to countryaah, Japan's economy throughout the 20th century was based on
imports of raw materials and exports of increasingly
advanced industrial products. With strong US support, Japan
managed to re-enter the world market after the Second World
War, and between 1960 and 1980, its GDP grew by 6.3 percent
per year (about 10 percent per year during the 1960s), a
rate of growth that highest in the world. What enabled "the
Japanese wonder" was, among other things, a close
collaboration between government and business, a high level
of household savings, low defense costs (which facilitated
extensive industrial investment and research), a
well-trained workforce with high work ethic, and domestic
political stability. Growth was also greatly promoted by a
liberal, fast-growing world trade. The heavy industry came
to play the most important role in the economy.
Economic growth continued during the 1980s at an average
of 4 percent per year and with growth even during periods of
economic stagnation in other industrial states. In the
latter part of the 1980s, Tokyo emerged as the world's third
exchange center, alongside London and New York. At the same
time, economic integration in Western Europe developed, and
both there and in the United States a protectionism began to
be clearly visible. In order to be able to hold their
positions in the world market, Japanese large companies
abroad sought with both factory facilities and other forms
of investment. Of the Japanese direct investment abroad in
1986-91, almost half went to North America, just over 1/5 to
Europe and only 1/8 to East and Southeast Asia. A so-called
financial bubble economy was built, which erupted in 1990.
Economic growth slowed to zero in 1993, and then the
recovery has been slow. During the period 2002-07, growth
was steady, but it averaged only 1.8 per cent per year. In
2010, employment was 70 percent in service, 21 percent in
manufacturing and energy production, 5 percent in
construction and 4 percent in agriculture, forestry and
Both in the financial market and in the administration, a
liberalization started during the latter part of the 1990s.
Furthermore, large parts of the Japanese business sector
have been restructured to eliminate overcapacity and
increase efficiency. Exceptions are agriculture, forestry
and to some extent fishing, which has an old-fashioned
structure. Production in these industries is shrinking and
must be supplemented by growing imports.
During the 2000s, Japan's role in the world market has
not been as clear as before. Economic growth in several
developing countries, especially in China, has benefited
Japan through increased demand for, among other things.
steel and heavy capital goods, but in recent years it has
also become a disadvantage, as competition in the world
market has intensified for many products where Japan has
previously been a world leader. A significantly smaller
share of Japan's foreign trade is now taking place with the
US and the EU, while East, Southeast and South Asia are
becoming increasingly important markets.
For many parts of the Japanese business world, the
domestic market is also reduced. An increasing proportion of
the population now consists of older consumers who already
have a variety of electrical and electronic aids, such as
appliances, "flat-screen TVs" and mobile phones. They also
have less need for many other goods than the young
households, which are getting fewer every year. A cultural
change has also emerged in recent years, affecting business
operations. Traditional values have started to be called
into question, and among the young, it is no longer as
obvious as before that work requirements should be given
higher priority than all individual needs.
In 2017, agriculture together with forestry and fisheries
accounted for 1 percent of GDP and 4 percent of employment
in Japan. Of the land area, 12 per cent is permanently
cultivated. The land is extremely fragmented and 85 per cent
of the farms comprise less than 2 ha (conditions on Hokkaido
not included). The average area per farm is lowest in
southern Japan and only on Hokkaido is it over 10 ha.
In 2007, only 20 percent of Japan's 2.2 million farmers
had agriculture as their main source of income. Others had
it as a side job alongside industrial or service jobs. But
the growers on 60 per cent of farms were pensioners, a
majority of whom were women, and agriculture is a
near-extinct sector in Japan. It is labor intensive but not
efficient and most of it is run with traditional orientation
and old methods.
Nearly 90 percent of the grain harvested is rice, which
can be grown throughout the country except in northeast
Hokkaido. Other crops include wheat, potatoes, sugar beets,
cabbage and other vegetables, citrus fruits, apples, pears,
tea and tobacco. In the islands farthest south, tropical
crops such as sugar cane and pineapple are grown. Silk and
cotton that were once Japan's most important export goods
are no longer grown in the country. The soil is not very
fertile and in order to increase the yield a lot of
artificial fertilizer is added.
During the post-war period, the state has given high
subsidies to rice cultivation, partly to safeguard the food
supply and partly because the ruling party wanted to secure
the votes in the countryside. Since 1987, rice subsidies
have been reduced, but two-thirds of small farmers'
agricultural income is still expected to be subsidized.
At the same time, changing dietary habits have led to a
rapidly growing demand for meat and dairy products, among
other things. Cattle breeding occurs mainly on Hokkaido,
while poultry and pigs are found throughout the country.
Japan was self-sufficient in food in the 1950s, but it is
now only 50 percent. The cultivation of rice, vegetables and
fruit mainly covers demand, while half of the demand for
meat and fish was covered by imports in 2007. Most of the
animal feed was also imported.
Among the major industrialized countries, Japan is the
country most dependent on food imports. The government seeks
to promote development towards more versatile and efficient
agriculture with sustainable units, but as land prices are
high, the pooling of farms is slow.
About 66 percent of Japan's area is wooded, but large
forest areas in the mountainous regions are very difficult
to access. They must also be kept away from exploitation to
prevent serious erosion.
To a lesser extent one can now speak of a productive
forestry in Japan. The main reasons are the same as for
agriculture. Nearly 3/5 of the forest area has private
owners, mainly individual households, and the forest is very
fragmented into small units. Old forest owners are reluctant
to invest in sustainable and efficient forestry and the
harvesting of a planned replanting is often not followed.
Most private forest owners do not have the forest as the
main source of income and they do not see the value of
Harvesting has declined very sharply since the 1950s.
However, timber is still an important building material in
Japan and paper consumption is increasing. Imports of wood
and wood products are increasing every year and most of the
pulp and paper industry's raw material needs are now covered
by imports, mainly from the US and the Russian Federation.
Nearly half of the domestic timber production comes from
Hokkaido and the four northernmost prefectures on Honshu.
Many forest areas play an important role as recreation
areas and some also have a cultural significance by
tradition. The more accessible forest areas may in the
future take on a new role, such as land for the cultivation
of energy forests, as Japan seeks new energy raw materials
to reduce dependence on imported oil.
Traditionally, fish is of great importance in the daily
diet in Japan, and only Iceland and the Faroe Islands have
greater per capita fish consumption. Already during the
interwar period, Japan was by far the world's largest
fishing nation. During the post-war period, the development
of modern, large-scale fishing continued in the fish-rich
waters of the continental shelf throughout the world.
Since 1976, most states have established fishing limits
200 nautical miles (370 km) off their coasts. In such
territorial waters, Japan had previously captured 40 percent
of its entire fishing catch. Now an agreement is required
with each state, which has become increasingly difficult for
Japan to obtain. The total catches of sea fishing during the
years 1984-90 were at a steady level, about 12 million
tonnes annually, but since then Japanese fishing has been
reduced very sharply. Fish stocks are shrinking and most
countries are increasingly safeguarding their own fish
industry. In 2007, the total catch was only 4.2 million
tonnes from the sea fishery and 0.8 million tonnes from the
fish farms. Japan was then in sixth place among the world's
fishing nations with 3 percent of all seafood catches (China
had then taken the leading position by just over 30
Japanese high sea fishing is highly mechanized and
therefore employs only a small proportion of Japanese
fishermen. The majority of them fish on a small scale in
coastal home waters. Mainly catch sardines, tuna, cod and
mackerel. Cultivation of oysters, algae, fish, etc. on the
coast has become increasingly important.
Imports of fish have increased significantly since the
1980s, and more than 40 percent of the fish consumed in 2007
had come from abroad. The extensive commercial whaling was
halted in 1988 after strong pressure from international
opinion, but whaling for research purposes continues. Every
year, about 900 whales are slaughtered in the South Arctic
Ocean, and the meat is sold to restaurants and shops.
Japan's mineral resources are consistently very small and
scattered. This has meant that the extraction is largely
unprofitable, and the country is now extremely dependent on
mineral imports. The mining industry accounts for less than
0.1 percent of the country's employment. Japan is
self-sufficient only with limestone for cement production
and with sulfur as part of the chemical industry. Virtually
all iron ore is imported, mainly from Australia but also
from Brazil and India. Japan no longer has any domestic
copper mining, but is one of the world's largest producers
of refined copper with raw materials from mainly Chile and
Indonesia. The country also imports a lot of bauxite into
aluminum production. On a small scale, zinc and gold are
mined inland. Recycling of iron and copper scrap has become
Japan needs to import more than 90 percent of energy raw
materials. In 2007, oil and natural gas were the largest
commodity group in Japan's imports, accounting for nearly 19
percent of the country's total import costs. Half of the
country's energy needs are covered by imported oil. Domestic
oil extraction, on Honshus's northwest coast, accounts for
only a few per cent of Japanese oil consumption. As a result
of import dependency, most of the 31 oil refineries are
located at the deep ports around the Inland Sea and at the
Gulf of Tokyo.
Domestic coal at Kyushu and Hokkaido was of great
importance to Japan's industrialization, but assets have
declined. Collages are thin, of poor quality and difficult
to access, and the breaking costs are high. Of the hundreds
of coal mines in operation in 1960, only two remained in
2007. At the time of the 2011 Fukushima accident, coal
accounted for less than one-sixth of Japan's energy supply
and 97 percent of it was imported. Subsequently, coal and
oil have had to replace nuclear energy's contribution to the
electricity supply with great costs as a result.
Natural gas, which is mostly imported in liquid form from
Indonesia, meets almost one-sixth of the energy demand,
while nuclear power accounts for slightly more. The
importance of nuclear energy was reinforced during the 1990s
and 2000s, and in 2007 it accounted for one third of
electricity generation. In 2009, 53 reactors were in
operation, making Japan the third largest producer of
nuclear power in the world (after the US and France). Many
Japanese nuclear power plants are located in areas with a
high risk of earthquakes. After the Fukushima accident, all
reactors were shut down for safety reasons. The first
(Sendai) was restarted in 2015 after the introduction of new
security routines and installations. Many of the other
reactors are expected to be restarted in the coming years.
Japan's energy policy is aimed at streamlining energy use
and reducing dependence on imported oil. This is achieved
through increased use of coal and natural gas in the thermal
power plants, further expansion of nuclear energy and the
development of alternative energy sources such as geothermal
energy and solar energy (which, however, only cover a few
percent of the energy demand).
Manufacturing and exporting industrial goods has been the
engine of Japan's economic development throughout the
post-war period. Rising wealth in a large population has
meant a growing domestic market that has been a stable
foundation for most industrial sectors. More than half of
all industrial production takes place in the four regions
Tokyo-Yokohama, Osaka-Kobe, Nagoya and northern Kyushu.
Most Japanese companies are small and focused on the
domestic market: 30 percent of all industrial employees
worked in companies with less than 30 employees. There is
still plenty of room for size rationalization.
An aging population with an associated saturated domestic
market has in recent years resulted in subdued domestic
demand, but this has been offset by the fact that Japanese
companies have established themselves abroad and thereby
been able to increase their operations and find new markets.
A growing share of domestic demand for industrial goods is
now covered by imports from foreign-located Japanese
companies. This applies, for example, to semiconductors,
digital cameras and televisions, and it is also beginning to
become noticeable in the case of more prominent high-tech
products such as computers.
Major changes have also occurred in the heavy base
industry in Japan. The cost of imported oil has grown
sharply and the extremely energy-consuming production of
base aluminum has shrunk to a small proportion of its
highest capacity. Furthermore, there are many examples of
merging between rival companies in the steel, cement, paper
and petrochemical industries, all very energy-intensive
Until 1996, Japan was the world's largest steel producer
and a major exporter of crude steel to the USA, among
others. Subsequently, Japanese steel production was greatly
reduced. But in recent years, it has expanded again, mainly
as a result of exceptional growth in China. This has also
led to increased demand for Japanese transport equipment,
construction equipment and similar products.
With a rough breakdown of Japanese industry, electrical
and electronics production, including IT, emerges as the
largest sector. However, this previously so expansive sector
has stagnated and the future may be perceived as uncertain
as competition from new industrial states in Asia has become
increasingly clear. It is considered that major investments
in research and development are now required.
Things have been better for the car industry. In Japan,
it has always focused on the production of small cars, and
in the 21st century it has models that "are right in time".
The sector has been restructured and mergers have meant that
it has been possible to reduce overcapacity and meet
changing competition in the world market. In 2007, Japanese
car companies had a larger production abroad (mainly in the
US, EU and China) than at home in Japan.
In the early 1970s, half of all newly built tonnage in
the world came from Japanese shipyards. In connection with
the subsequent oil crisis, the ship's capacity was reduced
by half, but demand increased again in the late 1980s. Japan
has been the clear leader shipbuilding nation since 1994.
A large industrial sector that is not export-oriented at
all is the food industry. It includes a large number of
small, inefficient companies that have survived in a local,
highly divided market. As large national transport and
retail networks now emerge, these small businesses will
become more competitive as their owners age.
The textile and clothing industry has lost half of its
workforce over the past decade. In parallel with this,
textile imports have increased. Almost all chemical
industries are highly dependent on the import of raw
materials. So is the pulp and paper industry, which produces
almost exclusively for the domestic market.
A number of Japanese major companies are among the
largest in the world and have a good reputation globally,
such as Toyota and Honda car companies and electronics
companies Hitachi and Toshiba. But some sectors lack
world-renowned companies: the pharmaceutical, shoe, textile
and fashion industries, as well as beer and soft drink
manufacturing and the petrochemical industry.
In the 1950s and 1960s, Japan was newly industrialized
without regard to environmental impact, and in the early
1970s, the country emerged as the most polluted in the world
in terms of air and water quality. Since the mid-1970s,
countermeasures have been taken, mainly to get cleaner air
in the big cities. Compared to other major industrial
states, Japan is far ahead with some purification measures,
such as reducing emissions from gasoline engines, and
Japanese car companies were early in developing hybrid and
electric cars. The improvements in the environment in some
respects are also due to the fact that heavy, often serious
environmental disruptive industries now have less scope,
while "cleaner" high-tech manufacturing has expanded.
The poisoning disaster in the Gulf of Minamata (compare
Minamata disease) in the 1950s attracted the world's
attention to the growing water pollution. In Japan, the
level of discharges in the metropolitan areas' waterways was
reduced by 40% during the 1980s, but water pollution is
still a serious environmental problem, mainly as a result of
uncleaned sewage. The waste sorting system, on the other
hand, is well developed.
Since the mid-2000s, environmental-related work has been
widened and environmental research has been given priority
in Japan's national research plan. It is important to
generate environmentally friendly energy, for example.
biomass, to reduce emissions and reuse waste, to further
improve air quality and to stimulate environmental
technology development. Climate-promoting measures are
gaining greater acceptance in Japan as they prove to reduce
costs while stimulating trade.
During the first decades of the post-war period, Japan
experienced export-led economic development. Subsequently,
the country has mostly exported to be able to import the raw
materials needed for Japanese consumption, including energy
raw materials and food. Japan is one of the world's four
largest trading nations, but foreign trade represents a
smaller share of GDP than in other countries in this part of
The composition of goods in Japanese foreign trade
differs considerably from the conditions of other large
industrialized countries' trade. Exports were dominated by
goods from the engineering industry, while raw materials
accounted for almost half the import value. The old
industrialized countries of the West now play a smaller role
in Japan's export trade than before. On the import side,
there have also been major changes. The US and the EU have
decreased in importance, while China and other countries in
East and Southeast Asia have become increasingly important
The changing trade pattern is a result of the rapid
economic development in this part of Asia, but it is also
due to a fierce trade resistance from the US and Europe.
Japan has a very large surplus in trade with these partners,
while at the same time not being inclined to bring in many
goods from there. In the first half of 2008, exports to 25
percent consisted of means of transport, of which 3/5 were
passenger cars. Electrical and electronic equipment
accounted for 19 percent, while other machines accounted for
20 percent. Chemical industry products accounted for 9.5
percent and steel for 5 percent. Less than 2 per cent
consisted of food, raw materials and fuels.
Previously very well-known Japanese goods are now almost
completely lacking in exports. Textiles, which were the most
important commodity group in the 1960s exports now
constitute only 1 percent, TV and other audiovisual devices
that have been prominent since the 1970s accounted in 2008
for only 3 percent of exports and cameras and other optical
equipment for 2.5 percent. These goods are now imported from
Japanese companies that have placed their production in
Imports of mineral fuels have risen sharply in recent
years and accounted for 34 percent (of which 3/4 was crude
oil) of all imports during the first half of 2008. About 8
percent consisted of other raw materials and 8 percent of
food. Much of the imports from East and Southeast Asia are
workshop products. Electrical appliances accounted for 13%
of the import value and the country has become a net
importer of household electronics.
Japan has for many years had a very large surplus in its
commodity trade. The current account balance shows a
somewhat more balanced picture, as the country has a deficit
in the international exchange of services, including related
to transport services and tourism. About 8 to 9 million
foreign tourists visit Japan each year, while many more
million Japanese tourists go abroad each year.
Tourism and gastronomy
Japan has an extensive tourism industry. In 2015, the
country was visited by 19.7 million visitors. Most come from
nearby countries; South Korea, Taiwan and China account for
20 percent of each visitor. Of countries outside Asia, the
US (8 percent), Australia (2 percent) and the United Kingdom
(2 percent) dominate.
One of the country's main attractions is the old imperial
capital of Kyoto with its temples and pagodas. For the
nature enthusiast, Japan's dramatic scenery with high
mountains and deep forested valleys offers many excursion
destinations. Tokyo with attractions such as the Ginza
shopping district and the Asakusa and Shinjuku entertainment
districts as well as Tokyo Disneyland are also popular
tourist destinations. Japanese culture, such as the classic
theater form kabuki, also attracts many visitors.
Chinese cuisine has obviously influenced the Japanese,
but the Portuguese also played a certain role. Already in
the 1300s, the Buddhist influence made the carnivores
minimized. The food was cooked or steamed (when not eaten
raw), and only with the Portuguese did the technique of
frying (tempura) spread. During the 19th century,
carnivores increased again, but for many centuries the
peasants were forced to eat what is today one of the
national dishes, sukiyaki (a stew with thin beef
slices served with soy and vegetables).
The basic ingredients in Japanese cuisine are soybeans,
rice, fish and algae. The beans are fermented into miso
(bean paste) used as a seasoning in soups and sauces, or
used for tofu, cream cheese with extremely high protein
content. The rice turns into wine, sake, or into
the sweeter variant mirin. Soup is included in
every Japanese meal, it is based on a tasty broth in which
is added misopaste, pieces of meat or fish. The most popular
fish are tuna, bream, bonit and octopus. The fish dishes
include sashimi (mouthfuls of raw fish served with
soy sauce flavored with the special green horseradish,
wasabi) and maki zushi (raw fish rolled in
vinegar-flavored rice, sushi, which is enclosed by
a thin layer of pliers).
Dishes that are not deep-fried are usually cooked in
broth, and preferably at the table. The reason for the broth
important in Japanese cooking is usually a dashi,
base broth, cooked on konbu (dried seaweed) or
Fine shredded meat or fish is also often fried at the
table, teppanyaki. If the ingredients are marinated
in or poured with a sauce of soy, mirin and sugar, the dish
is called teriyaki.
The first vines in Japan were planted by Buddhist monks
in the 7th century. The sweetest white wine was produced in
the 1970s. Today, the trend is towards semi-dry and dry
wines. See also Japanese food and Japanese wines.