Japan ranked second in the world behind the People's Republic of China in tonnage of fish caught—11.9 million tons in 1989, up slightly from 11.1 million tons in 1980. After the 1973 energy crisis, deep-sea fishing in Japan declined, with the annual catch in the 1980s averaging 2 million tons. Offshore fisheries accounted for an average of 50 % of the nation's total fish catches in the late 1980s although they experienced repeated ups and downs during that period

Coastal fishing by small boats, set nets, or breeding techniques accounts for about one third of the industry's total production, while offshore fishing by medium-sized boats makes up for more than half the total production. Deep-sea fishing from larger vessels makes up the rest. Among the many fish species caught are sardines, skipjack tuna, crab, shrimp, salmon, pollock, squid, clams, mackerel, sea bream, saury, tuna and Japanese amberjack.

Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch ^[10], prompting some claims that Japan's fishing is leading to depletion in fish stocks such as tuna.^[11] Japan has also sparked controversy by supporting quasi-commercial whaling.^[12]

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Industry

Main article: Manufacturing industries of Japan

The nation's industrial activities (including mining, manufacturing, and power, gas, and water utilities) contributed 46.6% of total domestic industrial production in 1989, up slightly from 45.8 percent in 1975. This steady performance of the industrial sector in the 1970s and 1980s was a result of the growth of high-technology industries. During this period, some of the older heavy industries, such as steel and shipbuilding, either declined or simply held stable. Together with the construction industry, those older heavy industries employed 34.9% of the work force in 1989 (relatively unchanged from 34.8 percent in 1980). The service industry sector grew the fastest in the 1980s in terms of GNP, while the greatest losses occurred in agriculture, forestry, mining, and transportation. Most industry catered to the domestic market, but exports were important for several key commodities. In general, industries relatively geared toward exports over imports in 1988 were transportation equipment (with a 24.8 percent ratio of exports over imports), motor vehicles (54 percent), electrical machinery (23.4 percent), general machinery (21.2 percent), and metal products (8.2 percent).

Industry is concentrated in several regions, in the following order of importance: the Kantō region surrounding Tokyo, especially the prefectures of Chiba, Kanagawa, Saitama and Tokyo (the Keihin industrial region); the Tōkai region , including Aichi, Gifu, Mie, and Shizuoka prefectures (the Chukyo-Tokai industrial region); Kinki (Kansai), including Osaka, Kyoto, Kobe, ( the Hanshin industrial region); the southwestern part of Honshū and northern Shikoku around the Inland Sea (the Setouchi industrial region); and the northern part of Kyūshū (Kitakyūshū). In addition, a long narrow belt of industrial centers is found between Tokyo and Fukuoka, established by particular industries, that have developed as mill towns.

The fields in which Japan enjoys relatively high technological development include semiconductor manufacturing, optical fibers, optoelectronics, optical media, facsimile and copy machines, and fermentation processes in food and biochemistry. Japan lags slightly in such fields as satellites, rockets, and large aircraft, where advanced engineering capabilities are required but they made headway through their aerospace exploration agency, JAXA with possible manned independent mission to moon, and in such fields as computer-aided design and computer-aided manufacturing (CAD/CAM), and databases, where basic software capabilities are required, and natural resources exploitation, due to the lack of them.

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Services

Japan's service sector accounts for about three-fourths of its total economic output. Banking, insurance, real estate, retailing, transportation, and telecommunications are all major industries such as Mitsubishi UFJ, Mizuho, NTT, TEPCO, Nomura, Mitsubishi Estate, Tokio Marine, JR East, Seven & I, ANA counting as one of the largest companies in the world. The Koizumi government set Japan Post, one of the country's largest providers of savings and insurance services for privatization by 2014. The six major keiretsus are the Mitsubishi, Sumitomo, Fuyo, Mitsui, Dai-Ichi Kangyo and Sanwa Groups. Japan is home to 326 companies from the Forbes Global 2000 or 16.3% (as of 2006).

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Labor force

In 2001, Japan's labour force consisted of some 67 million workers—40% of whom were women—and was rapidly shrinking. [3] Labour union membership is about 12 million. The unemployment rate is currently 4.1%. In 1989, the predominantly public sector union confederation, SOHYO (General Council of Trade Unions of Japan), merged with RENGO (Japanese Private Sector Trade Union Confederation) to form the Japanese Trade Union Confederation.

One major long-term concern for the Japanese labour force is a low birthrate. In the first half of 2005, the number of deaths in Japan exceeded the number of births, indicating that the decline in population, initially predicted to start in 2007, had already started. While one countermeasure for a declining birthrate would be to remove barriers to immigration, the Japanese government has been reluctant to do so.

As of July 2006, the unemployment rate in Japan is 4.1%, according to the OCDE.

see also: Labor market of Japan

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Current economic issues

The Koizumi administration, which held office until 2006, enacted or attempted to pass (sometimes with failure) major privatization and foreign-investment laws intended to help stimulate Japan's dormant economy. Although the effectiveness of these laws is still ambiguous, the economy has begun to respond, but Japan's aging population is expected to place further strain on growth in the near future.^[13]

Heterodox economists tend to claim that Japan's economy is far stronger than genarally believed.^[14] Some mainstream economists acknowledge that Japan, which unlike most Western countries has maintained its industrial base, and has vast capital reserves, currently has a strong economic outlook.

The privatization of Japan Post, the Japanese postal system which also runs insurance and deposit-taking businesses, is a major issue. A political battle over privatization caused a political stalemate in August, 2005, and ultimately led to the dissolution of the Japanese House of Representatives. The Postal Savings deposits, which have until now been used to fund public works projects, many of which have had questionable economic value, stands in excess of 1.9 trillion U.S. dollars, and could be a major force in energizing the private sector.

The decline in the Japanese population as a result of a low birthrate threatens the long-term economic vitality of Japan. A higher percentage of elderly in the population will put pressures on the pension system, and will ultimately force a higher burden on the current generation of laborers.

The Japanese monetary authorities' continued desire to depress the price of yen relative to other key specific currencies to protect domestic business from imports may no longer be feasible. The most recent record intervention in 2003 amounted to over 17 trillion yen, more than one third of one trillion US dollars at the time and nearly 3% of Japan's 2003 GDP, being sold in favor of other non-yen denominated assets. However, since 2005, Japan has not directly intervened to buy currency, as yen carry trade has effectively carried out the same task.

Interestingly, international trade has expanded by 60% from 91.4 trillion yen to 142.6 trillion yen from 2001 to 2006, but the size of GDP has barely budged. However, taking in account the economic participation rate, Japan's GDP per worker has increased steadily.

The Organization for Economic Cooperation and Development downgraded its economic forecasts on March 20, 2008 for the Japan for the first half of 2008. Japan does not have room to ease fiscal or monetary policy, the 30-nation group warned. For Japan, the OECD said the pace of underlying growth appears to be softening despite support from buoyant neighboring Asian economies. The organization expects first-quarter GDP to be up 0.3 percent and predicts a rise of 0.2 in the second quarter. [4]

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Post-war economic history

From the 1960s to the 1980s, overall real economic growth has been called a "miracle": a 10% average in the 1960s, a 5% average in the 1970s and a 4% average in the 1980s.^[15] Growth slowed markedly in the late 1990s, largely due to the Bank of Japan's failure to cut interest rates quickly enough to counter after-effects of over-investment during the late 1980s. Because the Bank of Japan failed to cut rates quickly enough, Japan entered a liquidity trap. To keep its economy afloat, Japan ran massive budget deficits to finance large public works programs. By 1998, Japan's public works projects still could not stimulate demand enough to end the economy's stagnation. In desperation, the Japanese government undertook "structural reform" policies intended to wring speculative excesses from the stock and real estate markets. Unfortunately, these policies led Japan into deflation on numerous occasions between 1999 and 2004. In his 1998 paper, Japan's Trap, Princeton economics professor Paul Krugman argued that based on a number of models, Japan had a new option. Krugman's plan called for a rise in inflation expectations to, in effect, cut long-term interest rates and promote spending.^[16] Japan used another technique, somewhat based on Krugman's, called Quantitative easing. As opposed to flooding the money supply with newly printed money, the Bank of Japan expanded the money supply internally to raise expectations of inflation. Initially, the policy failed to induce any growth, but it eventually began to effect inflationary expectations. By late 2005, the economy finally began what seems to be a sustained recovery. GDP growth for that year was 2.8%, with an annualized fourth quarter expansion of 5.5%, surpassing the growth rates of the US and European Union during the same period.^[17] Unlike previous recovery trends, domestic consumption has been the dominant factor of growth.

Japan is the top export market for almost 15 trading nations worldwide.

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Other economic indicators

Industrial Production Growth Rate: 3.3% (2006 est.)

Investment (gross fixed): 100% of GDP (2006 est.)

Household income or consumption by percentage share:

• Lowest 10%: 4.8%
• Highest 10%: 21.7% (1993)

Agriculture - Products: rice, sugar beets, vegetables, fruit, pork, poultry, dairy products, eggs, fish

Exports - Commodities: machinery and equipment, motor vehicles, semiconductors, chemicals

Imports - Commodities: machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials (2001)

Exchange rates:
Japanese Yen per US$1 - 100.320 (2008) 109.690016 (2005), 115.933 (2003), 125.388 (2002), 121.529 (2001), 105.16 (January 2000), 113.91 (1999), 130.91 (1998), 120.99 (1997), 108.78 (1996), 94.06 (1995)

Electricity:

• Electricity - consumption: 946.3 billion kWh (2005)
• Electricity - production: 996 billion kWh (2005)
• Electricity - exports: 0 kWh (2003)
• Electricity - imports: 0 kWh (2003)

Electricity - Production by source:

• Fossil Fuel: 56.68%
• Hydro: 8.99%
• Nuclear: 31.93%
• Other: 2.4% (1998)

Electricity - Standards:

• 100 volts at 50 Hz from the Oi River (in Shizuoka) Northward;
• 100 volts at 60 Hz Southward

Oil:

• production: 125,000 bbl/day (2006)
• consumption: 5.578 million bbl/day (2005)
• exports: 93,360 barrel/day (2001)
• imports: 5.449 million barrel/day (2001)
• net imports: 5.3 million barrel/day (2004 est.)
• proved reserves: 59 million bbl (1 January 2006)

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See also

• Japanese post-war economic miracle
• Quantitative easing

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Notes

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