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Japan's Economic Malaise
Implications of Japan’s Economic Stagnation
Japan is one of the developed countries with successful economic models influenced by the rich industrial base in the country. Japan has a well-established automotive and fishing industry that also played a role in the success of the country economically. However, with the economic stagnation in the country, there are certain implications or effects that the stagnation will have on the benefits, risks and costs of conducting business in the country. There are two major implications of economic stagnation in Japan: rise in the levels of unemployment and reduction levels in the production of goods and services.
Rise in Unemployment
With a stagnating economy, the country will lack the capacity to support and sustain the working population. As such, many people will lose their jobs. Loss of jobs further derails the economic progress in the country. That is, there will be a reduction in the degree of investment because people will have inadequate money or funds to invest. Therefore, without investments, it would be challenging to venture into or conduct business operations in the country, which in turn increases the business risks. Rise in unemployment also translates to a rise in insecurity levels and criminal activities as people look for alternative sources of income. An insecure country will scare away the foreign investors, thus lowering down the country’s income. Moreover, rise in unemployment levels lowers the taxation margins in the country, which also lowers the income levels and margins of the country.
The increase in unemployment levels will reduce the marginal propensity in the market and the purchasing power of the individuals in the country. As such, there will be interference in the supply chain of essential goods and services, leading to a dead economy. An economy that cannot support its people can promote violence in the country.
Reduction in the production levels of goods and services
Stagnation in the economy of Japan will lead to reduced production of goods and services within the country. The reduction in production levels leads to dissatisfaction in the wants and needs of the consumers. A reduction in the levels of production will lead to the emergence of scarcity where the consumers will have employ opportunity costs. As a result of that, there will be some good and services that will be foregone, leading to loss of value and consequently collapse.
Collapse of goods and services will lead to the collapse of business enterprises in Japan. A decline in the business organization will lower the income levels of the country, which will make it challenging the country to support other elemental sectors including education and security. The collapse of goods and services production will lead to reduction in the supply and demand of the goods and services, which will lead to the emergence of inflation. Inflation will lead to a reduction in the demand of goods and services leading to the emergence of counterfeit products.
In conclusion, the stagnation of the economy of Japan will have negative implications on the economy and functions of the country. There will be increased levels of unemployment, which will also lower the standards of living of the people. if the economy of the country continues stagnating, the country will fail to support its citizens and will eventually collapse. Therefore, the country has to establish measures of maintaining its economic growth and sustain the people.
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