The Japanese Economy

Exports: Japan's main export goods are cars, electronic devices and computers. Most important single trade partner is the USA which imports more than one quarter of all Japanese exports. Other major export countries are Taiwan, Hong Kong, South Korea, China and Singapore.

Imports: Japan has a large surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs, and wood. Major suppliers are the USA, China, Indonesia, South Korea, and Australia.

Industries: Manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about 2% of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small.

The Japanese Economy experienced a 'miracle' growth phase after the end of the Second World War and up until the 1980s to become the second largest economy in the world. However, in the 1990s it experienced a 'Lost Decade', and some of its structural problems continue to hold it back.

Thanks to low tax rates, plenty of economic freedom, and a system dominated by the private sector, Japan's economy is the second largest economy in the world and the largest in Asia, based on real GDP, market exchange rates, and nominal GDP.

Japan uses planned development of science and technology, and has a strong work culture, which benefits the country as a whole. It also emphasizes good relationships between the industrial sector and national government.

The Japanese economy, while teetering on the verge of recession a number of times during and after the 1960's, managed to ride out these times and continued to sustain high economic growth. This reached a peak in 1991 and in 1992; Japan entered a period of economic slowdown.

In 1992, the Economic Deliberative Council issued its Life-style Super Power 5-Year Plan, in which it stated: To date, much has been made of raising productivity, however, from now on, there will be greater consideration of the individual needs of the people.

Rather than merely considering how to increase Japan's economic strength, more attention is to be paid to the harmony of the global society.

In the 1990's, a certain degree of satisfaction has been achieved in 'things' Japanese and so, efforts are being made to achieve a better life-style-one in which there is enjoyment of leisure, with a reduction in working hours.

The Life-Style Super Power Five Year Plan

In the Life-style Super Power 5-Year Plan, it has been proposed that the number of working hours per year be reduced to 1800 and that people living in large cities be able to buy a residence for the equivalent of 5 times their annual salary.

However, the realization of such goals is no easy matter. The reason for this is that in Japan, large numbers of people living on a limited amount of land makes for exorbitant prices in housing.

It is normal for a Japanese office worker to work at least ten hours a day, which would include commuting time and it is not unusual to find people who are actually working as many as thirteen hours a day, when you add two hours of overtime to the eight-hour working day, as well as three hours of commuting time (return trip).

Compared to other foreign countries, it is easy to see how far removed the lifestyle of a Japanese office worker is from that of a decent human-like existence.

Towards Internationalization

Throughout the world, people have become familiar with the 'yen' and Japanese 'goods'. In the past, when one wished to travel overseas, it was necessary to take American dollars. These days, it is possible to get by with Japanese yen in most countries.

When it comes to the questions of Japanese culture or traditions, one discovers that, unlike Japanese 'currency' and 'goods', these have not been exported to the four corners of the globe, and it seems that efforts need to be made to increase international understanding.

For example, in business dealings, the regulation of imports and the existence of mechanisms which make it impossible for foreign corporations to enter Japan have drawn criticism. Unnecessary regulation should be quickly dispensed with and the opening of markets should be accelerated. Japan's history of exporting in a unilateral way and always being in the black has led to an ever-worsening imbalance of international payments.

The greatest problems however, seem to derive from the different practices in business dealings. It is not a question of accusing one party of being 'in the right' and the other of being 'in the wrong'-efforts to ensure mutual understanding of the proceedings involved must be pursued by both parties.

To this end, it is necessary to accept foreign students and to employ foreign workers in companies and to have them gain an understanding of Japanese customs-Japanese and foreigners need to interact in order to learn about each other's different viewpoints.

The Appreciation of the Yen

In 1973, Japan adopted the floating exchange rate system for the yen. Since this time, Japan has seen its currency grow from strength to strength.

The strong yen may be attributed to the comparatively high level of economic growth, the slow rise of commodity prices and the fact that trade figures continue to remain in the black. Certainly, the concerted action of many countries to create a strong yen has set the scene for the present situation.

The impact of a strong yen has meant that the Japanese economy has been hit hard-in particular, car manufacturers and the electronics industry, which depend upon large numbers of exports. The prices of imported goods have dropped and the numbers of domestic imports have swelled. With the continued strengthening of the yen, Japan's economy appears to be in for an ordeal.

The economy is highly advanced and dominated by the services sector, accounting for 73.1% of the economy. The industrial sector, once the engine of Japan's growth, contributed 25.3% of the GDP. The agricultural sector accounts for only 1.6% of the economy.

Japan has some peculiarities that have marked its rapid rise from the ashes of the Second World War, to preeminence in the 1980s. In particular, manufacturers, their suppliers and distributors work closely together in informal but tight structures called keiretsu, with intimate support from financial institutions and the government. For most of the last fifty years, large Japanese corporations have also provided guaranteed employment for life to ‘salarymen’, typically male employees who work the longest hours on the planet in return for that commitment.

Living Cost

Living costs in Japan and especially in Tokyo are famous to be among the world's highest. However, if you live outside of central Tokyo, adjust to a Japanese lifestyle and do not depend too heavily on food and products from your home country, you may be surprised how inexpensive Japan can be.

Housing

Some of the world's most expensive land can be found in central Tokyo. Consequently, even tiny apartments in the city center are very expensive. However, housing costs are distinctly lower in Tokyo's suburbs, surrounding prefectures and in other regions and cities of Japan. Additional commuting costs are often more than compensated by the savings on the rent, especially as many Japanese companies pay part or all of their employees' commuting expenses. If you prefer to live close to city centers, gaijin houses are an inexpensive option to consider.

Utilities such as gas, water and especially electricity are expensive, and phone rates are high. For international calls, consider internet phones, callback services and other offers for the expat community.

Food

Local supermarkets are relatively inexpensive if you stick to Japanese food such as seasonal vegetables, seafood, soya bean products and rice. If you visit supermarkets shortly before closing time in the evening, you can purchase remaining perishable products at big discounts.

There are plenty of restaurants where you can have a full meal for between 500 and 1000 Yen. Noodles (ramen, soba and udon), domburi (for example, beef domburi), curry rice, bibimba (Korean style domburi), hamburgers and many more types of dishes are available at such inexpensive restaurants. Look for them around and inside large train stations and in business areas.

A meal at a more average restaurant costs roughly between 1,000 and 3,000 Yen, while there is no upper price limit when it comes to high-class restaurants such as ryotei.

During lunch hours, many restaurants offer inexpensive teishoku (set menus) at around 1000 Yen. Lunch boxes (bento), which are sold in convenience stores and department stores, train stations and at temporary stands in business areas are also a good deal.

Everyday goods and services

Clothing departments of supermarket chains such as Ito Yokado or discount clothing stores such as Uniqlo offer inexpensive clothing. The availability of large sized clothes may becomes a problem if you are over 180 cm tall or a big person, otherwise. Department stores and boutiques are more expensive.

Japanese hair dressers are famous for their great service and high prices. However, there are also places where you can get a quick haircut for around 1000 Yen.

While naturally not famous for high quality, 100 Yen Shops sell a large range of products including stationary and kitchen goods at 105 Yen each (consumption tax included) and can be very cost-efficient.

Transportation

Commuters can purchase commuter passes for unlimited travel between their home and office/school for a given time period. A large variety of other discount offers is available for train travel in Japan. Check out our Guide to Japanese train tickets for more details.

Owning a car in Japan is expensive due to the mandatory bi-annual inspections (shaken), mandatory insurance, an automobile tax and the fee for a parking space (in large cities). The cars themselves, however, are relatively inexpensive, with smaller new cars starting at under one million yen. A liter of gasoline costs around 100 Yen. The use of highways is subject to tolls.

Electronics

Electronic goods, such as TVs, stereo sets, cameras and computers are relatively inexpensive at stores like Yamada Denki, Yodobashi Camera, Sakuraya and Bic Camera, and in discount shopping areas like Akihabara in Tokyo.