Bubble Economy

The Economy of Japan had experience a tremendous growth since the end of the Korean war. The growth of GNP in 1967 and 1968 was above 10 % (double digit growth period) which exceed countries such as Britain, France and Germany. The economy experienced a boost is due to many reasons, such as: enlargement of industrial facilities, massive adaptation of western technology and education, lower the military expense to 1% of GNP, relation with power nation, human resources and their spirit to achieve 'zero defect program'. But after the first and second oil crisis that occur from 1973 onward. The economy move downwards partially due to the poor management of economic policy. Although the government had attempt to adjust the economic policy but the recovery was slow. As the soaring of yen continues the demand for export has increase tremendously. With the concern of the United State of this problem, president Reagan and the G5 have signed an agreement with Japan called 'Plaza Agreement' , the agreement stated that the exchange rate of Japan and Deutschmark can appreciate against the U.S. . Since then the yen value began to appreciate, Japan was going through a period of trade balance adjustment. …