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Please watch the 3rd segment of the above video, starting at 8:16 minutes, and discuss the implications on International Business and how you see this evolving in 2024. Please use two external sources
Sample Answer
The Impact of Japan’s Economic Policies on International Business in 2024
Japan, as the third-largest economy globally, plays a crucial role in the international business landscape. The country’s economic policies, particularly its monetary strategies, have significant implications not only for its domestic market but also for global financial stability. In the segment from the provided video, it is evident that Japan’s Central Bank has been pursuing unconventional monetary policies to keep interest rates low and stabilize its financial sector. However, these actions have wider repercussions on international business and finance.
Thesis Statement
Japan’s persistent low-interest rate policy and recent adjustments in bond yields have the potential to disrupt global financial markets and impact international business operations in 2024.
Implications for International Business
Japan’s decision to keep interest rates exceedingly low has consequences that reverberate across borders:
1. Currency Fluctuations: The Bank of Japan’s efforts to maintain low-interest rates have led to a depreciation of the Yen against major currencies like the US Dollar. This shift can affect international trade, making Japanese exports more competitive but also raising costs for imports.
2. Investor Behavior: With lower returns on investments in Japanese bonds, international investors may seek higher yields elsewhere. This can influence capital flows and investment decisions globally, potentially impacting asset prices and market stability.
3. Competitive Landscape: Japanese companies operating in international markets may benefit from a weaker Yen, boosting their export competitiveness. However, increased import costs could squeeze profit margins, especially for firms heavily reliant on imported goods or raw materials.
4. Supply Chain Disruptions: Currency fluctuations and market uncertainties stemming from Japan’s monetary policies can disrupt global supply chains, affecting businesses reliant on Japanese components or partnerships.
Evolution in 2024
In 2024, the trajectory of Japan’s economic policies and their effects on international business are likely to evolve:
1. Policy Adjustments: The Bank of Japan may face pressure to recalibrate its monetary stance in response to domestic economic conditions and global market dynamics. Any shifts in policy, such as adjustments in interest rates or bond yields, could trigger volatility in international financial markets.
2. Trade Relations: Japan’s currency movements and export competitiveness will continue to influence its trade relationships with key partners like the US, China, and the EU. Trade disputes or agreements could arise based on perceived currency manipulation or unfair trade advantages.
External Sources
To further support the analysis of Japan’s economic impact on international business:
1. Reuters: Japan’s Central Bank Keeps Policy Steady, Warns of Global Risks – This article discusses the Bank of Japan’s recent policy decisions and their implications for global economic stability.
2. Bloomberg: How Japan’s Low Rates and High Debt Are Defying Economic Gravity – An analysis of Japan’s unique economic situation, focusing on the impact of low-interest rates and high debt levels on the country’s economy and global markets.
By monitoring Japan’s economic policies and their effects on international business closely, stakeholders can better prepare for potential disruptions and leverage opportunities arising from these developments in 2024.
