Frog in the Pot: Germany's Path to the Japan SyndromeIssue: Spring 2003
Japan's decade of decline is the worst fate suffered by an advanced economy since the Great Depression. Contraction in Japan, however, is not only Japan's problem--it is also a drag on the global economy. Japan's withdrawal of capital from Asia and a weakening yen contributed heavily to the Asian financial crisis of 1997-98. Since then, Japan's continuing slump has limited export earnings for emerging market countries, thus strengthening the backlash in Asia and Latin America against globalization and the "Washington Consensus." It is also exacerbating rather than offsetting the current global slowdown.