Comparing Economies Aus Japan Essay

Comparing Economies Aus Japan Essay Comparing Economies Aus Japan Essay Australia and Japan are two exceptionally advanced and industrialised mixed market economies, meaning their economies are mostly run by private market forces, but there is also substantial government intervention in economic life. Australia and Japan are closely linked and have a very strong economic relationship within the world economy that has evolved over decades. These two economies provide for an interesting comparison, as they are similar in many aspects, however they do have their various significant differences. This report seeks to compare and contrast the aspects of both Japan and Australia, which make up their economies, and to provide the close analysis of their economic characteristics. The economic aspects examined within this paper include: economic growth, main industries, trade, employment and unemployment, distribution of income, quality of life, environmental sustainability and the role of government. General Facts Australia Japan Geography Island located just below the equator in the South Pacific region Archipelago located in Asia to the east of North Korea and South Korea Size 7,741,200 km2 377,194 km2 Population 23.7 million 127.3 million Population density (per km2) 3 350.66 Currency Australian dollar (AU$) Japanese yen (Â ¥) Type of Economy Mixed/Free market economy Mixed/Free market economy Economic Growth Economic growth refers to an economy’s capability of producing goods and services. GDP is the measure of a nation’s total output, and is used as the main indicator for economic growth. In 2013, Japan’s GDP measured US$4.901 trillion and Australia’s measured US $1.56 trillion. Japan has a much larger economy than Australia in terms of GDP, which is most likely due to their significantly larger population and stronger labour force. Although Japan has the larger total GDP, Australia has a significantly larger GDP per capita, which is due to their much smaller population. Australia’s economic growth rate between the years 2010-2013 ranged from 2-4%, according to the World Bank, and Japan’s rate of economic growth ranged from -0.5-4.7%. Australia Japan GDP US$4.901 trillion (2013) $1.56 trillion (2013) GDP per capita US$67,458.36 US$38,633.71 The rates of economic growth of both Japan and Australia during the past few years are shown in the graph below. Australia’s rates of economic growth throughout the years remain relatively steady in comparison to Japan’s. Contrastingly, Japan’s economic growth rates do not tend to remain steady and often rise and fall dramatically in short periods of time. Australia’s economic growth is quite consistent, in the sense that they tend to have less dramatic changes in rates of economic growth in comparison to Japan. Inflation generally refers to the rise of prices of consumer goods and services in the market, and the decline of the purchasing value of money. CPI (consumer price index) is the measure used to calculate inflation in the economy. CPI is determined by calculating the percentage change in the average prices of common consumer goods and services. The changes in the CPI of Australia and Japan throughout the years is displayed on the graph below, relative to the 2010 statistics, which are used as the 100%. In 2013, Australia’s CPI measured 107.8%, whereas Japan’s measured 100.0%. Australia’s CPI had risen by 7.8% in three years, whereas Japan remained where they were three years ago. From the graph below, it can be observed that Australia’s CPI continues to increase quite rapidly, which is in contrast with Japan, whose CPI is quite stable and experiences very small change in rises and falls. It can be predicted that Australia’s CPI will continue to rise , and Japan’s is expected to rise slightly due to the government reforms that were aimed to increase inflation. Both the Australian and Japanese Governments have introduced various policies and stimulus packages for the purpose