The Great Japanese Earthquake’s Economic Impact May be Negative in the Short Term But Positive LongTerm

With all the emphasis on China’s growth, few realize the extent to which we continue to depend on Japanese companies for many of our critical electronic and mechanical components. Japanese robotic companies, for example, have an overwhelming share of the world market. There are many critical niches in which Japanese companies control 90 percent of the world’s marketshare.

Depending on how long factories in Japan remain closed, parts and machinery shortages could have a ripple effect along the entire supply chain around the world.

Longer term, however, as heartless as this may be to say when the death toll is still being counted, the earthquake could have a positive economic impact. In Japan there is an old saying: After the earthquake prosperity. That’s because an earthquake spurs an explosion of activity as the society mobilizes to rebuild.