ECO100Y1 Lecture : US and Japan
Feb 3, 2009
Reading 9.1
1980-US and Japan had a balanced trade
1980-84-Large trade deficit from Japan to US, due to Japan being a protectionist country
-US import from Japan was 3 times as large as US exports to Japan in 1985, exports had to grow by more
than 3 times as fast as imports if Us wanted to keep the trade deficit from widening
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-The Long term credit Bank of Japan in 1993, said the imbalance was due to price-inelastic high-tech.
products, 4.5B of the imbalance was from disc players, video cameras, machine tools that were not
produced in the US
-Because Japan has a triangular trade pattern, it imports oil from Saudi Arabia, Coal from Australia and
soybeans from Brazil, it needs to pay for those imports by exporting large amts to North America,
Europe and rest of East Asia
-Japanese household saving is high compared to US household saving which is low and declining
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second half of the decade
-why are land prices so high in Japan? High expected rate of growth and high savings rate, with low
taxation of income from capital and land, Agricultural protectionism and regulations impede rational
allocation of land among alternate uses
-Japan laborers work longer hours, overall productivity is more than twice of US
There is a large growing trade deficit
The reason for the Japan trade surplus(from US), Japan had to import a lot of
US has large foreign exchange deficit-over 1 trillion, need sufficient foreign exchange in order to prevent
depreciation
China is main buyer of US bonds, bringing foreign exchange to US, holding up the US dollar
Samsung Article-strategy by Samsung, to quarantine the senior research group for a flat screen tv, built
the model in 5 months
National Post-v[oPP]vP}µ]À]Ç]ZlÇ}v}u]ZoovP(]vPv
Lack of productivity growth by businesses in Canada
Productivity leads to real wage increases, tax revenue increases, 17/20 countries in productivity growth
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Canada is behind other economies
R&D as a percentage of GDP in Canada is the lowest of the G7
Patents per capita, lower than US or Japan, sign of innovation
Quality of Management, inferior to US, in formal years of education
What should the government do? Improve the competitive business sector, removing regulations
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