Economic Stagnation in Japan
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Economic Stagnation in Japan

Exploring the Causes and Remedies of Japanization

Edited by Dongchul Cho, Takatoshi Ito and Andrew Mason

Japan’s dramatic transformation from economic success to economic stagnation offers important policy lessons to advanced countries everywhere that are struggling with stagnation. The term ‘Japanization’ is often used by economists to describe long-term stagnation and deflation. Symptoms include high unemployment, weak economic activity, interest rates near zero, quantitative easing, and population aging. In the global context, what can governments do to mitigate the downward trends experienced by Japan? This judiciously timed book investigates in depth the causes of Japan’s ‘lost decades’ versus the real recovery achieved by the United States, and the lessons that can be learned.
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Chapter 4: Export dynamics of Japan, Korea and China

Kyu-Chul Jung

Abstract

Kyu-Chul Jung examines how Korea’s export market today resembles Japan’s since the 1990s and faces increasing competition from China. In the 1990s Japan lost export market shares as Korea began to catch up, but China began to catch up with Korea in the late 2000s. The old strategy of exporting the same goods as advanced countries is not sustainable. With its limited resources, Korea needs to concentrate on exports where it has a comparative advantage, to undertake structural reforms (dealing with insolvent enterprises and improving labor-market flexibility) and to develop new export markets. Korea needs to focus on core capabilities, so that China and other latecomers cannot easily emulate Korea’s technology and market strategy.

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