Positive Effects of Japanese Saving Rate Essay Example for Free

Positive Effects of Japanese Saving arrange EssayThe economic saving(a) localise of Japan is among the highest in the piece. According to a recent study, the rate in the 80s and the early 90s had been over 10% steadily and higher than any other developed kingdom. (Katayama 1). This high saving rate has immediate ordained effects on Japans miserliness and to foreign economies as well. In this short paper, we leave discuss and explore some of the advantages brought by Japans high saving rate. As we are all familiar with, Japan is well known for being a self-sufficient country. It is a country that innovates its own useful products, and produces quality that is competitive with American made products. maven great difference amidst the two is that Japans preservation has a better inclination towards saving, piece the American economy is more geared towards spending and making foreign investments. That is a major advantage for Japan as far as economic stability is concer ned, because by being fitting to save well, they are able to sustain their position as a self-sufficient nation. That would mean, they dont need to focus on making foreign investments to maintain and even increase their gross house servant product.In countries with relatively very high spending rates such as mainland China and the United States, there is almost a desperate need to make foreign investments and export goods. Japan, meanwhile, is able to attract more foreign investors to their dirt because of its high savings rate and economic self sufficiency. Future economic stability of citizens is another collateral domestic effect of Japans saving rate. According to Katayama, the life-cycle theory, one of the representative consumption theory, shows that while a rational household may save some of the income in youth, they may spend their savings after their retirement. (3). This means that majority of Japanese citizens are placing more focus on their future rather than the p resent. When the current workforce reaches old age and eventually retire, they have personal savings that will master a better quality of life even during old age. It is a very good domestic advantage for Japan because the future generation of retired workforce will be taken good bang of, even when they reach the age when they leave their jobs and cannot contri hardlye to the Japanese economy anymore. Japans saving rate does not impact its own people only, but the entire Asia and the world as well.One of our research sources states since Japan is the worlds second largest economy (and the largest in Asia), developments within its borders have implications not only for itself, but the rest of the world as well, particularly the rest of Asia and the United States, its largest trade partner. Indeed, the faltering Japanese economy is potentially a significant impediment to economic recovery in the rest of Asia (Nolan, Robinson and Wang). Although much has been tell about the slight w eakening of Japans currency and savings rate during the past 10 years, the fact remains that Japan is still the worlds second largest economy.It is also considered as the worlds largest creditor. The countrys savings rate, although not as good as before, remains just about higher than those of highly developed countries and emerging economies. Thus, Japan is still in a position to greatly influence global economic trends in positive ways, eventually quell the current economic crises and trust more resources in the future.BibliographyBrooke, James. Quarters Growth Rose in Japan To 7%, Buoyed by China Trade. The New York Times. (18 Feb. 2004). 1 Dec. 2007.http//query. nytimes. com/gst/fullpage. html? res=9B01E0DD123DF93BA25751C0A9629C8B63 Katayama, Kentaro. Why Does Japans Saving Rate Decline So Rapidly? . Policy Research Institute, Ministry of Finance, Japan. (Dec. 2006). 1 Dec. 2007. http//www. mof. go. jp/jouhou/soken/kenkyu/ron164. pdf. Noland, Marcus. , Sherman Robinson and Zhi Wang. The Global Economic Effects of the Japanese Crisis. The Peterson Institute for International Economics. 1 Dec. 2007. http//www. iie. com/publications/wp/wp. cfm? ResearchID=147.