Negative Effect of Current Account Surplus on Long-term Growth; Focused on the Cases of Japan, S. Korea and China
DOI:
https://doi.org/10.14738/abr.99.10842Keywords:
current-account, surplus, long-run-stagnation, Japan, Korea, ChinaAbstract
It is a teaching of current economics that the surplus of current account in international payment contributes to the increase of income. But it has got a negative effect on the long-term growth in the reality, which is easily proved by some instances. First, the Japanese growth rate has been very low despite its current account maintaining a huge surplus. Second, it is another instance that South Korea has suffered from its low growth rate even if its government has enforced the policy to defend its exchange rate from declining while its current account surplus has become large since 1998. Next, the growth rate of China has decreased from the time when its foreign reserve has begun to reduce despite its huge surplus of current account. This paper clarifies the reason why their growths are stagnant despite their huge surpluses in current account. If this paper changes the policies of above countries, it would resolve their economic difficulties and settle the imbalance of the world economy. And this paper would contribute to the evolution of economics.
References
Aloy, M. and K. Gente, (2009). “The role of demography in the long run Yen-USD real exchange rate appreciation,” Journal of Macroeconomics, 31: 654-667.
Bayoumi, T. (1999). “The Morning After: Explaining the Slowdown in Japanese Growth in the 1990s,” Journal of International Economics, 53; 241-259.
Choe, Yongshik. Hyun-jung Kim, (2020). “Lessons from the Experiences of Currency Crisis, focused on the Cases of Korea, Argentina, Mexico and Greece, International Journal of Business and Economics Research, 9(4): 192-
Corbett, Jenny and Takatoshi Ito, (2010). “What should the US and China learn from the past US-Japan conflict?” The US-Sino Currency Dispute: New Insights from Economics, Politics and Law, http://www3.grips.ac.jp/~t-ito/VoxEU_currency_dispute_22.pdf, Accessed on May 28, 2020.
Demirguic-Kunt, Asli and Enrica Detragiache, (1998). “Financial Liberalization and Financial Fragility,” IMF Working Paper WP/98/83.
Fukuda, Shin-ichi and Jun-ichi Nakamura, (2011). “Why Did ‘Zombie’ Firms Recover in Japan?” The World Economy, Special Issue: Asia Regional Issue, 34(7): 1124-1137
Hamada, K. and Y. Okada, (2009). “Monetary and International Factors behind Japan’s Lost Decade,” Journal of the Japanese and International Economies, 23: 200-219.
Hamao, Y., J. Mei and Y. Xu, (2007). “Unique Symptoms of Japanese Stagnation: An Equity Market Perspective,” Journal of Money, Credit and Banking, 39(4): 901-923.
Hayashi, Fumio and Edward C. Prescott, (2002). “The 1990s in Japan: A Lost Decade,” Review of Economic Dynamics, 5(1): 206-235
Hoshi, T. and A. K. Kashyap, (2004). “Japan’s Financial Crisis and Economic Stagnation,” Journal of Economic Perspectives, 18(1): 3-26.
Kindleberger, Charles P. and Robert Z. Aliber, (2005). Manias, Panics, and Crashes; A History of Financial Crashes, fifth edition, John Wiley & Sons, Inc., 2005(1978).
Korea Development Institute, (2002). “The Lessons to be Learned from the Japanese 10-Year Stagnation”, in Korean, KDI, Seoul, Korea.
Krugman, Paul, (1979). “A Model of Balance of Payment Crises,” Journal of Money, Credit and Banking, 11: 311-(1998). “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap,” Brookings Papers on Economic Activity, 2: 237-205.
Kwon, Hyeog Ug, Futoshi Narita and Machiko Narita (2015). “Resource Reallocation and Zombie Lending in Japan in the 1990s” Review of Economic Dynamics, 18(4); 709-732
Lazonick, William, (1999). “The Japanese Economy and Corporate Reform: What Path to Sustainable Prosperity?” Corporate Governance and Sustainable Prosperity: 226-254. https://link.springer.com/chapter/10.1057/9780230523739_8, Accessed on 21 March, 2021.
Lee, Bong-gu, (1997). Economic Falling of Japan, in Korean, Korea Economic Daily, Seoul, Korea.
Lin, Yupeng, Anand Srinivasan and Takeshi Yamada, (2014). “The Effect of Government Bank Lending: Evidence from the Financial Crisis in Japan,” https://www.uts.edu.au/sites/default/files/FDG_Seminar_140604.pdf, accessed on may 21, 2021.
McKinnon, R. and K. Ohno, (2001). “The Foreign Exchange Origins of Japan’s Economic Slump and Low Interest Liquidity Trap, The World Economy 24: 279-315.
Motonishi, Taizo and Hiroshi Yoshikawa, (1999). “Causes of the Long Stagnation of Japan during the 1990s: Financial or Real?” Journal of the Japanese and International Economies, 13(3): 181-200
Nakamura, Jun-ichi and Shin-ichi Fukuda, (2013). “What Happened To ‘Zombie’ Firms In Japan?: Reexamination For The Lost Two Decades,” Global Journal of Economics, 2(2); 1-18.
Nakatani, Takeshi and Peter Skott, (2007). “Japanese Growth and Stagnation: A Keynesian Perspective,” Structural Change and Economic Dynamics, 18(3): 306-332.
Porter, Michael, Hirotaka Takeuchi and Mariko Sakakibara, (2000). Can Japan Compete? Perseus Publishing, Cambridge, Massachusetts, USA.
Saito, Seichiro, (1998). KISEKI NO HANSEI WA NAZE USHINA WARETAKA – MONOGATAR NIHON KEIZEI 50-NENSHI (Why Japanese Economy Collapsed), translated into Korean by Shinhan Research Institute, Deulnyeok, 1999, Seoul Korea
Sheth, Jagdish N., (2008). The Self-Destructive Habits of Good Companies: And How to Break Them, Pearson Education, Inc., NJ USA, translated into Korean by Jung- Shik Kim & Woo-Young Jeon, Lux Media, 2008, Seoul Korea
Takahashi, Joshen, (2001). Disappeared Miracle in Japanese Economy, translated into Korean by Gwak Haesun, Darakwon, 2002, Seoul, Korea
Tyers, Rod, (2011). Japanese Economic Stagnation: Causes and Global Implications, Center for Applied Macroeconomic Analysis, The Australian National University, CAMA Working Paper Series.
Yoshino, Naoyuki and Eisuke Sakakibara, (2002). The Current State of the Japanese Economy and Remedies, Asian Economic Papers, 1(2): 110-126
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 Yongshik Choe, Seong-yop You
This work is licensed under a Creative Commons Attribution 4.0 International License.
