Japan's industrialized, free-market economy is the second-largest in the world. Its economy is highly efficient and competitive in areas linked to international trade, but productivity is far lower in protected areas such as agriculture, distribution, and services. Japan's reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade produced a mature industrial economy. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy.
After achieving one of the highest economic growth rates in the world from the 1960s through the 1980s, the Japanese economy slowed dramatically in the early 1990s, when the "bubble economy" collapsed, marked by plummeting stock and real estate prices. Japan eventually recovered from its worst period of economic stagnation since World War II. Real GDP in Japan grew at an average of roughly 1% yearly in the 1990s, compared to growth in the 1980s of about 4% per year. After sustaining several consecutive years of growth earlier this decade, the Japanese economy began to slow in line with global economic conditions, and the country fell into its first recession in roughly six years in 2008 as worldwide demand for its goods tumbled. The Bank of Japan reported real GDP growth of -1.8% in FY 2008 and has forecast a decline of 2.0% in 2009.
Agriculture, Energy, and Minerals
Less than 15% of Japan's land is arable. The agricultural economy is highly subsidized and protected. With per hectare crop yields among the highest in the world, Japan maintains an overall agricultural self-sufficiency rate of about 40% on fewer than 4.6 million cultivated hectares (14 million acres). Japan normally produces a slight surplus of rice but imports large quantities of wheat, corn, sorghum, and soybeans, primarily from the United States. Japan is the third-largest market for U.S. agricultural exports.
Given its heavy dependence on imported energy, Japan has aimed to diversify its sources and maintain high levels of energy efficiency. Since the oil shocks of the 1970s, Japan has reduced dependence on petroleum as a source of energy from more than 75% in 1973 to less than 50% in 2006. Other important energy sources are coal, liquefied natural gas, nuclear power, and hydropower. Today Japan enjoys one of the most energy-efficient developed economies in the world.
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, coke, copper, and bauxite must be imported, as must many forest products.
Japan's labor force consists of some 66.5 million workers, 42% of whom are women. Labor union membership was estimated to be about 10 million in 2007.
Information by U.S. Department of State