The World Economy and Japan Since the 1970’s

Abstract

During the 1980’s the world economy began to develop new features that are quite different from those of the 70’s. Inflation during the 70’s and the early 80’s — also called “stagflation”, in the sense that it was accompanied by stagnation of production and a feeling of depression — has come to an end. Both the British and American governments managed to curtail inflation by severely restricting the money supply, after two years of recession and high unemployment. Stagflation, of course, has caused many problems, and its undesirable consequences are still with the US. Although unemployment in the US has dropped from more than 10% last spring to 7–8% at present, it still stands at 12–13% in the UK and 9–10% in Germany. We must admit that the cost of inflation control has turned out to be rather high. From a global viewpoint, Latin American countries are still suffering from inflation, and the problems of those countries with their vast accumulated debts remain. The economic crisis in developing countries is becoming rather intense due to the stabilization of international commodity prices and a tendency toward excessive supply of primary goods after the recent inflation.