Іі. Developed countries

The USA

The USA important economy in the world. In 2010, The US economy was responsible for 20.218 percent of the world’s total GDP (PPP) or US$ 14.624 trillion.

Yet despite leading the world’s economy for more than a hundred years, The US economy is now facing its greatest ever challenge since World War II. This challenge has been a result of both domestic and international factors.

Domestically, the US economy’s frailties were cruelly exposed during the 2008 financial crisis. The US economy has found it harder to recover from the 2008 financial crisis, believed to be the worst financial crisis since the Great Depression, as compared to previous downturns. Consumer confidence within the country is at all time low, perpetuating the slow economic growth since 2008.

On the international front, it is increasingly likely that the US will lose its status as the world’s largest economy. According to the latest IMF forecast done in April 2011, China is expected to overtake the US by 2016. This has come as a major surprise for the global community – previous forecasts had predicted China overtaking the US by 2035 at best.

CHINA

Market liberalization in the Chinese economy has brought its economy forward by leaps and bounds - but rural China remains poor, even as its cities increase in affluence.

In 2010, China’s GDP growth was 10.456 percent, totaling US$ 5,745.13 billion, and is expected to increase 11.79 percent in 2011 to US$ 6,422.28 Billion. Forecasts for 2015 predict China’s GDP to reach US$ 9,982.08 billion, growing 10-12 percent per year between 2010 and 2015.

China's economy is huge and expanding rapidly. In the last 30 years, the rate of Chinese economic growth has been almost miraculous, averaging 8 percent growth in Gross Domestic Product (GDP) per annum. The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars in 2007. China already has the biggest economy after the United States and most analysts predict China will become the largest economy in the world this century.

China’s population in 2010 was 1.341 billion, and its expected to grow to 1.375 billion in 2015. In 2010, China’s unemployment rate stood at only 4.1 percent, decreasing 4.65 percent from the previous year and expected to decrease further to 4 percent in 2011. Forecasts for 2015 predict China’s unemployment rate to remain at 4 percent between 2011 to 2015.

However, there are still inequalities in the income of the Chinese people. The per capita income of China is only about 2,000 US dollars, which is fairly poor against global standards.

Economic reforms started in China in the 70s and 80s with the initial focus on collectivizing agricultural activities in the country. The leaders of the Chinese economy, at that point in time, were trying to change the center of agriculture from farming to household activities. The reforms also extended to the liberalization of prices, in a gradual manner. The process of fiscal decentralization soon followed.

As part of the reforms, more independence was granted to business enterprises that were owned by the state government. This meant government officials at local levels and managers of various plants had more authority than before.

This led to the creation of a number of various types of privately held enterprises within the services sector, as well as the light manufacturing sectors. The banking system was also diversified, and Chinese stock markets started to develop and grow as economic reforms in China took hold.

China grew at a rapid pace as a result of these reforms and opened its economy to the world for trade and direct foreign investment.

China has adopted a slow but steady method in implementing economic reforms. It has also sold the equity of some of its major Chinese state banks to overseas companies and bond markets. In recent years, China's role in international trade has also increased.

JAPAN

Japan is the 3rd largest economy in the world behind the US and China. In 2010, Japan's GDP (Current Prices, US dollars) was US$5.458 trillion and its GDP (PPP) was US$4.309 trillion.

Much of Japan’s modern economic success can be traced to two significant periods in its history- the pre-war Meiji Era and the post-war Economic Miracle.

The Japanese were one of the earliest nations in Asia to industrialise. During the Meiji restoration period in the mid 19th century, the Japanese government actively pursued Western-style reforms and development – hiring more than 3,000 Westerners to teach modern science, mathematics and technology to Japan.

The Meiji government also created a conducive business environment for private businesses to thrive. Shipyards and factories were built by the government and sold at extremely low prices to entrepreneurs. These entrepreneurs eventually began businesses that quickly expanded into conglomerates known as the Zaibatsu.

The Zaibatsu controlled much of Japan’s economic and industrial activity. By the start of World War II, the Big Four Zaibatsu – Mitsubishi, Mitsui, Sumitomo and Yasuda – had control of over more than 30 percent of Japan's mining, chemical, metals industries, 50 percent of the machinery and equipment market, and 60 percent of the commercial stock exchange. The Zaibatsu also developed interlocking relationships among themselves and Japanese policy makers, thus allowing them a level of control over government policies.

Although World War II devastated most of the Japanese economy, the social foundations laid down during the Meiji Era contributed to the post-war economic miracle from the 1960s to the 1980s. New constitutional and economic policies implemented by the US during the American occupation of 1945-1952, also contributed to the eventual recovery of the Japanese economy. Furthermore, although there were attempts to dissolve the Zaibatsu system, the Zaibatsu managed to evolved into the Keiretsu with the six major Keiretsu being Mitsubishi, Sumitomo, Fuyo, Mitsui, Dai-ichi Kangyo and Sanwa Groups.

However the greatest contributing factor of the Japanese Economic Miracle was the establishment of the Ministry of International Trade and Industry (MITI) in 1949. MITI implemented numerous policies that led to heavy industrial growth in Japan. Many scholars have described MITI to have had the greatest impact on the economy of a nation than any other governmental regulation or organisation in the world. According to prominent political scientist Chalmers Johnson, author of MITI and the Japanese Miracle, “MITI formalized cooperation between the Japanese government and private industry. The extent of the policy was such that if MITI wished to “double steel production, the neo-zaibatsu (keiretsu) already has the capital, the construction assets, the makers of production machinery, and most of the other necessary factors already available in-house”.

During the post-war economic miracle from the 1960s to the 1990s, Japan experienced huge economic growth – at an average of 10 percent annually in the 1960s, 5 percent in the 1970s, and 4 percent in the 1980s.

Growth in the 1990s slowed down largely due to the asset price bubble in late 1980s, and the crash of the Tokyo Stock Exchange in 1990-92. This period is termed as the “Lost Decade” in Japan.

In the aftermath of the 2008 global financial crisis, the Japanese economy began to undergo a strong period of economic recovery. In 2010, Japan’s real GDP growth (constant prices, national currency) was 3.938 percent – the fastest growing economy among the G-7 nations for the year. However, the 2011 Japanese earthquake and tsunami has threatened to derail Japan’s economic growth. On April 2011, the Japanese government was forced to downgrade its assessment of the economy for the first time in six months. According to the Economics Minister Kaoru Yosano, “The biggest risks, or uncertain factors for the economy, are when power supplies will recover and whether the nuclear situation will keep from worsening."

The 2011 earthquake and tsunami in Japan is expected to result in US$235-310 billion worth of damages. The Bank of Japan has injected more than ¥325 billion into the economy to stabilize the financial market and slow down the appreciation of the yen.