 2010 period, there was a significant fall in the GDP of the country and the same suggest that
the economy had experienced a decrease. The above graph also shows that the beginning of 2016
shows significant growth in the estimates of GDP. As per the records, GDP growth in the second
quarter of 2016 April-May at a significant fast pace which can be attributed to the increase in the
capital expending of the economy. The increase in the capital expenditure in the economy
revived the country and ensured that there is a significant growth in the GDP of the business. The
only concern in this situation was the economic tension which existed due to trade tension. The
growth rate shows an increase in 3% in April-June which was much more than the estimated
growth in the country. The domestic demand in the economy also contributed to the increase in

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the GDP estimates in the economy. The overall increase in the investments from overseas has
enhanced and the average increase is estimated to be by 10.7%.
The analysis of the GDP estimates of Japan also shows that there has been significant fall
in GDP in between the period of 2010 to 2015 which was recognized to be mainly due to fall in
employment and also due to the problem of ageing population. Since the period of 1995, the
growth rate of private consumption in this country has been registered as 1% on an average. The
situation has significantly improved in current scenario as the recent estimates show that there is
a strong growth rate achieved by the economy which can be attributed mainly to the increase in
the capital expenditure undertaken by the country.
Overview of Economic Growth of Korea
The economic situation Korea has significantly improved over time and the country
which is regarded as the calm of morning of the East. The country has developed into a
responsible player and a global power among other global countries. The country has enormous
reserves of natural resources stored. The economy of Korea has effectively followed the
footsteps of Japan when considering the economic development. The economy has significantly
improved both in terms of per capita income and Gross Domestic Product. An appropriate
estimate which can be recorded for Gross Domes tic product of Korea in recent times is recorded
to be $ 1.6 trillion which is almost around 1/3rd of the Per capita income recorded for Japan.
From the perspective of ranking as well for Per capita Income, Korea is ranked number twelve.
The nominal per capita GDP of Korea was $11779 in the year 1995 that reached to around
$23021 in the year 2012. This indicates that the amount of GDP has increased significantly in the
last few decades.

4CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
Figure 2: (Gross Domestic Product of Korea)
The above chart effectively shows gross domestic product of Korea and the same is
shown to have increased significantly over the years. The graph line effectively shows that the
Gross Domestic Product of the country has been on the rise significantly. The economy of Korea
has experienced a constant growth at an average rate of 7%. During this period, the economy has
also experienced two major contractions as well. Another set of reports which are available for
South Korea is that the government has incurred significant amount of expenditure for the
purpose of developing the economy. In addition to this, the economy has also been affected by
globalization and therefore the industrial development in the economy has also contributed to the
growth of the economy.
The Korean economy is said to be in a slow growth through since the worldwide crisis of
the year 2008. This can be improved further by active involvement of the Government and if
appropriate steps are taken for the purpose of improving domestic consumption, high rate of
taxes and the welfare services which is provided to the consumers.

5CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
Implication of government policies enhancing economic growth
Japan
The economic growth of the country depends heavily on the policies of the government.
In most of the countries, the government formulate strategies with a view point of improving the
national product and GDP of the business. One of the policies which have been implemented by
the government of Japan is to reduce the overall debt capital in the country by slowly repaying
the international borrowings of the country. The reduction in debt capital of the business
effectively reduces the risks over the government. In addition to this, the interest burden on the
government of the country which may be due to amount of debt capital in the country. The
government of Japan is planning to make changes in the debt capital and exchange the same for
different perpetuities or bonds. The government also has tried to improve the demand of the
economy with a view point of achieving growth in the economy. The demand in the economy
has a major role to play in formulation of policies of the government. The economy of Japan is
very much market oriented and therefore all the strategies of the government are formulated
considering the demand and supply in the Japanese economy. Inadequate demand in the
economy would result in government to reduce the taxes in order to encourage courage. A
natural position for Japan would necessarily be developments in technology particularly in the
service segment namely, development of different diagnostic tools particularly in health care
segments
Korea
The government of Korea has also developed the country effectively and has undertaken
a diverse strategy upholding Trans-Pacific Partnership deal with the US and some other nations

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as well. This has significantly contributed to the earnings of the business and thereby also
increased the GDP of the business even though the rate of growth of GDP has been a bit slower.
The focus on the field of agriculture and industry has been placed equally by the Government
and thereby this has initiated the development process in the country. Additionally, the policy of
the government to undertake an initiative to assimilate women entirely as well as equally into the
labour force is an appropriate strategy for the country. This kind of dimensions needs to boost up
both productivity as well as the rate of growth. The Government also has significant focus on
improving the debt structure of the country and thereby also reduce the interest burden.
Scope for further enhancing economic growth
There is wide scope of improvement still available in case of South Korea which can be
done by the Government following effective strategies. In case of South Korea, an important
aspect for achieving growth and development is through technical advancements. The
Government has significantly increased the expenditure on states wise research and development
for developing technical know-how. This would develop the businesses which are operating in
Korea. The Korean Institute of Science and Technology (KIST) is established with a view of
improving the technological level in the economy. The government of South Korea has also
invested significantly in the education sector development as they are of the view point that
increase in the qualification level in the economy which would ultimately increase the GDP of
the country. The government of the nation can consider promotion of technical education by
means of expansion of vocational secondary schools, technical colleges, and inspired students to
study out of the country. In addition to this, the Government can also facilitate and conduct
competitive examinations and give appropriate training for the same. In addition to this, the
government can also attract competent personnel’s and skilled labour forces from other countries

7CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
with better facilities, better pay and job security. Consequently, a highly competent, revered set
of professionals can help in guiding and at the same time promoting both economic as well as
social development. In addition to this, the companies of South Korea can think about
accelerating the worldwide business expansion by means of exporting and at the same time
foreign production. The Government can bring about special privileges for companies which are
engaged in export of commodities. This can be in the form of tax benefits, better access to
resources or funds of the business. Therefore, there is a great room for improvement of the
economy of South Korea. The nation can particularly improve the fiscal health, generate greater
number of jobs, and enhance levels of income founded on sustainable rate of growth. In view of
that, the government has the necessity to attain important policy objectives of stimulating the
creative nation not only based on microeconomic tactic but also from a macroeconomic
standpoint that can aid in identifying and developing novel sources of income.
The governing body of the nation has the need to dynamically thrust for both quantitative
as well as qualitative enhancements of the workforce based on the standpoint of both factor input
and generate a financier-friendly environment to inspire higher amount of investments, whilst
making continuous efforts to augment total productivity of factor. Based on the outlook of
quantitative input of nation’s labour, there is need to enhance overall social employment of
women, youth as well as seniors to resolve the imbalance between supply of labour as well as
demand and lessen social costs (Flath 2014). This counts welfare expenditure. Based on the
outlook of the quantitative labour input, it is obligatory to reform both education and inflate
associated investment to stock up human capital. In order to expand overall input of capital in the
entire economy, the entire nation shall have the need to enhance its investment environment by
delivering superior housing facility for foreign financiers, drastically easing investment-

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associated rules and re-modelling diverse free zones of economies. This will also have the
necessity to execute a stratagem to inspire overall inflow of particularly foreign direct
investment.
The government of Japan also needs to increase the focus in exports and productivity of
businesses in the country. In recent few years, the growth level in the country has significantly.
Government should reconsider the volume of investment in this area to develop a superior class
model shielding focus of investment on particular field. The government of Japan and Korea
needs to increase the Foreign direct investments in the economy for the purpose of establishing
more earnings in the economy. This will also increase the employment level in the economy and
this can also contribute to the Gross Domestic Product. The rate of growth of the economy can
be considered to be one of the most important sources of jobs. Further, policymakers of the
governing bodies of the nation have the need to realize that jobs without having growth can be
considered to be dangerous than the jobs without presence of jobs.
The governments need to intervene for setting up a good policy the production and
employment generation. Attempts need to be made to pull different economically immobile
women into the market for labour (Shim and Lee 2016). This also shall have the need to generate
jobs where work and study are compatible to facilitate entry of young individual into the specific
market of labour and institute the dual system that can support proper pattern of employment.
The nation also has the need to improve overall state of the nation by upgrading
economic system (Buzo 2016). This can be done through improving regional demand by means
of development of superior value-added service segments namely, medical tourism development
and welfare, enhancing specific parts as well as material segments into novel strategic export

9CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
segments and improving overall level of competitiveness of the regional financial segment. The
Korean economy is in a need to develop the foundation/basis for invigorating service segment by
means of deregulations across the board (Stubbs 2017). Additionally, the economy has to
generate high-quality jobs that can fit the value added generated by upgraded service segments
by enhancing the reward framework.
There is further Scope of Improvement in case of South Korea as the government needs
to increase the level of capital expenditure in the country and in addition to this, the government
also needs to take a note of the social needs of the country and also sustainability requirements of
the country. The governing authority needs to make efforts to augment overall social
accountability of different business enterprises, counting not only large sized businesses but also
different government administrative centre, labour unions, different civic grouping together with
mass media indicating towards international guiding principles on social accountability. In
addition to this, the employment opportunity in the country also needs to be increased which can
be done by attracting more foreign investment in the country. Every regulations which are
implemented by the government needs to be formulated in such a way that they can contributed
in a positive manner to the GDP of the country. An example can be given of the tax regulations
which can be used by the government as a tool for encouraging more exports in the business.
Conclusion
The above discussion shows that there are further scope of development for both the
countries Japan and Korea. In Korea, Government needs to secure overall fiscal health in order
to cope with enhanced burdens of welfare by means of investment expansion. The government
also needs to consider all the risks which the economy faces. By minimizing overall conflicts as

10CONTEMPORARY ISSUES IN JAPANESE AND KOREAN ECONOMY
well as risks between the two parts of Korea, it can be possible for the government to enhance
overall system stability of the entire nation. The government of Japan needs to look after some
areas of the economy while in the context of Korea, government involvement is needed more
than the former one. The government of both the countries needs to formulate better policies so
that the economy can achieve growth and development.

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