The Effects of the Tsunami in Japan - Case Study Example

How Tsunami Disaster effected Japan’s Economy (March 11, Effects of Tsunami on Japan’s Economy Introduction Japan has a huge economy growth with the base on high technology factories, nuclear power, currency, and food exports. The nation also receives many benefits over the sea such as seafood and shipbuilding technology. Unluckily, Japan is located at the prone nation to occurrence of tsunamis because it sits at the middle of four different plates: Pacific plates, Philippine plates, North America plates, and Eurasian plate. Over years, several numbers of tsunamis have been experienced because the Philippines and Pacific plate are continuously moving below the North America and Eurasian plates. At the result, a danger tsunami was created on March 11, 2011 by a 9.0 magnitude earthquake. The huge tsunami destroyed a large number of many physical properties and many lives of Japanese citizens were lost. It caused damage to Japan’s economy because the economy is connected with other nations internationally from trade in goods and services (Steiner). The tsunami’s destruction of properties affected the main sources of Japan’s exports, and if it cannot export, then the economy is in jeopardy (Ferris & Solis). Therefore, it shows that tsunami had a negative effect on basis of cost of damage, stock market, Gross Domestic Product or output, power, currency, loss of lives, and food exports. Body Before tsunami occurred, Japan was the third largest country with respect to increase in economy growth. When the nation was affected by the tsunami, the biggest exporting companies had been temporally collapsed such as Sony that exported a large number of electronics and Toyota Motor, which form the largest world automaker exporting many motors worldwide. These large companies contributed effectively in Japan’s economy. The quake pushed down Japan’s stock by 6.18% per share and affected the top ten largest economies (Steiner). Continuing of the devastation, March 11 Tsunami also affected energy power plants such as electric-nuclear power. The damage caused many important industries to shut down since they could not run the industries without power. When companies or industries were closed, the manufacturing process had been stopped; therefore, there was no product available for sale overseas and even locally. Furthermore, the tsunami also destroyed public road and communication radio stations. The communication would be stopped and trading was unable to make any significant transaction. As a result, the processing of imports and exports was interrupted. Moreover, many Japanese lost their lives, so it decreased the labor input. As many aspects of the downward economy and lives of many Japanese affected, it pushed down 3% of the Japan’s GDP. Since tsunami effect, Japan economy has slowly recovered and the government is struggling to take it back to the time before the tsunami occurred (Amadeo). The Tsunami damaged cost did not only stop at the building cost, but it also highly affected Japanese resident negatively. For example, before tsunami occurred, Japanese lived comfortably and worked actively on the third placed position among nations economic status (Waitt 40). However, its economy was crashed by tsunami occurrence. Tsunami has resulted to continuous evacuation and uncertainty of the Japan population with 20,000 people killed, 465,000 people evacuated, and a large number lost their job from 11th March 2011 tsunami occurrence (Ferris and Solis). Moreover, Japan’s GDP was further affected negatively by change in Japan’s stock market. Although Japan’s economy had been suffering some decline in the period prior to the tsunami, it also had its greatest moments in which it outperformed most economies even the U.S’s economy from the perspective of growth rate. For instance, Japan’s recession was made official in the year 2008 when the country’s economy dropped sharply by approximately 12.9% from the year before (Amadeo). This was the result of decreasing exports in consumer electronics and vehicle sales, which contribute an approximated 16% of the country’s revenues. This was Japan’s force behind its economic revival that took place between 2002 and 2008. In the wake of the tsunami, Japan was just recovering from a decade lone recession as it had a rebound GDP growth of 3% in the year 2010 becoming the world’s best (Amadeo). Although this decreased during the last quarter of 2010, it was expected to pick up as the country was working towards stringer exports. Before the country could realize this, the tsunami struck. The main cause of the tsunami was an earthquake that struck the Eastern part of Japan’s Coast, which was 9.0 in magnitude on the Richter scale. Although Japan is prone to earthquakes, the 2011 earthquake started an event of activities that would lead to many deaths and lead to an impact both on Japan and on other regions that depend heavily on Japan’s economy and that include the U.S. In view of the frequent disasters that face the country, Japan implemented very stringent measures to ensure that it would minimize deaths resulting from earthquakes. In spite of this, japan experienced many deaths and huge losses to the economy as the tsunami led to the destruction of at least 138,000 buildings (Ferris and Solis). The country viewed the year 2011 as a year of triple disaster as the tsunami hit as the economy was trying to get on its feet following three disasters that began with the earthquake and then followed by the tsunami and then the nuclear meltdown. However, of the three, the most disastrous was the tsunami since its effects were felt by many countries because most of the production done in Japan was halted for a significant period of time as people were evacuated to safety. Although the Japanese government’s response was prompt and lifesaving, the 2011 tsunami is the most expensive natural disaster in human history. The nuclear meltdown that took place following the tsunami was termed as the worse nuclear crisis since it lead to the most fear and provoked significant criticism as many countries felt that Japan could have responded in a better way to save more lives. The destroyed nuclear power plants of Fukushima have rendered the region close to them uninhabitable and to date, the region is still a no go zone. The area is expected to remain that way for several years and the decommissioning practice might take at least 30 years. This is a big blow to the Japanese capability of power production since the nuclear power plant in Fukushima accounted for a significant percentage of Japan’s power. The country will not have the power that was being produced by the Fukushima plane for a long period and will not use the area or approximately 20 km surrounding the plant. Following the tsunami impact, of the 465,000 displaced individuals, a significant number is still in temporary accommodation as they attempt to rebuild their lives and regain what they lost. While in this type of accommodation, they are relying on the government, which is yet to reconstruct some of the areas that were affected by the tsunami. This adds to the government’s expense affecting the economy negatively. While there were very many negative effects mostly on the economic part, Japanese residents lost their jobs, long established life patterns and even their businesses (Ferris and Solis). While the small businesses make a significant contribution to the country’s economy in terms of both jobs and tax revenues, the government lost that source of economic welfare when the tsunami hit. Some of the Japanese residents were forced to leave the northern parts of Tohoku so as to look for employment opportunities in other regions. This implies that certain parts of the country became unproductive or virtually unproductive which might remain the same for significant amounts of time. Although there were constant warnings from scientists, TEPCO or the Tokyo Electric Company did not take the tsunami seriously enough to bring measures that could ensure good results (Symonds). As a result, the plant was hit severely as its electricity supplies were hit and a chain of reactions took place leading to the occurrence of partial meltdown. The company reportedly underestimated the impact of the tsunami so that it could maintain its share prices as well as profits with disastrous outcome. Following the tsunami, Japan suffered differently from different infrastructures. For instance, some communities were uprooted from their original dwelling places in their entirety while the infrastructure with regard to the roads, power, and other important utilities led to the disruption of supply networks in their significant extents. Japan’s production networks were important to both Japan and other countries. Other countries also felt the impact of the disruption of distribution networks due to the connectivity that the county facilitated. The interruption was mostly the cause of dramatic drops both in industrial production and in exports. However, Japanese companies managed to restore most of the supply networks in several months. In spite of this, the Japanese government continues to lose the advantage behind the nuclear power plants that were affected during the tsunami. However, some of the power plants that were not affected much restored operations in several months but the effect of the closure is long term. Specifically, only two nuclear power producing companies have managed to reopen and restore power production operations. This has resulted in the production of less than adequate power for the country’s growing demand. To make up for the power demand, the country has resulted in importing more oil, which, although has managed to resolve the power problem, has added to the country’s expenses. Since March 11, Japan has exhibited trade deficits amounting to approximately $78 billion in the year 2012 (Ferris and Solis). Following the tsunami, the country’s economy plunged by 0.5% in 2011 (Amadeo). This was mostly attributed to the fact that manufacturing slowed as the distribution channels were being repaired. The March 11 tsunami also brought formidable effects on the social and political fronts of Japan. Following the disaster of the Fukushima plant that prompted the displacement of people in an area of at least 20 km around the plant, there emerged large citizen movements that were directed towards the abolition of production of power through nuclear reaction. This is one of the social impacts since Japanese citizens were concerned with their overall safety mostly because of the prior disasters that have taken place in the nuclear power production plants that have even resulted in deaths of workers and citizens and exposed people to dangerous reactive materials. In response, the Japanese government has enacted more stringent safety standards as well as the establishment of new patterns of governmental regulations. In this quest, the government has also increased its activities in monitoring of the functioning of the power plans to ensure that there are no future disasters resulting from nuclear power production facilities. The disaster prompted the country’s civil society to rise in help of their fellow citizens who were stricken by the tsunami (Ferris and Solis). Japanese citizens helped each other mostly those who had lost everything were helped so as to be in a position to support themselves. The Japanese population responded in an orderly, dignified and a creatively manner following the mega disaster in support of the disaster stricken individuals. This shows a significant potential of Japan’s social potential. The country is still suffering from a shrinking labor pool mostly because the country’s population is aging. Moreover, Japan imports most of its commodities in the specifics of food and oil. In addition, it is still struggling with increasing commodity prices not to mention that the re-construction process is still undergoing and the looming danger of an earthquake at any moment. Japan has the fourth largest economy after U.S, E.U, and China implying that its decline can affect global economy. In relation to U.S, Japan’s decline can affect the U.S directly mostly because it is the largest holder of U.Ss treasuries which was a move aimed at keeping yen low in relation to the dollar that weakened Japan’s economy and raised its debt to approximately 182% of its GDP (Amadeo). However, this made Japan’s motor industry very competitive ensuring that Toyota became the number one automaker globally. As Japan continues to clean up the nuclear dump, there are concerns mostly on the cleanup exercise and the financial cost that would be required to restore Fukushima in perfect operating condition (Fackler). The government estimates that the construction would require approximately $18 billion. In addition, the country’s energy future is also uncertain because the government is yet to devise a long terms solution to this problem. The effects of the disaster in Japan went beyond Japan. This is because is established a warning to all countries that should acknowledge that even though they may be developed and well prepared they should come into term with the idea that they are not immune to terrifying disasters. Therefore, this served as a wakeup call for the entire world to understand that disasters that are more devastating than anticipated can take place. They should therefore, be more prepared for the unexpected. Conclusion In conclusion, Japan’s disaster affected the country’s economy from different perspectives. As the country was recovering from a recession, an anticipated disaster struck affecting the exports, ending lives, displaced hundreds of thousands, led to nuclear problems, and destroying vast amounts of property. The effects of the tsunami were felt by many people and countries. Although japan is in the process of reconstructing its network connections and restoring its supply and exports, it still has a lot to do because the tsunami caused many problems that include power shortages and the need to import more oil, which adds to the severely affected economy. The problems in Japan are a wakeup call for other countries to be prepared for the worst. Works Cited Amadeo, Kimberly. “Japans Economy How the Fourth Largest Economy Affects the U.S. and the World” About.com 22 Apr. 2014. Web. 03 May 2014. http://useconomy.about.com/od/grossdomesticproduct/a/Japan_Recession.htm Fackler, Martin. "Forced to Flee Radiation, Fearful Japanese Villagers Are Reluctant to Return." The New York Times. The New York Times, 27 Apr. 2014. Web. 03 May 2014. . Ferris, Elizabeth and Solis Mireya. "Earthquake, Tsunami, Meltdown - The Triple Disasters Impact on Japan, Impact on the World (Brookings Institution)." World News. 11 Mar 2011. Web. 03 May 2014. . Steiner, Rupert. A £60bn Blow to the World Economy as Japanese Markets Plunge 6.18 percent. U.K News 15 Mar 2011. Web. 03 May 2014. . Symonds, Peter. “Japans Triple Disaster: An Indictment of Capitalism” World Socialist Web Site. 16 Mar 2012. Web. 03 May 2014. . Waitt, G. ‘Social Impacts of the Tsunami in Japan’. Tokyo: Journal of Japan Tourism, (2011). Read More