RUNNING HEAD: A RESEARCH PAPER FOR GLOBE ENVIRONMENT BUSINESS

A Research Paper for Globe Environment Business

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Introduction
EU, Japan and Chinas leap from poverty due to the marvelously successful market
reforms introduced in 1978 has obscured serious weaknesses in its economy compared to the
American economy. These weaknesses have been exacerbated by renewed Chinese state
intervention that began around 2003. Many seem convinced that China, EU, and Japan are at the
helm of outdoing the U.S. economically. However, Americans should not lose track of their
enormous advantages over the Chinese, Japanese and EU income, in natural resources, and in
other areas such as labor productivity. Heritage Foundation and economic expatriate Derek
Scissors, explains why it is critical that the U.S. remember its strengths and recognize profound
Chinese, Japanese and EU labor force weaknesses.
There is increasingly big talk of China, EU, and Japan defeating America in raw
economic size in the next decade, or, adjusting for purchasing power, and labor force
productivity. America can and should win the economic competition.
America vs. China
One of the most astonishing developments resulting from the financial catastrophe is the
belief among ordinary Americans that China has turned out to be the worlds prominent
economy. This view appeared in the roughest times of US economic development and had
persisted even though the impact of the crisis has started to subside and U.S. media have
repeatedly conveyed the same belief. But it is patently absurd.
The main reason for Americans disappointment is jobs as statistics show that the Official
U.S. lack of employment breached 9 percent during the past two years. It is even higher when
counting those who have stopped looking for jobs. Centrally, the Chinese issues an urban

unemployment total below 4.5 percent, but this includes only those officially known and no one,
including officials at the Ministry of Human Resources and Social Security, trusts it is accurate.
The Chinese Academy of Social Sciences managed by the state placed urban unemployment at
9.4 percent before the full effect of the financial crisis was felt. The PRCs rural joblessness has
long exceeded 20 percent. Correct Chinese unemployment rate is certainly higher than real
American unemployment, and, depending on how unemployment is determined, could be
considerably higher.
Productivity echoed by employment, where the numbers may amaze those who see the
US as the global leader. Predominantly it is accepted that Chinese policy is driven first by the
necessity to create jobs, but the level of that challenge is not widely perceived. When joblessness
is determined by those who are in need of employment and do not have them, Chinas
unemployment is twice that of the U.S. even in a feeble American year. This is an amazing
burden for China.
For labor, a pure signal of American advantage is the ratio of GDP to an employee; the
U.S. has a larger economy in spite of a smaller workforce. The American lead is on order of 11:1
indicating that the average American worker is 11 times more productive. Manufacturing, where
China is viewed as the new global leader, requires more than eight Chinese workers to be
equivalent to the production of one American worker. Superior productivity makes the average
American much wealthier than the ordinary Chinese. Nor has this success come at the expense of
jobs; more of the labor force is hired in the U.S. than in China.

The Japanese vs. U.S. Economies

The economies in U.S. and Japanese are relatively similar. They are both large developed
economies that have provided their citizens with a high standard of living. However, they are
very dissimilar in some critical ways. The U.S. economy is roughly two and half times as large
as Japans on labor force productivity, nominal, and purchasing power parity (PPP) basis. The
Japanese standard of living is somewhat lesser than the U.S as measured on a theoretical per
capita/GDP basis and even inferior when measured on a PPP per capita/GDP basis. This indicates
a high cost for food, fuel, and other essential needs in Japan as opposed to the United States.
Japan has also endured slow economic growth due to recessions in labor productivity in the past
two decades, while U.S. economic progress had been resilient, though both economies have
undergone slow growth and even decline after the 2008-2009 financial catastrophe. The U.S.
average annual GDP growth rate during the last ten years (2003-2012) has been almost two times
that of Japans due to higher labor force productivity I the U.S.
However, in U.S, the strong growth, and low unemployment during this time were
predominantly noteworthy because the government budget was administrated in concurrently
and achieved excess for four years between 1998 and 2001 leaving a big gap of economic
development between U.S and Japan which did not act correspondingly. The stock market was
boosted by the growth of Internet-based companies in what is known as the dot-com bubble
that created vast sums of unexpected revenue for the government on capital gains taxes and
increasing salaries.

References
Huang, J., & Rozelle, S. (1996). Technological change: Rediscovering the engine of productivity
growth in China's rural economy. Journal of Development Economics, 49(2), 337-369.
Ikenberry, G. J. (2008). The rise of China and the future of the West: can the liberal system
survive?. Foreign affairs, 23-37.
Xie, D., Zou, H. F., & Davoodi, H. (1999). Fiscal decentralization and economic growth in the
United States. Journal of Urban Economics, 45(2), 228-239.