Economy of Japan

The economy of Japan is the third largest in the world by nominal GDP,[12][13] the fourth
largest by purchasing power parity [14] and is the world's second largest developed economy.
[15]

According to the International Monetary Fund, the country's per capita GDP(PPP) was at

$36,899, the 22nd-highest in 2013.[16] Japan is a member of G7. The Japanese economy is
forecasted by theQuarterly Tankan survey of business sentiment conducted by the Bank of
Japan.[17]
Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates
widely. Accounting for these fluctuations through use of the Atlas method, Japan is
estimated to have a GDP per capita of around $38,490.
Japan is the world's third largest automobile manufacturing country,[18] has the largest
electronics goods industry, and is often ranked among the world's most innovative countries
leading several measures of global patent filings.[19] Facing increasing competition from
China and South Korea,[20] manufacturing in Japan today now focuses primarily on high-tech
and precision goods, such as optical instruments, hybrid vehicles, and robotics. Besides
the Kant region,[21][22][23][24] the Kansai region is one of the leading industrial clusters and
manufacturing centers for the Japanese economy.[25]
Japan is the world's largest creditor nation,[26][27] generally running an annual trade surplus
and having a considerable net international investment surplus. As of 2010, Japan
possesses 13.7% of the world's private financial assets (the second largest in the world) at
an estimated $14.6 trillion.[28] As of 2013, 62 of the Fortune Global 500 companies are based
in Japan.[29]

Economy of Japan

Financial center in Tokyo

Currency

Japanese yen (JPY)

Fiscal year

1 April 31 March

Trade organisations

APEC, WTO, OECD, G-20,G8 and others

Statistics

GDP

$4.210 trillion (2015 est.) (nominal; 3rd)

$4.70 trillion(2013 est.) (PPP;4th)

GDP rank

3rd (nominal) / 4th (PPP)

GDP growth

1% real (QoQ, Q1 2015)

2.3% nominal (QoQ Q1 2015)

GDP per capita

$33,223 (2015 est.) (nominal;24th)

$36,899 (2013 est.) (PPP;23rd)

GDP by sector

agriculture: 1.2%, industry: 27.5%, services: 71.4% (2012 est.)

Inflation (CPI)

3.2% (May 2014)[1]

Population belowpoverty line

16% (2010)[2]

Gini coefficient

38.1 (2002)

Labour force

65.93 million (2011 est.)

Labour force by occupation

agriculture: 3.9%, industry: 26.2%, services: 69.8% (2010 est.)

Unemployment

3.4% (2015 est.)[3]

Main industries

motor vehicles, electronic equipment, machine tools,steel and nonferrous metals,

ships, chemicals, textiles, processed foods

Ease-of-doing-business rank

24th[4]
External

Exports

$697 billion (2013 est.)

Export goods

motor vehicles 13.6%; semiconductors 6.2%; iron and steel products 5.5%; auto parts 4.6%;
plastic materials 3.5%; power generating machinery 3.5%

Main export partners

China 18.1%
United States 17.8%
South Korea 7.7%
Thailand 5.5%
Hong Kong 5.1% (2012 est.) [5]

Imports

$766.6 billion (2013 est.)

Import goods

petroleum 15.5%; liquid natural gas 5.7%; clothing 3.9%; semiconductors 3.5%; coal 3.5%;
audio and visual apparatus 2.7%

Main import partners

China 21.3%
United States 8.8%
Australia 6.4%
Saudi Arabia 6.2%
United Arab Emirates5.0%
South Korea 4.6%
Qatar 4.0% (2012 est.) [6]

FDI stock

$1.41 trillion (2013)

Gross external debt

$2.767 trillion (Q3 2014 est.)[7]

Public finances

Public debt

226.10% of GDP (2013 est.)[8]

Revenues

$1.739 trillion (2013 est.)

Expenses

$2.149 trillion (2013 est.)

Economic aid

$9.7 billion ODA (February 2007)

Credit rating

Standard & Poor's:[9]

AA- (Domestic)
AA- (Foreign)

AAA (T&C Assessment)

Outlook: Stable[10]
Moody's:[10]
A1
Outlook: Positive
Fitch:[10]
AOutlook: Positive
Foreign reserves

US$1.26

Overview of economy[edit]
In the three decades of economic development following 1960, Japan ignored defense
spending in favor of economic growth,[30][31]thus allowing for a rapid economic growth referred
to as the Japanese post-war economic miracle. By the guidance of Ministry of Economy,
Trade and Industry,[32] with average growth rates of 10% in the 1960s, 5% in the 1970s, and
4% in the 1980s, Japan was able to establish and maintain itself as the world's second
largest economy from 1978 until 2010, when it was supplanted by thePeople's Republic of
China. By 1990, income per capita in Japan equalled or surpassed that in most countries in
the West.[33]
However, in the second half of the 1980s, rising stock and real estate prices caused
the economic bubble to the Japanese economy by Bank of Japan. The economic
bubble came to an abrupt end as the Tokyo Stock Exchange crashed in 199092 and real
estate prices peaked in 1991. Growth in Japan throughout the 1990s at 1.5% was slower
than growth in other major developed economies, giving rise to the term Lost Decade.
Nonetheless, GDP per capita growth from 2001-2010 has still managed to outpace Europe
and the United States.[34] But Japan public debt remains a daunting task for the Japanese
government due to excessive borrowing, social welfare spending with an aging society and
lack of economic/industrial growth in recent years to contribute to the tax revenue. [35]Japan
had recently embraced the new strategy of economic growth with such goals to be achieved
in 2020 as expected.[36] The ICTindustry has generated the major outputs to the Japanese
economy.[37][38][39][40][41][42][43][44][45][46] Japan is the second largest music market in the world (for
more, see Japan Hot 100).[47] With fewer children in the aging Japan,

Japanese Anime industry is facing growing Chinese competition in the targeted Chinese
market.[48] Japanese Manga industry (from the Japanese Manga (and anime) profession

[49]

) enjoys popularity in most of the Asian markets. [51] The issue of export-oriented economy

[50]

from the Japanese currency intervention causes the effect of improving export but reduces
import due to weaker Yen by the Japanese government. [52]
A mountainous, volcanic island country, Japan has inadequate natural resources to support
its growing economy and large population, and therefore exports goods in which it has a
comparative advantage such as engineering-oriented, Research and Development-led
industrial products in exchange for the import of raw materials and petroleum. Japan is
among the top-three importers for agricultural products in the world next to the European
Union and United States in total volume for covering of its own domestic agricultural
consumption.[53] Japan is the worlds largest single national importer of fish and fishery
products.[54][55][56][57][58]Tokyo Metropolitan Central Wholesale Market

[59][60]

is the largest

wholesale market for primary products in Japan, including the renowned Tsukiji fish market.
[61][62]

Japanese whaling, ostensibly for research purposes, has been challenged as illegal

under international law.

Although many kinds of minerals were extracted throughout the country, most mineral
resources had to be imported in the postwar era. Local deposits of metal-bearing ores were
difficult to process because they were low grade. The nation's large and varied forest
resources, which covered 70 percent of the country in the late 1980s, were not utilized
extensively. Because of political decisions on local, prefectural, and national levels, Japan
decided not to exploit its forest resources for economic gain. Domestic sources only
supplied between 25 and 30 percent of the nation's timber needs. Agriculture and fishing
were the best developed resources, but only through years of painstaking investment and
toil. The nation therefore built up the manufacturing and processing industries to convert
raw materials imported from abroad. This strategy of economic development necessitated
the establishment of a strong economic infrastructure to provide the needed energy,
transportation, communications, and technological know-how.
Deposits of gold, magnesium, and silver meet current industrial demands, but Japan is
dependent on foreign sources for many of the minerals essential to modern industry. Iron
ore, copper, bauxite, and alumina must be imported, as well as many forest products.

Economic history[edit]

An 1856 ukiyo-e depicting Echigoya, the current Mitsukoshi

Main article: Economic history of Japan

The economic history of Japan is one of the most studied economies for its spectacular
growth in three different periods. First was the foundation of Edo (in 1603) to whole inland
economical developments, second was the Meiji Restoration (in 1868) to be the first nonEuropean power, third was after the defeat of World War II (in 1945) when the island nation
rose to become the world's second largest economy.

First contacts with Europe (16th century)[edit]

Main article: Nanban trade
Japan was considered as a country rich inPRECIOUS METALS , mainly owing to Marco
Polo's accounts of gilded temples and palaces, but also due to the relative abundance of
surface ores characteristic of a massive huge volcanic country, before large-scale deepmining became possible in Industrial times. [63] Japan was to become a major exporter of
silver, copper, and gold during the period until exports for those minerals were banned. [64]

Renaissance Japan was also perceived as a sophisticated feudal society with a high culture
and a strong pre-industrial technology. It was densely populated and urbanized. Prominent
European observers of the time seemed to agree that the Japanese "excel not only all the
other Oriental peoples, they surpass the Europeans as well" (Alessandro Valignano, 1584,
"Historia del Principo y Progresso de la Compania de Jesus en las Indias Orientales).
Early European visitors were amazed by the quality of Japanese craftsmanship and
metalsmithing. This stems from the fact that Japan itself is rather poor in natural resources
found commonly in Europe, especially iron. Thus, the Japanese were famously frugal with
their consumable resources; what little they had they used with expert skill.
The cargo of the first Portuguese ships (usually about 4 smaller-sized ships every year)
arriving in Japan almost entirely consisted of Chinese goods (silk, porcelain). The Japanese
were very much looking forward to acquiring such goods, but had been prohibited from any
contacts with the Emperor of China, as a punishment for Wak pirate raids. The Portuguese
(who were called Nanban, lit. Southern Barbarians) therefore found the opportunity to act as
intermediaries in Asian trade.

Edo period (16031868)[edit]

The beginning of the Edo period coincides with the last decades of the Nanban trade
period, during which intense interaction with European powers, on the economic and
religious plane, took place. It is at the beginning of the Edo period that Japan built her first
ocean-going Western-style warships, such as the San Juan Bautista, a 500-tongalleon-type
ship that transported a Japanese embassy headed by Hasekura Tsunenaga to the
Americas, which then continued to Europe. Also during that period,
the bakufucommissioned around 350 Red Seal Ships, three-masted and armed trade ships,
for intra-Asian commerce. Japanese adventurers, such as Yamada Nagamasa, were active
throughout Asia.
In order to eradicate the influence of Christianization, Japan entered in a period of isolation
called sakoku, during which its economy enjoyed stability and mild progress. [citation needed]
Economic development during the Edo period included urbanization, increased shipping of
commodities, a significant expansion of domestic and, initially, foreign commerce, and a
diffusion of trade and handicraft industries. The construction trades flourished, along with

banking facilities and merchant associations. Increasingly, han authorities oversaw the
rising agricultural production and the spread of rural handicrafts.
By the mid-eighteenth century, Edo had a population of more than 1 million
and Osaka and Kyoto each had more than 400,000 inhabitants. Many other castle
towns grew as well. Osaka and Kyoto becameBUSY TRADING and handicraft production
centers, while Edo was the center for the supply of food and essential urban consumer
goods.
Rice was the base of the economy, as the daimyo collected the taxes from the peasants in
the form of rice. Taxes were high, about 40% of the harvest. The rice was sold at
thefudasashi market in Edo. To raise money, the daimyo used forward contracts to sell rice
that was not even harvested yet. These contracts were similar to modern futures trading.
During the period, Japan progressively studied Western sciences and techniques
(called rangaku, literally "Dutch studies") through the information and books received
through the Dutch traders in Dejima. The main areas that were studied included geography,
medicine, natural sciences, astronomy, art, languages, physical sciences such as the study
of electrical phenomena, and mechanical sciences as exemplified by the development of
Japanese clockwatches, or wadokei, inspired from Western techniques.

Prewar period (18681945)[edit]

Since the mid-19th century, after the Meiji restoration, the country was opened up to
Western commerce and influence and Japan has gone through two periods of economic
development. The first began in earnest in 1868 and extended through to World War II; the
second began in 1945 and continued into the mid-1980s.
Economic developments of the prewar period began with the Rich State and Strong Army
Policy by the Meiji government. During the Meiji period (18681912), leaders inaugurated a
new Western-based education system for all young people, sent thousands of students to
the United States and Europe, and hired more than 3,000 Westerners to teach modern
science, mathematics, technology, and foreign languages in Japan (Oyatoi gaikokujin). The
government also built railroads, improved road, and inaugurated a land reform program to
prepare the country for further development.

To promote industrialization, the government decided that, while it should help private
business to allocate resources and to plan, the public sector was best equipped to stimulate
economic growth. The greatest role of government was to help provide good economic
conditions for business. In short, government was to be the guide and business the
producer. In the early Meiji period, the government built factories and shipyards that were
sold to entrepreneurs at a fraction of their value. Many of these businesses grew rapidly into
the larger conglomerates. Government emerged as chief promoter of private enterprise,
enacting a series of probusiness policies.
In the mid-1930s, the Japanese nominal wage rates were 10 times less than the one of the
U.S (based on mid-1930s exchange rates), while the price level is estimated to have been
about 44% the one of the U.S.[65]

Postwar period (1945present)[edit]

Japanese exports in 2005

See also: Japanese post-war economic miracle and Economic history of Japan
From the 1960s to the 1980s, overall real economic growth was extremely large: a 10%
average in the 1960s, a 5% average in the 1970s and a 4% average in the 1980s. [66] By the
end of said period, Japan had moved into being a high-wage economy.[67]
Growth slowed markedly in the late 1990s also termed the Lost Decade after the collapse of
the Japanese asset price bubble. As a consequence Japan ran massive budget deficits
(added trillions in Yen to Japanese financial system) to finance large public works programs.

Graphical depiction of Japan Product 's product exports (2012) from Harvard Atlas of Economic
Complexity

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.[68]
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 affect 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.[69] Unlike previous
recovery trends, domestic consumption has been the dominant factor of growth.
Despite having interest rates down near zero for a long period of time, the Quantitative
easing strategy did not succeed in stopping price deflation. [70] This led some economists,
such as Paul Krugman, and some Japanese politicians, to advocate the generation of
higher inflation expectations.[71] In July 2006, the zero-rate policy was ended. In 2008, the
Japanese Central Bank still has the lowest interest rates in the developed world, deflation

has still not been eliminated[72] and the Nikkei 225 has fallen over approximately 50%
(between June 2007 and December 2008). However, on April 5, 2013, the Bank of
Japan announced that it would be purchasing 60-70 trillion yen in bonds and securities in an
attempt to eliminate deflation by doubling the money supply in Japan over the course of two
years. Markets around the world have responded positively to the government's current
proactive policies, with the Nikkei 225 adding more than 42% since November 2012.[73] The
Economist has suggested that improvements to bankruptcy law, land transfer law, and tax
laws will aid Japan's economy. In recent years, Japan has been the top export market for
almost 15 trading nations worldwide.

Infrastructure[edit]

Shinkansen N700 Series

Main articles: Energy in Japan and Transportation in Japan

In 2005, one half of Japan's energy was produced from petroleum, a fifth from coal, and
14% from natural gas.[74] Nuclear power in Japanmade a quarter of electricity production but
due to the Fukushima Daiichi nuclear disaster there has been a large desire to end Japan's
nuclear power program.[75][76] In September 2013, Japan closed its last 50 nuclear power
plants nationwide, causing the nation to be nuclear free. [77]
Japan's spendings on roads has been considered large. [78] The 1.2 million kilometers of
paved road are one of the major means of transportation. [79] Japan has left-hand traffic.[80] A
single network of speed, divided, limited-access toll roads connects major cities and are
operated by toll-collecting enterprises.[81] New and used cars are inexpensive, and the
Japanese government has encouraged people to buyhybrid vehicles.[82] Car ownership fees
and fuel levies are used to promote energy-efficiency.[82]
Rail transport is a major means of transport in Japan. Dozens of Japanese railway
companies compete in regional and local passenger transportation markets; for instance, 6

passenger JR enterprises, Kintetsu Corporation, Seibu Railway, and Keio Corporation.

[83]

Often, strategies of these enterprises contain real estate or department stores next to

stations, and many major stations have major department stores near them. [84] The
Japanese cities
of Fukuoka, Kobe, Kyoto, Nagoya, Osaka, Sapporo, Sendai, Tokyo andYokohama all
have subway systems. Some 250 high-speed Shinkansen trains connect major cities.[85] All
trains are known for punctuality, and a delay of 90 seconds can be considered late for some
train services.[86]
There are 98 passenger and 175 total airports in Japan, and flying is a popular way to
travel.[2][87][88] The largest domestic airport, Tokyo International Airport, is Asia's second
busiest airport.[89] The largest international gateways are Narita International Airport (Tokyo
area), Kansai International Airport (Osaka/Kobe/Kyoto area), and Chbu Centrair
International Airport (Nagoya area).[90] The largest ports in Japan include Nagoya Port,
the Port of Yokohama, the Port of Tokyo and the Port of Kobe.[91]
About 84% of Japan's energy is imported from other countries. [92][93] Japan is the world's
largest liquefied natural gas importer, second largest coal importer, and third largest net oil
importer.[94] Given its heavy dependence on imported energy, Japan has aimed to diversify
its sources.[95] Since the oil shocks of the 1970s, Japan has reduced dependence on
petroleum as a source of energy from 77.4% in 1973 to about 43.7% in 2010 and increased
dependence on natural gas and nuclear power.[96] Other important energy source includes
coal, and hydroelectricity is Japan's biggest renewable energy source.[97][98] Japan's solar
market is also currently booming.[99] Kerosene is also used extensively for home heating in
portable heaters, especially farther north.[100] Many taxi companies run their fleets on
liquefied natural gas.[101] A recent success towards greater fuel economywas the introduction
of mass-produced Hybrid vehicles.[82] Prime Minister Shinzo Abe, who was working on
Japan's economic revival, signed a treaty with Saudi Arabia and UAEabout the
risingPRICES OF OIL , ensuring Japan's stable deliveries from that region. [102][103]

Macro-economic trend[edit]

Real GDP growth rate from 1956 to 2008

Quarterly change in the real GDP (blue) and the unemployment rate (red) of Japan from 2000 to
2010. See Okun's law.

This is a chart of trend of gross domestic product of Japan at market prices estimated by
the International Monetary Fund with figures in millions of Japanese Yen.[104] See also[105][106]

PPP
Year

Gross domestic

US dollar

product

exchange

Inflation

Nominal per-

capita

index

capita GDP

GDP

(2000=100)

(as % of USA)

(as % of
USA)

195
5

196
0

8,369,500

360.00

10.31

16,009,700

360.00

16.22

196
5

197
0

197
5

198
0

200
5

201
0

32,866,000

360.00

24.95

73,344,900

360.00

38.56

148,327,100

297.26

59.00

240,707,315

225.82

100

105.85

71.87

502,905,400

110.01

97

85.04

71.03

477,327,134

88.54

98

89.8

71.49

For purchasing power parity comparisons, the US dollar was exchanged at 109 in 2010.
[107]

Industries[edit]
Industries by GDP value-added 2012.[108] Values are converted using the exchange rate on
April 13, 2013.[109]

Industry

Other service activities

GDP value-added $ billions 2012

1,238

% of total GDP

23.5%

Manufacturing

947

18.0%

Real Estate

697

13.2%

Wholesale and retail trade

660

12.5%

Transport and communication

358

6.8%

Public administration

329

6.2%

Construction

327

6.2%

Finance and insurance

306

5.8%

Electricity, gas and water supply

179

3.4%

Government service activities

41

0.7%

Mining

0.05%

Total

5,268

100%

Sectors of the economy[edit]

Agriculture sohai[edit]
Main article: Agriculture, forestry, and fishing in Japan

Rice is a very important crop in Japan as shown here in a rice paddy inTawaramoto, Nara.

The Japanese agricultural sector accounts for about 1.4% of the total country's GDP.
[110]

Only 12% of Japan's land is suitable for cultivation. [111][112] Due to this lack of arable land, a

system of terraces is used to farm in small areas. [113] This results in one of the world's
highest levels of crop yields per unit area, with an overall agricultural self-sufficiency rate of
about 50% on fewer than 56,000 km (14 million acres) cultivated.
Japan's small agricultural sector, however, is also highly subsidized and protected, with
government regulations that favor small-scale cultivation instead of large-scale agriculture
as practiced in North America.[111] There has been a growing concern about farming as the
current farmers are aging with a difficult time finding successors. [114]
Rice accounts for almost all of Japan's cereal production. [115] Japan is the second-largest
agricultural product importer in the world. [115]Rice, the most protected crop, is subject to
tariffs of 777.7%.[112][116]
Although Japan is usually self-sufficient in rice (except for its use in making rice crackers
and processed foods) and wheat, the country must import about 50% of its requirements of
other grain and fodder crops and relies on imports for half of its supply of meat. [117][118]Japan
imports large quantities of wheat and soybeans.[115] Japan is the 5th largest market for EU
agricultural exports.[119] Over 90% of mandarin oranges in Japan are grown in Japan.
[118]

Apples are also grown due to restrictions on apple imports. [120]

Fishery[edit]

Main article: Fishing industry in Japan

Global fish catch in Japan

Japan ranked fourth in the world in 1996 in tonnage of fish caught.[121] Japan captured
4,074,580 metric tons of fish in 2005, down from 4,987,703 tons in 2000, 9,558,615 tons in
1990, 9,864,422 tons in 1980, 8,520,397 tons in 1970, 5,583,796 tons in 1960 and
2,881,855 tons in 1950.[122] In 2003, the total aquaculture production was predicted at
1,301,437 tonnes.[123] In 2010, Japan's total fisheries production was 4,762,469 fish.
[124]

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 species of seafood caught are sardines, skipjack tuna, crab, shrimp,
salmon, pollock, squid, clams, mackerel, sea bream, sauries, tuna and Japanese
amberjack. Freshwater fishing, including salmon, trout and eel hatcheries and fish farms,
[125]

takes up about 30% of Japan's fishing industry. Among the nearly 300 fish species in the

rivers of Japan are native varieties of catfish, chub, herring and goby, as well as such
freshwater crustaceans as crabs and crayfish. [126] Marine and freshwater aquaculture is
conducted in all 47 prefectures in Japan. [123]
Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the
global catch,[127] prompting some claims that Japan's fishing is leading to depletion in fish
stocks such as tuna.[128] Japan has also sparked controversy by supporting quasicommercial whaling.[129]

Industry[edit]
Main article: Manufacturing in Japan

Japanese manufacturing and industry is very diversified, with a variety of advanced

industries that are highly successful. Industry accounts for 24% of the nation's GDP.[110]
Industry is concentrated in several regions, with the Kant region surrounding Tokyo,
(the Keihin industrial region) as well as the Kansai region surrounding Osaka (the Hanshin
industrial region) and the Tkai region surrounding Nagoya (the Chukyo-Tokai industrial
region) the main industrial centers.[21][22][23][24][25][130] Other industrial centers include the
southwestern part of Honsh and northern Shikoku around the Seto Inland Sea (the
Setouchi industrial region); and the northern part of Kysh (Kitakysh). In addition, a long
narrow belt of industrial centers called the Taiheiy Belt is found between Tokyo
and Fukuoka, established by particular industries, that have developed as mill towns.
Japan enjoys high technological development in many fields, including consumer
electronics, automobile manufacturing, semiconductor manufacturing, optical
fibers,optoelectronics, optical media, facsimile and copy machines, and fermentation
processes in food and biochemistry. However, many Japanese companies are facing
emerging rivals from the United States of America, South Korea, and China.[131]
Automobile manufacturing[edit]
Main article: Manufacturing in Japan

Lexus LS. The rapid growth and success of Toyota's Lexus and other Japanese automakers reflects
Japan's strength and global dominance in the automobile industry.

Japan is the third biggest producer of automobiles in the world.[18] Toyota is currently the
world largest car maker, and the Japanese car makers Nissan, Honda, Suzuki,
and Mazda also count for some of the largest car makers in the world. [132][133]

Mining and petroleum exploration[edit]

Main article: Mining in Japan
Japan's mining production has been minimal, and Japan has very little mining deposits. [134]
[135]

However, massive deposits of rare earths have been found off the coast of Japan. [136] In

the 2011 fiscal year, the domestic yield of crude oil was 820 thousand kiloliters, which was
0.4% of Japan's total crude processing volume. [137]

Services[edit]
Main article: Trade and services in Japan

Japan Airlines, though faced with massive debts as of 2010, is considered one of the largest airlines
in the world.

Japan's service sector accounts for about three-quarters of its total economic output.
[110]

Banking, insurance, real estate, retailing,transportation, and telecommunications are all

major industries such as Mitsubishi UFJ, Mizuho, NTT, TEPCO, Nomura, Mitsubishi
Estate,ON, Mitsui Sumitomo, Softbank, JR East, Seven & I, KDDI and Japan
Airlines counting as one of the largest companies in the world. [138][139] Four of the five most
circulated newspapers in the world are Japanese newspapers.[140] The Koizumi government
set Japan Post, one of the country's largest providers of savings and insurance services for
privatization by 2015.[141] The six major keiretsus are
theMitsubishi, Sumitomo, Fuyo, Mitsui, Dai-Ichi Kangyo and Sanwa Groups.[142] Japan is
home to 251 companies from the Forbes Global 2000 or 12.55% (as of 2013).[143]
Tourism[edit]
Main article: Tourism in Japan

Himeji Castle, in Himeji, Hygo Prefecture, is one of the most visited sights in Japan.

In 2012, Japan was the fifth most visited country in Asia and the Pacific, with over 8.3
million tourists.[144] In 2013, due to the weaker yen and easier visa requirements for
southwest Asian countries, Japan received a record 11.25 million visitors, which was higher
than the government's projected goal of 10 million visitors. [145][146][147] The government hopes to
attract 20 million visitors a year by the 2020 Summer Olympics in Tokyo.[146] Some of the
most popular visited places include the Shinjuku, Ginza, Shibuya and Asakusa areas
in Tokyo, and the cities of Osaka, Kobe and Kyoto, as well as Himeji Castle.[148] Hokkaido is
also a popular winter destination for visitors with several ski resorts and luxury hotels being
built there.[146][149]

Finance[edit]

The mainTRADING ROOM

the world.

of the Tokyo Stock Exchange, one of the largest stock exchanges in

The Tokyo Stock Exchange is the fourth largest stock exchange in the world by market
capitalization, as well as the 2nd largestSTOCK MARKET in Asia, with 2,292 listed
companies.[150][151][152][153][154] The Nikkei 225 and the TOPIX are the two important stock market
indexes of the Tokyo Stock Exchange.[155][156] The Tokyo Stock Exchange and the Osaka
Stock Exchange, another major stock exchange in Japan, merged on January 1, 2013,
creating one of the world's largest stock exchanges. [154] Other stock exchanges in Japan
include the Nagoya Stock Exchange, Fukuoka Stock Exchange and Sapporo Securities
Exchange.[157][158]

Labour force[edit]
Main article: Labour market of Japan

Unemployment rate of Japan

The unemployment rate in December 2013 was 3.7%, down 1.5 percentage points from the
claimed unemployment rate of 5.2% in June 2009 due to the strong economic recovery.[159]
[160][161]

This is regarded as an underestimate.[citation needed] Even part-time workers with extremely

low hours are classified as employed.

In July 2006, the unemployment rate in Japan was 4.1%, according to the OECD. At the
end of February 2009, it stood at 4.4%

[162]

This seemingly modest rate however understates

the situation. According to The Economist, the ratio of job offers to number of applicants has
declined to just 0.59, from almost 1 at the start of 2008, while average work hours also
declined. Average wages also went down by 2.9% over the 12 months ending in February.
In 2008, Japan's labour force consisted of some 66 million workers40% of whom were
womenand was rapidly shrinking.[163]
One major long-term concern for the Japanese labour force is a low birthrate. [164] 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, despite
taking new steps towards it, the Japanese government has been reluctant to do so, and
foreign immigration to Japan has been unpopular among citizens. [165]
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. Labour union
membership is about 12 million.

Law and government[edit]

Japan ranks 27th of 185 countries in the Ease of Doing Business Index 2013.[166]
Japan has one of the smallest tax rates in the developed world.[167] After deductions, the
majority of workers are free from personal income taxes. Consumption tax rate is only 8%,
while corporate tax rates are high, second highest corporate tax rate in the world, at 36.8%.
[167][168][169]

However, the House of Representatives has passed a bill which will increase the

consumption tax to 10% in October 2015.[170] The government has also decided to reduce
corporate tax and to phase out automobile tax. [171][172]
Shareholder activism is rare despite the fact that the corporate law gives shareholders
strong powers over managers.[173] Recently, more shareholders have stood up against
managers.[174]
The government's liabilities include the second largest public debt of any nation with debt of
over one quadrillion yen.[175][176][177] Former Prime Minister Naoto Kan has called the situation
'urgent'.[178]
Japan's central bank has the second largest foreign-exchange reserves after the People's
Republic of China, with over one trillion US Dollars in foreign reserves. [179]

Culture[edit]

Overview[edit]
Nemawashi (), or "consensus building", in Japanese culture is an informal process of
quietly laying the foundation for some proposed change or project, by talking to the people
concerned, gathering support and feedback, and so forth. It is considered an important
element in any major change, before any formal steps are taken, and
successfulnemawashi enables changes to be carried out with the consent of all sides.
Japanese companies are known for management methods such as "The Toyota
Way". Kaizen (, Japanese for "improvement") is a Japanese philosophy that focuses on
continuous improvement throughout all aspects of life. When applied to the workplace,
Kaizen activities continually improve all functions of a business, from manufacturing to
management and from the CEO to the assembly line workers. [180] By improving standardized
activities and processes, Kaizen aims to eliminate waste (see Lean manufacturing). Kaizen
was first implemented in several Japanese businesses during the country's recovery after
World War II, including Toyota, and has since spread to businesses throughout the world.
[181]

Within certain value systems, it is ironic that Japanese workers labor amongst the most

hours per day, even though kaizen is supposed to improve all aspects of life.
Some companies have powerful enterprise unions and shunt. The Nenko System or
Nenko Joretsu as it is called in Japan, is the Japanese system of promoting an employee in
order of his or her proximity to retirement. The advantage of the system is that it allows
older employees to achieve a higher salary level before retirement and that it usually brings
more experience to the executive ranks. The disadvantage of the system is that it does not
allow new talent to be merged with the experience and those with specialized skills cannot
be promoted to the already crowded executive ranks. It also does not guarantee or even
attempt to bring the "right person for the right job". Relationships between government
bureaucrats and companies are often close. Amakudari ( amakudari , "descent from
?

heaven") is the institutionalised practice where Japanese senior bureaucrats retire to highprofile positions in the private and public sectors. The practice is increasingly viewed as
corrupt and a drag on unfastening ties between private sector and state that prevent
economic and political reforms. Lifetime employment (shushin koyo) and seniority-based
career advancement have been common in the Japanese work environment.[167][182] Japan
has begun to gradually move away from some of these norms. [183][184]

Salaryman ( Sararman , salaried man) refers to someone whose income is

?

salary based; particularly those working for corporations. Its frequent use by Japanese
corporations, and its prevalence in Japanese manga and anime has gradually led to its
acceptance in English-speaking countries as a noun for a Japanese whitecollarbusinessman. The word can be found in many books and articles pertaining to
Japanese culture. Immediately following World War II, becoming a salaryman was viewed
as a gateway to a stable, middle-class lifestyle. In modern use, the term carries
associations of long working hours, low prestige in the corporate hierarchy, absence of
significant sources of income other than salary, wage slavery, and karshi. The term
salaryman refers almost exclusively to males.
An office lady, often abbreviated OL (Japanese: eru), is a female office worker in
Japan who performs generally pink collar tasks such as serving tea
and secretarial orclerical work. Like many unmarried Japanese, OLs often live with their
parents well into early adulthood. Office ladies are usually full-time permanent staff,
although the jobs they do usually have little opportunity for promotion, and there is usually
the tacit expectation that they leave their jobs once they get married.
Freeter ( furt ) (other spellings below) is a Japanese expression for people
?

between the age of 15 and 34 who lack full-time employment or are unemployed, excluding
homemakers and students. They may also be described
as underemployed or freelance workers. These people do not start a career after high
school or university but instead usually live as parasite singles with their parents and earn
some money with low skilled and low paid jobs. The low income makes it difficult for freeters
to start a family, and the lack of qualifications makes it difficult to start a career at a later
point in life.
Karshi ( karshi ), which can be translated quite literally from Japanese as "death
?

from overwork", is occupational sudden death. The major medical causes of karshi deaths
are heart attack and stroke due to stress.
Skaiya ( skaiya ), (sometimes also translated as corporate bouncers, meeting?

men, or corporate blackmailers) are a form of specialized racketeer unique to Japan, and
often associated with the yakuza that extort money from or blackmail companies by
threatening to publicly humiliate companies and their management, usually in their annual

meeting ( skai ). Sarakin ( ) is a Japanese term for moneylender, or loan shark.

?

It is a contraction of the Japanese words for salaryman and cash. Around 14 million people,
or 10% of the Japanese population, have borrowed from a sarakin. In total, there are about
10,000 firms (down from 30,000 a decade ago); however, the top seven firms make up 70%
of the market. The value of outstanding loans totals $100 billion. The biggest sarakin are
publicly traded and often allied with big banks.[185]
The first "Western-style" department store in Japan was Mitsukoshi, founded in 1904, which
has its root as a kimono store called Echigoya from 1673. When the roots are considered,
however, Matsuzakaya has an even longer history, dated from 1611. The kimono store
changed to a department store in 1910. In 1924, Matsuzakaya store in Ginzaallowed street
shoes to be worn indoors, something innovative at the time. [186] These former kimono shop
department stores dominated the market in its earlier history. They sold, or rather displayed,
luxurious products, which contributed for their sophisticated atmospheres. Another origin of
Japanese department store is that from railway company. There have been many private
railway operators in the nation, and from the 1920s, they started to build department stores
directly linked to their lines' termini. Seibu and Hankyuare the typical examples of this type.
From the 1980s onwards, Japanese department stores face fierce competition from
supermarkets and convenience stores, gradually losing their presences. Still, depto are
bastions of several aspects of cultural conservatism in the country. Gift certificates for
prestigious department stores are frequently given as formal presents in Japan. Department
stores in Japan generally offer a wide range of services and can include foreign exchange,
travel reservations, ticket sales for local concerts and other events.

Keiretsu[edit]
Main article: Keiretsu
A keiretsu ( , lit. system or series) is a set of companies with interlocking business
?

relationships and shareholdings. It is a type of business group. The

prototypical keiretsuappeared in Japan during the "economic miracle" following World War
II. Before Japan's surrender, Japanese industry was controlled by large familycontrolled vertical monopolies called zaibatsu. The Allies dismantled the zaibatsu in the late
1940s, but the companies formed from the dismantling of the zaibatsu were reintegrated.
The dispersed corporations were re-interlinked through share purchases to form horizontally
integrated alliances across many industries. Where possible, keiretsu companies would

also supply one another, making the alliances vertically integrated as well. In this period,
official government policy promoted the creation of robust trade corporations that could
withstand pressures from intensified world trade competition. [187]
The major keiretsu were each centered on one bank, which lent money to
the keiretsu's member companies and held equity positions in the companies. Each central
bank had great control over the companies in the keiretsu and acted as a monitoring entity
and as an emergency bail-out entity. One effect of this structure was to minimize the
presence ofhostile takeovers in Japan, because no entities could challenge the power of the
banks.
There are two types of keiretsu: vertical and horizontal. Vertical keiretsu illustrates the
organization and relationships within a company (for example all factors of production of a
certain product are connected), while a horizontal keiretsu shows relationships between
entities and industries, normally centered on a bank and trading company. Both are
complexly woven together and self-sustain each other.
The Japanese recession in the 1990s had profound effects on the keiretsu. Many of the
largest banks were hit hard by bad loan portfolios and forced to merge or go out of
business. This had the effect of blurring the lines between the keiretsu: Sumitomo
Bank and Mitsui Bank, for instance, became Sumitomo Mitsui Banking Corporation in 2001,
while Sanwa Bank (the banker for the Hankyu-Toho Group) became part of Bank of TokyoMitsubishi UFJ. Additionally, many companies from outside the keiretsu system, such
as Sony, began outperforming their counterparts within the system.
Generally, these causes gave rise to a strong notion in the business community that the old
keiretsu system was not an effective business model, and led to an overall loosening of
keiretsu alliances. While the keiretsu still exist, they are not as centralized or integrated as
they were before the 1990s. This, in turn, has led to a growing corporate acquisitionindustry
in Japan, as companies are no longer able to be easily "bailed out" by their banks, as well
as rising derivative litigation by more independent shareholders.

Other economic indicators[edit]

Current account balance 2006[188]

Net international investment position: 266,223 \ billion[189] (1st)[190]

Industrial Production Growth Rate: 7.5% (2010 est.)
Investment (gross fixed): 20.3% of GDP (2010 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 88.67 (2010), 93.57 (2009), 103.58 (2008), 117.99 (2007),
116.18 (2006), 109.69 (2005), 115.93 (2003), 125.39 (2002), 121.53 (2001), 105.16
(January 2000), 113.91 (1999), 130.91 (1998), 120.99 (1997), 108.78 (1996), 94.06 (1995)
Electricity:

Electricity consumption: 925.5 billion kWh (2008)

Electricity production: 957.9 billion kWh (2008 est.)

Electricity exports: 0 kWh (2008)

Electricity imports: 0 kWh (2008)

Electricity Production by source:

Fossil Fuel: 69.7%

Hydro: 7.3%

Nuclear: 22.5%

Other: 0.5% (2008)

Electricity Standards:

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

100 volts at 60 Hz Southward

Oil:

production: 132,700 bbl/d (21,100 m3/d) (2009) (46th)

consumption: 4,363,000 bbl/d (693,700 m3/d) (2009) (3rd)

exports: 380,900 barrels per day (60,560 m3/d) (2008) (64th)

imports: 5,033,000 barrels per day (800,200 m3/d) (2008) (2nd)

net imports: 4,620,000 barrels per day (735,000 m3/d) (2008 est.)

proved reserves: 44,120,000 bbl (7,015,000 m3) (1 January 2010 est.)

Economy of Pakistan

Currency

1 Pakistani Rupee (PKR)

Rs.1 = 100 Paisas

Fiscal year

1 July 30 June

Trade organizations

ECO, SAFTA, ASEAN, WIPO and WTO

GDP

$250 billion (nominal, 2014)

Statistics
[1]

$928 billion (PPP, 2015)[2]

GDP rank

26th (PPP)
42nd (nominal)

GDP growth
GDP per capita

4.24%(2014)[3]
$1,513 (nominal)[4]
$4,886.27(PPP; 135th; 2015)[2]

GDP by sector
Inflation (CPI)

agriculture: 25.1%, industry: 21.3%, services: 53.6% (2014 est.)

2.1% (April 2015)[5]

Population belowpoverty line

12.4% (2014)[6]

Labour force

31 million (201213)[7]

Labour force by occupation

agriculture: 43%, construction: 15.2%, manufacturing: 13.3%,wholesale and retail:

9.2%,transport and communication: 7.3% (201213)[7]

Unemployment

6.6% (2013 est.)[8]

Main industries

textiles and apparel, food processing, pharmaceuticals,

construction, chemicals, cement, mining,

machinery, steel, engineering, software and hardware, automobiles, motorcycle and auto
parts, electronics, paper products, fertilizer, shrimp, defense products,

shipbuilding

Ease-of-doing-business rank

104th (2015)[9]
External

Exports

Total $30.414 billion (2013-14 est.), Goods $25.157 billion, Services $5.256 billion[10]

Export goods

Linens (10%)
Cotton and Yarn (9.2%)
Rice (7.9%)
Non-Knit Men's Suits (4.3%)
Refined Petroleum (3.2%)
Cement (2.3%)[11]

Main export partners

United States 13.3%

China 10.9%
United Arab Emirates8.6%
Afghanistan 8.5%
Germany 5.1%[12]

Imports

$41.668 billion (2013-14 est.)[13]

Import goods

Food $4.15 billion

Machinery $5.05 billion
Transport Vehicles $1.66 billion
Textile $2.29 billion
Fertilizers and other chemicals $6.86 billion
Raw metal $2.7 billion
Refined Petroleum $9.02 billion
Crude Petroleum=$5.75 billion

Main import partners

China 17%
United Arab Emirates15%
Kuwait 8.8% (2012 est.)
Saudi Arabia 8.5%
Malaysia 4.8%
[14]

Public finances
Public debt

61.8% of GDP (2014-15)[15]

Revenues

14.8% of GDP, Pkr 4.119 trillion or $40 billion[16]

Expenses

19.5% of GDP, Pkr 5.412 trillion or $54 billion

Credit rating

Standard & Poor's:[17]

B- (Domestic)

B- (Foreign)
B- (T&C Assessment)
Outlook: Positive[18]
Moody's:
B3[19]
Outlook: Stable
Foreign reserves

$17.7 billion (April 2015)

The economy of Pakistan is the 26th largest in the world in terms of purchasing power parity (PPP),
and 42nd largest in terms of nominal Gross Domestic Product. As Pakistan has a population of over 186
million (the world's 6th-largest), thus GDP per capita is $3,149 ranking 140th in the world. Pakistan is a
developing country[21][22][23] and is one of the Next Eleven, the eleven countries that, along with the BRICs,
have a potential to become one of the world's large economies in the 21st century.[24] However, after
decades of war and social instability, as of 2013, serious deficiencies in basic services such as railway
transportation and electric power generation had developed. [25] The economy is semi-industrialized, with
centres of growth along the Indus River.[26][27][28] Primary export commodities include textiles, leather
goods, sports goods, chemicals and carpets and Rugs. [29]
Growth poles of Pakistan's economy are situated along the Indus River;[27][30] the diversified economies
of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of
the country.[27] The economy has suffered in the past from internal political disputes, a fast-growing
population, mixed levels of foreign investment. [25] Foreign exchange reserves are bolstered by steady
worker remittances, but a growing current account deficit driven by a widening trade gap as import
growth outstrips export expansion could draw down reserves and dampen GDP growth in the medium
term.[31] Pakistan is currently undergoing process economic liberalization with includes privatization of all
government corporations, aimed to attract foreign investment and decrease budget deficit.[32] In 2014,
foreign currency reserves crossed $15 billion which has led to stable outlook on the long-term rating
by Standard & Poor's

Economic comparison of Pakistan 19992008

A view of I. I. Chundrigar Road, the financial district of Karachi in Pakistan

Main Industries by Region - Pakistan. Source: [45]

Pakistan & its two largest City economies. Source: [46]

Indicator

GDP

GDP Purchasing Power Parity

(PPP)

GDP per Capita Income

Revenue collection

Foreign reserves

1999

$75 billion

2007

2015

$185 billion

$272.136 billion

$270 billion $475.5 billion

$504 billion

$545.6 billion

$928.43 billion (PPP,2015)

$450

$925

$1085

$1250

$1313

Rs. 305

Rs. 708

Rs. 990

Rs. 1.05

billion

billion

billion

trillion

$16.4 billion

$8.89 billion

$17.21 billion

$17.7 billion

$18.45 billion

$30.414 billion (2013-14 est.)

billion

Exports

$8.5 billion

$18.5 billion

Textile Exports

$5.5 billion

$11.2 billion

KHI stock exchange (100-Index)

2009

$170 billion

$1.96

$160 billion

2008

$5 billion at
700 points

$75 billion at
14,000
points

$19.22
billion

$46 billion at
9,300 points

Rs 2.65 trillion

$26.5 billion
at 9,000
points

Foreign Direct Investment

$1 billion

$8.4 billion

$5.19 billion

$4.6 billion

$0.803 billion[25]

External Debt & Liabilities

$39 billion

$40.17 billion

$45.9 billion

$50.1 billion

$56 billion

Poverty level

60%

43%

37%

29%

17%

Literacy rate

Development programs

45%

53%

59%

61%

Rs. 80

Rs. 520

Rs. 549.7

Rs. 621

billion

billion

billion

billion

58%[26]

Rs758 billion

Agriculture[edit]
Main article: Agriculture in Pakistan

Agriculture by Province

Mango Orchard in Multan, Pakistan

The most important crops are wheat, sugarcane, cotton, and rice, which together account for more than
75% of the value of total crop output. Pakistan's largest food crop is wheat. In 2005, Pakistan produced
21,591,400 metric tons of wheat, more than all of Africa (20,304,585 metric tons) and nearly as much as
all of South America (24,557,784 metric tons), according to the FAO.[66] The country is expected to harvest

47 to 64 million tons of wheat in 2015. Pakistan has also cut the use of dangerous pesticides dramatically.
[67]

Pakistan is a net food exporter, except in occasional years when its harvest is adversely affected by
droughts. Pakistan exports rice, cotton, fish, fruits (especially Oranges and Mangoes), and vegetables
and imports vegetable oil, wheat, pulses and consumer foods. The country is Asia's largest camel market,
second-largest apricot and ghee market and third-largest cotton, onion and milk market. The economic
importance of agriculture has declined since independence, when its share of GDP was around 53%.
Following the poor harvest of 1993, the government introduced agriculture assistance policies, including
increased support prices for many AGRICULTURAL COMMODITIES

and expanded availability of

agricultural credit. From 1993 to 1997, real growth in the agricultural sector averaged 5.7% but has since
declined to about 4%. Agricultural reforms, including increased wheat and oilseed production, play a
central role in the government's economic reform package.
Majority of the population, directly or indirectly, dependent on this sector. It contributes about 24 percent
of Gross Domestic Product (GDP) and accounts for half of employed labor force and is the largest source
of foreign exchange earnings.[68]
Pakistan's Top Ten commodities by export value in 2011 were: [69]

Commodity

Value [1000 USD]

Wheat

674424

Cotton lint

359341

Flour of Wheat

352014

Tangerines, mandarins, clem.

120893

Potatoes

102185

Cattle meat

71729

Maize

70028

Cotton Waste

65707

Dates

64081

Vegetables fresh nes

53136

Pakistan's principal natural resources are arable land and water. About 25% of Pakistan's total land area
is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates
three times more acres than Russia. Pakistan agriculture also benefits from year round warmth.
Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. Zarai Taraqiati
Bank Limited is the largest financial institution geared towards the development of agriculture sector
through provision of financial services and technical expertise.
Pakistan is one of the world's largest producers of the following commodities according to FAOSTAT, the
statistical arm of the Food and Agriculture Organization of The United Nations, given here with the 2008
ranking:

Name

Global rank

Apricot

3rd

Buffalo Milk

2nd

Chickpea

3rd

Cotton, lint

4th

Cotton, Seed

3rd

Dates

5th

Mango

6th

Onion, dry

4th

Oranges

11th

Rice, paddy

11th

Sugarcane

5th

Tangerines

9th

Wheat

10th

Major Imports of Pakistan

1. Machinery.
2. Petroleum.
3. Chemicals.

4. Vehicles and spare parts.

5. Edible Oil.
6. Wheat.
7. Tea.
8. Fertilizers.
9. Plastic material.
10. Paper Board
11. Iron ore and steel.
12. Pharmaceutical products.
Imports of Pakistan
Pakistans imports are also highly concentrated in few items namely, machinery, petroleum and petroleum
products, chemicals, transport equipment, edible oil, iron and steel, fertilizer and tea. These imports
accounted for 73% of total imports during 2006-07. Among these categories machinery,
petroleum/petroleum products and chemicals accounted for 53.4% of total imports.
Direction of Imports of Pakistan
Pakistans imports are highly concentrated in few countries. Over 40 percent of them continue to originate
from just seven countries namely, the USA, Japan, Kuwait, Saudi Arabia, Germany, UK and Malaysia.
Saudi Arabia is emerging as major supplier to Pakistan followed by the USA and Japan. The shares of
USA and Japan, with some fluctuations, exhibited a declining trend because of the shift in the import of
machinery/capital goods and raw materials to other sources. On the other hand, the share of Pakistans
imports from Saudi Arabia has been rising due to higher imports of POL products. Malaysia share has
shown rising, as well as, falling trends over the years mainly on account of fluctuations in palm

Major Exports of Pakistan

1. Raw cotton, Textile products and Cotton yarn.

2. Rice.
3. Leather and leather products.
4. Carpets and rugs, Tents.
5. Synthetic textiles.
6. Surgical instruments.
7. Sports goods.
8. Readymade garments.
9. Vegetable, fruit and fish.
10. Engineering goods.
11. Chemicals and Pharmaceutical products.
Exports of Pakistan
Exports were targeted at $18.6 billion or 12.9 percent higher than last year. Export of food group declined
by 3.5 percent. This declined is caused by a 2.6 percent and 14.3 percent decline in exports of rice and
fruits. Export of rice declined due to lesser production caused by adverse weather condition which kept
the domestic price higher. It was more profitable to sell within the country than to export. Exports of textile
manufactures grew by 0.2 percent. Prominent among these are export of knitwear 13.9 percent,
readymade garments 6.8 percent, made up articles 8.9 percent, cotton yarn 4.6 percent and towels 2.6
percent. Exports of other textile materials registered a high double digit growth of 17.2 percent. Export of
raw cotton, cotton cloth and bed wear on the other hand registered a decline.
Direction of Exports of Pakistan
Although Pakistan trade with a large number of countries its exports are however highly concentrated in
few countries including USA, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia which account
for one-half of its exports. The United States is largest export market for Pakistan, accounting for 28.4
percent of its exports followed by UK and Germany. Japan is fast vanishing as export market for Pakistan

as its share in total exports has been on decline for one decade, reaching less than one percent from 5.7
percent a decade ago.
Pakistan needs to diversify its exports not only in terms of commodities but also in terms of markets.
Heavy concentration of exports in few commodities and few markets can lead to export instability. Other
issues which need to be addressed include low value added and poor quality, obsolete use of machinery
and technology, higher wastage of inputs adding to the cost of production, low labor productivity, little
spending on research and development, export houses lacking capacity to meet bulk orders, inability to
meet requirements of consumers I terms of fashion and design, non-adherence to contracted quality and
delivery schedule, lack of marketing techniques etc

Pak-Japan trade relations

In the economic field Japan continues to be a major trade partner of Pakistan
By Dr.Muhammad Ayoob Shaikh
&
Mr. Hakim Ali Kanasro
Feb-11 - 17, 2002
After inception of Pakistan in August 1947, Japan established a liaison office in Karachi in December
1950. And on April 28, 1952, when the San Francisco Peace Treaty came into effect, Japan and Pakistan
established diplomatic relations, and since then both countries have enjoyed friendly relations for fifty two
years. Bilateral economic relationship including trade between Japan and Pakistan has been steadily
promoted. Commerce treaty in 1960, which mutually grants the most, favored treatment on trade and
entry of nationals etc.
In the economic field Japan continues to be a major trade partner of Pakistan. In the development
cooperation field, Japan has contributed to the economic development of Pakistan as a major bilateral
development cooperation partner.
After the 2nd world war, more than 50% of Japan's industry was in ruins. The cotton spinning and textile
industries were very important factors in the revival and reconstruction of Japan's nation. At that time
Pakistan extended a helping hand to Japan, by exporting raw cotton, an indispensable material for the
spinning industry and by importing cotton textiles from Japan under the open General License System,
even though the world market was plagued by shortage of many materials. Even in the early fifties Japan
was still short of foodstuffs and Pakistan had supplied rice to Japan.
Pak-Japan have different natural resource endowments, they should specialize in the production of the
goods and services in which they have higher natural resources endowments and should involve in
bilateral trade. In this way production and consumption level will be higher and social and economic well
being of both the countries. Because Japan is an industrialized country, deficient in natural resources and
raw materials, which rely heavily on its value added exports to pay for these imports. Pakistan stands in
the category of developing countries, deficient in technology and endowed with natural resources of fertile
agricultural land and raw materials. The natural resource endowments and economic backgrounds of both
the countries make a very strong case to develop these economies through international trade and
investment.

Pakistan exported raw cotton to Japan and it processed the cotton into yarn and cloth and then exported
these back to Pakistan. This pattern shifted later on as Japan began to export spinning machinery to
Pakistan, and currently textile yarn and fabrics the largest component of Pakistani exports to Japan. From
Pakistan's perspective Japan is one of the most important-trading partner. During 1990-91 to 1999-2000
Pakistan's major export went to seven countries namely, USA, Germany, Japan, U.K., Hong Kong, Dubai
and Saudi Arabia. Among these countries, the share of Pakistan's exports to USA has been increasing
persistently while that of Japan exhibited a continuous decrease mainly due to the protracted recession in
the Japanese economy.
The share of exports to Germany, UK, Hong Kong, Dubai and Saudi Arabia remained almost stagnant
with minor fluctuations. The country wise annual share in export since l990-91 to 1999-2000 is given in
the Table-1.
It is evident from above Table-1 that Pakistan is trading with number of countries but its exports are highly
concentrated in few countries. Nearly above one-half of Pakistan's exports during the period from 199091 to 1999-2000 went to above seven countries. Among these countries, the share of Pakistan's exports
to USA has been increasing continuously and share of Pakistan exports to Japan shows persistently
decrease. It is also clear from the above table that the Pakistan exports to Japan also declined by 62.65%
in the year 1999-2000 in comparison of 1990-91. Pakistan exports to Japan had a rising trend up to the
year 1993-94 but started declining mainly due to the antidumping duties of Japanese government on
textile imports from Pakistan in 1995 and partially because of the rising trade between Japan and ASEAN
countries.
In the same way Pakistan is trading with large number of countries but its imports are highly concentrated
in few countries. Nearly below one-half of Pakistan's imports during the period from 1990-91 to 19992000 originated from seven countries namely, USA, Japan, Kuwait, Saudi Arabia, Germany, UK and
Malaysia. By and large, the shares of imports originating from these countries have remained almost
unchanged during the 1990s with the exception of Germany, which depicts a decreasing trend. The
imports from Japan were also on the increase since 1992-93 and started declining from 1993-94 to 19992000. The shares of imports from Kuwait and Saudi Arabia in 1999- 2000 have increased. The probable
reasons for Japan decreasing trend in imports may be the joint venture between Pakistan and Japan in
the automobile sector and the discouragement of Pakistani government for these imports to develop the
home industry and conserve theFOREIGN EXCHANGE reserves.
Pakistan's imports are highly concentrated in few items namely, machinery, petroleum and petroleum
products, chemicals, transport equipments, edible oil, iron and steel, fertilizer and tea. These eight
categories of imports, on average, accounted for about 75 per cent of total imports in the decade of the
1990s. Among these categories, machinery, petroleum & petroleum products and chemicals accounted
for almost 54% of total imports. Our country is trading with large number of countries but its imports are
highly concentrated in few countries. Nearly below one-half of Pakistan's imports during the decade of the
1990s originated from seven countries namely, USA, Japan, Kuwait, Saudi Arabia, Germany, UK and
Malaysia. The evidence is given in the table-2.
It is evident from the table-2 that Japan's average share was 10.63% and USA average share was 9.78%
in this way they dominates the other countries in terms of percentage share of Pakistani imports. The
shares of imports from Kuwait and Saudi Arabia in 1999-2000 have increased because both countries
were witnessed on account of higher Pakistan oilfields limited (POL) imports from both these countries.
It is also evident from the table-2 that Japan stood at first place in terms of percentage share of Pakistani
imports during the period 1990-91 to 1995-96. But on average the percentage shares of Pakistani imports
from Japan was more as compared to other countries and also its share declined after 1996-97.
Japan is the second largest trade partner for Pakistan following the United States. The export from
Pakistan to Japan has increased from Rs.11.448 billion to Rs.13.850 billion in the year 1990-91 to 1999-

2000. Import from Japan to Pakistan also increased by Rs.22.161 billion to Rs.33.681 billion in the above
same period. Deficit in the balance of trade has also increased from Rs.10.713 billion to Rs.19.813 billion
during the period from 1990-91 to 1999-2000.
Pakistan has average exported to Japan Rs.15.228 billion and imported from Japan average Rs.34.679
billion and balance of payment in deficit was averagely Rs.19.450 billion during the period from l990-91 to
1999-2000. As evidence is given in table-3
It is clear from the table-3 that the overall Pak-Japan balance of trade position in the decade of 90s
remained under pressure.
Debt Service payment on Japan's loan
The large accumulated amount of Japan loans has increased the liability of debt service payments many
fold. The evidence is given in the table- 4
Table-4 shows that debt service payment on Japan loan increased till to the year 1997-98 after that the
principal and interest both declined because of debt rescheduling.
Workers remittances from Japan
The earnings of Pakistani nationals, which they earned in Japan and sent it to Pakistan constitutes the
worker's remittance from Japan. The table-5 shows the workers remittance and percentage share of
worker remittance from Japan.
It is evidence from the above table that the annual workers remittance decline year after year. Because
annual workers remittance (AWR) was US$ 26.84 million in the year 1990-91 but it declined and reached
to only US$ 1.58 million in the year 1999-2000. The government of Pakistan must check and watch
whether this amount may come through Hundi business, if it is true then government must provide
facilities to the peoples to deposit and take their money through bank. In this way government can show
accurate .