5 Areas Japan Leads the World (2 mins)

 

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In economic circles (and even outside), many look down on Japan, whether it is because of the “lost decade” after the 1980s bubble burst, an ageing population or its apparent lack of appetite for radical change. But such superficial ideas mask much that is impressive about Japan. Here’s five lesser known areas where Japan leads the world:

1)      Japan has the highest share of the population in employment amongst the biggest economies in the world.  Just over 50% of the population is in employment compared to 47% in the US, 49% in Germany and 48% in the UK. It also has the lowest unemployment rate at 3.3% compared to US’s 4.9% or Germany’s 4.6%. All of this, despite the fact that Japan’s population has been declining for years.

2)      Japan tops the world in patents granted. The most recent data for 2014 shows that Japan had close to 300,000 patents granted, followed the US’s 260,000 and China’s 175,000

3)      Japan is the biggest direct investor in the world. Buying foreign companies or investing in foreign factories and such is a critical driver of world growth. On a net basis, Japan consistently has the highest net FDI in the world. This year, Japan is expected to have originated  net FDI of $105bn compared to next placed US at $90bn (the year before, the US had a negative number meaning it was recipient of direct investment, rather than the originator).

4)      Since 2009, only Germany has had higher productivity than Japan. Productivity, or the lack thereof, has been one of the biggest macro debates in recent years. It’s noteworthy then when looking at GDP per person adjusted for PPP currency that Japan has seen productivity growth of over 20% since 2009. That’s the same as the US and only bettered by Germany’s 25%. It’s higher than the UK’s 20%, France’s 15% and Italy’s 6%

5)      Japan is the safest country in the world. Well, this is well known, but it’s nice see it quantified. A survey on whether people felt safe walking alone at night found Japan to be the safest large country in the world. 88% of people felt safe. This compares to the next best Korea’s 84%. As for the US, only 42% of  people feel safe walking alone at night (the UK 51%)

Bilal

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2 thoughts on “5 Areas Japan Leads the World (2 mins)”

  1. Hello Bilal!

    I found your blog via the Nomura site. It is refreshing to see an investment banker with a life outside of finance and able to express themselves online without the constant need for spin.

    Regarding this article, I am surprised at how Japan has been able to maintain its high standard of living despite a moribund economy – except for the gargantuan debt. I have learned a thing or two from this blog. Could you give some plausible explanations as to why the yen has been strengthening against the greenback this year. I surmise that the natural level of the yen is somewhere between the 80s and 90s to the greenback, therefore the pre-Abenomics rate wasn’t so far-off. What do you think?

    1. There are many things surprising about Japan and the currency is one of them. You rightly point out that the natural rate is somewhere closer to 80. Another factor is that US long-term interest rates fell over 2016 and that the BoJ didn’t ease as much as many had hope after the initial cut in January

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