After WWII Japan’s exchange rate was fixed in a way that penalized consumption and subsidized production (for export). The result was the rapid rise of Japan as an industrial power in the 60s to the 80s. This is the same strategy that South Korea followed and China is following today.
While this strategy in the short term dramatically increases capital investment in a country in the long term it seems to come with a demographic drag. Workers simply stop having children as they are the largest consumption driver. Long term this creates profound demographic changes that ultimately are culturally fatal.
While this strategy in the short term dramatically increases capital investment in a country in the long term it seems to come with a demographic drag. Workers simply stop having children as they are the largest consumption driver. Long term this creates profound demographic changes that ultimately are culturally fatal.