Japanese and British Goods, Essay Example

The value of Japanese and British goods and services compared to US has been changing since 1950. Both countries have used different methods to sustain their needs and have a booming economy. Since 1950’s, Japan has been involving itself in production of electronic goods and the manufacture of motors. This has been one of the biggest boosts for Japan’s economy. Through exporting their goods, Japan has managed to make their markets expand unlike in the US, where exportation of goods is minimal due to high import of cheap products. This takes over the market making US manufactures lose their jobs since no one wants to buy their expensive goods. Japan has tried to focus on manufacturing of goods mainly electronics while, on the other hand, the US has slowly turned into agriculture as their main export good. In this case, Japan’s goods and services have a lower cost and price and thus get ready market.

Britain’s goods and services have been influenced in a very different way in comparison to US. Britain has been trying hard to get in the common market since the year of 1950. This is in order to have a ready market for its goods and services. This move drastically improved Britain’s economy, which had been highly affected during the world war and forced their currency to fall, making their goods and services lose price in the market. Price lose is a disadvantage to a country’s economy since it influences so many things, which includes agriculture, infrastructure and development of a country. While, in the US, they tried to separate workers according to their educational qualifications, and this meant that only those people with a high education qualification would get good jobs in manufacturing companies. By so doing, they encourage individuals to discriminate each other by looking down on those who are not learned. It is not fair to introduce educational backgrounds to the markets economy since, this brings about lose of talent and skilled labor. In the business market, Britain has made a big step compared to the US. Since, they manufacture their own products and goods and export them unlike in the US who imports most of their goods.

Diagram 1

The above diagram shows a real time exchange rate of goods between Japan and US. The exchange rate is 360 Yen to 1 $ making the dollar superior. Thus, the imports that Japan gets from the USA are cheaper compared to the exports Japan sends to the USA. Hence, the citizens in Japan are prone to consuming more of the foreign goods to the domestic ones. This is because the domestic ones are expensive. As the diagram shows the value of Yens that are more, go for minimal Dollars in goods.

Diagram 2

The above diagram shows a real time exchange of goods between Britain and US. The USA still in this case is seen to have a concrete currency, which only fluctuates if the macroeconomic instruments are unfavorable. The British Pounds still goes more for less USA goods in the market. Thus, the USA profits more that traders in Britain.

Diagram 3

It shows the consumer price index of Italy to the range of years. This is the purchasing power of consumers in Italy expressed in terms of years. The curve shows that the consumer price index varies at different years as it increases. From 1989 to 1994, the CPI continues to increase this shows that inflation is on the rise. That is the consumers are using more money to purchase the same goods. However, from 1994 to 1995 there is a stagnant plane showing that the CPI might increase further or finally reduce. Comparing to Germany’s CPI the difference of the graphs is clear. The currency for Germany in the later years stabilizes, unlike Italy.

Diagram 4

It shows Germany’s consumer price index that offers the benchmark for diagram 3 and 5. This is because Italy and United Kingdom choose to devaluate their currencies, unlike Germany. Thus, Germany is the comparing element to any changes and effects that will be witnessed.

Diagram 5

It shows United Kingdom consumer price index from the year 1989 to 1995. The CPI increases from the onset of 1989, but at 1994 onwards, it starts to decrease. This shows that the currency starts to gain stability compared to Italy whose fate is unknown. The difference from Germany is not that significant. Thus, it can be argued that UK made the right move in devaluing as the graph shows.

The devaluation of Italy and Britain’s currency was followed by different results for each country. In Italy, the devaluing as the diagram above shows starts out with the currency having low purchasing power. This is from 1989-1990, after these years the currency starts to rise. This is as the rate of inflation rises the currency is of a lesser value, and thus the country has to use more money to purchase goods. From 1990-1994, the consumer price index continues to rise until the end of 1995 where it seems stagnant. This is because the inflations rate is getting higher and the government tries to correct this. The end results show that the purchasing power does not change drastically, but as the prices keep increasing fewer goods are being purchased. In the United Kingdom, the currency value decreases as few citizens purchase goods and services that are from 1990-1994. The consumer price index then starts to increase at a slow rate as the consumer adapt to the inflation rates. However as the years go by the purchasing power reduces as the consumer price index decreases. In both the countries, there was a different impact of the decreasing currency value. The current account for Italy does increase as they import goods. They are evidently more expensive compared to domestic goods of the United Kingdom. Thus, the consumers opt to consume the countries goods and services. Thus, the decrease in the currency has a substantial effect in Italy’s current account. In the United Kingdom, the current deflection has minimal effects on the current account. This is as the current account rises at a decreasing rate that keeps decreasing after 1995.

Reference

Gardner, A. (1961). Macroeconomic Theory. Washington DC : Macmillian.

Jill, K. (1976). The Consumer price index. Washington DC : US. Department of Health, Education, and Welfare.

Michael, K. (2001). Drawing graph: methods and models. New Mexico: Springer.

Patricia, K. (2004). Currency. Paris : Franklin Watts.