From the economist article : A game of leapfrog
http://www.economist.com/node/21553498
From point of GDP, it is known Japan is third largest economy in the world, but by which means Japan is the 3rd happiest country in the world? It’s hard to say. Throughout almost all my life, I have always thought that why Japanese economic hasn’t revitalized? What is point? I want to tell you later but today, I want to share the fact which is less known. This is review recent article from the Economist.
For years, Japan was Asia’s richest and most powerful economy. It was the first Asian economy to industrialize, and the emerging Asian tigers Hong Kong, Singapore, South Korea, Taiwan and late China – merely followed in its tracks. Now, however Japan is steadily overtaken.
It is less known that Asia’s so-called newly industrialized economies (NIES) are, one by one, becoming richer than Japan. Most economist reckon that the best way to compare living standard is to take GDP per person measured at purchasing-power parity (PPP), which adjust for difference in the cost of living in each country. You know, the cost of living in Tokyo is the most expensive in the world 2012. Compare to New York City 33th and Shanghai is 16th. (See figure on source: http://www.mercer.com/press-releases/cost-of-living-rankings )
Cost of living: http://www.mercer.com/press-releases/cost-of-living-rankings
On this gauge, Japan was overtaken by Singapore in 1993, by Hong Kong in 1997 and by Taiwan in 2010. And South Korea will be richer than Japan soon. This is surprising, because in 1980, South Korea’s GDP per person was barely a quarter the level of Japan’s.
Now, Japanese prime minister is Shinzo Abe. He is famous for his policy of economics called Abenomics. Thanks for expectation for Abenomics, now stock price of Tokyo market has increased and the price of yen has decreased, which are good, will help Japanese economy later. But, the issue is Abenomics is going to introduce inflation target 2 percent. I am not sure whether or not inflation suits for Japanese economy. I said the living cost in Tokyo is the most expensive in the world already. If your salary is stable but the price of product increase, it is hard to live. And also it is important that inflation rate should be stable. Does this work?
Even it seems we have had hard time. For people in the world, Japanese economy is one of most important model. It is because Japanese economy has experienced Modern Industrialization, Bubble economy, and Aging society in advance any other country in the world. Let’s thinks about the future of Japanese economy.