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 Japan (2008)Japan (2007)
 JapanJapan
Background In 1603, a Tokugawa shogunate (military dictatorship) ushered in a long period of isolation from foreign influence in order to secure its power. For more than two centuries this policy enabled Japan to enjoy stability and a flowering of its indigenous culture. Following the Treaty of Kanagawa with the US in 1854, Japan opened its ports and began to intensively modernize and industrialize. During the late 19th and early 20th centuries, Japan became a regional power that was able to defeat the forces of both China and Russia. 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. In 1603, a Tokugawa shogunate (military dictatorship) ushered in a long period of isolation from foreign influence in order to secure its power. For more than two centuries this policy enabled Japan to enjoy stability and a flowering of its indigenous culture. Following the Treaty of Kanagawa with the US in 1854, Japan opened its ports and began to intensively modernize and industrialize. During the late 19th and early 20th centuries, Japan became a regional power that was able to defeat the forces of both China and Russia. 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, actual power rests in networks of powerful politicians, bureaucrats, and business executives. 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.
Budget revenues: $1.463 trillion


expenditures: $1.575 trillion (2007 est.)
revenues: $1.479 trillion


expenditures: $1.586 trillion (2006 est.)
Debt - external $1.492 trillion (30 June 2007) $1.547 trillion (30 June 2006)
Economic aid - donor ODA, $7.5 billion (2007) ODA, $8.9 billion (2004)
Economy - overview 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. In addition, the ten-year 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, was completed in October 2007, marking a major milestone in the process of structural reform. Nevertheless, 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. 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 60% 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 2002-06, growth improved and the lingering fears of deflation in prices and economic activity lessened. Japan's huge government debt, which totals 176% 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 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.
Exchange rates yen per US dollar - 117.99 (2007), 116.18 (2006), 110.22 (2005), 108.19 (2004), 115.93 (2003) yen per US dollar - 116.18 (2006), 110.22 (2005), 108.19 (2004), 115.93 (2003), 125.39 (2002)
GDP - composition by sector agriculture: 1.5%


industry: 25.2%


services: 73.3% (2007 est.)
agriculture: 1.5%


industry: 25.6%


services: 73% (2006 est.)
GDP - real growth rate 1.9% (2007 est.) 2.2% (2006 est.)
Industrial production growth rate 1.3% (2007 est.) 3.3% (2006 est.)
Inflation rate (consumer prices) 0% (2007 est.) 0.2% (2006 est.)
International organization participation ADB, AfDB, APEC, APT, ARF, ASEAN (dialogue partner), Australia Group, BIS, CE (observer), CERN (observer), CP, EAS, EBRD, FAO, G-5, G-7, G-8, G-10, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAIA, MIGA, NEA, NSG, OAS (observer), OECD, OPCW, OSCE (partner), Paris Club, PCA, PIF (partner), SAARC (observer), SECI (observer), UN, UN Security Council (temporary), UNCTAD, UNDOF, UNESCO, UNHCR, UNIDO, UNITAR, UNRWA, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO, ZC AfDB, APEC, APT, ARF, AsDB, ASEAN (dialogue partner), Australia Group, BIS, CE (observer), CERN (observer), CP, EAS, EBRD, FAO, G-5, G-7, G-8, G-10, IADB, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAIA, MIGA, NEA, NSG, OAS (observer), OECD, OPCW, OSCE (partner), Paris Club, PCA, PIF (partner), SAARC (observer), SECI (observer), UN, UN Security Council (temporary), UNCTAD, UNDOF, UNESCO, UNHCR, UNIDO, UNITAR, UNMOVIC, UNRWA, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO, ZC
Labor force 66.07 million (2007 est.) 66.57 million (2006 est.)
Military branches Japanese Ministry of Defense (MOD): Ground Self-Defense Force (Rikujou Jietai, GSDF), Maritime Self-Defense Force (Kaijou Jietai, MSDF), Air Self-Defense Force (Koku Jieitai, ASDF) (2008) Japanese Defense Agency (JDA): Ground Self-Defense Force (Rikujou Jietai, GSDF), Maritime Self-Defense Force (Kaijou Jietai, MSDF), Air Self-Defense Force (Nihon Koku-Jieitai, ASDF) (2006)
Pipelines gas 3,939 km; oil 170 km; oil/gas/water 104 km (2007) gas 8,015 km; oil 170 km; oil/gas/water 60 km (2006)
Unemployment rate 4% (2007 est.) 4.1% (2006 est.)
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