| It occupied Korea, Formosa (Taiwan),
and southern Sakhalin Island. In 1931-32 Japan occupied Manchuria,
and in 1937 it launched a full-scale invasion of China. Japan attacked
US forces in 1941 - triggering America's entry into World War II
- and soon occupied much of East and Southeast Asia.
After its defeat in World War II, Japan recovered to become an
economic power and a staunch ally of the US. While the emperor retains
his throne as a symbol of national unity, elected politicians with
heavy input from bureaucrats and business executives - wield actual
decisionmaking power.
The economy experienced a major slowdown starting in the 1990s
following three decades of unprecedented growth, but Japan still
remains a major economic power, both in Asia and globally.
Government-industry cooperation, a strong work ethic, mastery of
high technology, and a comparatively small defense allocation (1%
of GDP) helped Japan advance with extraordinary rapidity to the
rank of second most technologically powerful economy in the world
after the US and the third-largest economy in the world after the
US and China, measured on a purchasing power parity (PPP) basis.
One notable characteristic of the economy has been how manufacturers,
suppliers, and distributors have worked together in closely-knit
groups called keiretsu. A second basic feature has been the guarantee
of lifetime employment for a substantial portion of the urban labor
force. Both features have now eroded.
Japan's industrial sector is heavily dependent on imported raw
materials and fuels. The tiny agricultural sector is highly subsidized
and protected, with crop yields among the highest in the world.
Usually self sufficient in rice, Japan must import about 55% of
its food on a caloric basis.
Japan maintains one of the world's largest fishing fleets and accounts
for nearly 15% of the global catch. For three decades, overall real
economic growth had been spectacular - a 10% average in the 1960s,
a 5% average in the 1970s, and a 4% average in the 1980s. Growth
slowed markedly in the 1990s, averaging just 1.7%, largely because
of the after effects of overinvestment and an asset price bubble
during the late 1980s that required a protracted period of time
for firms to reduce excess debt, capital, and labor. From 2000 to
2001, government efforts to revive economic growth proved short
lived and were hampered by the slowing of the US, European, and
Asian economies.
In 2002-07, growth improved and the lingering fears of deflation
in prices and economic activity lessened, leading the central bank
to raise interest rates to 0.25% in July 2006, up from the near
0% rate of the six years prior, and to 0.50% in February 2007. Japan's
huge government debt, which totals 182% of GDP, and the aging of
the population are two major long-run problems. Some fear that a
rise in taxes could endanger the current economic recovery.
Debate also continues on the role of and effects of reform in
restructuring the economy, particularly with respect to increasing
income disparities and the 2007-17 privatization of Japan Post,
which has functioned not only as the national postal delivery system
but also, through its banking and insurance facilities, as Japan's
largest financial institution. |
About Japan
