Why does Japan depend on the foreign market?

What are the needs of the foreign market, if Japan is a country with one of the largest economies in the world? To better understand the answer to this question, let's look at everything behind the economy in Japan.

The Japanese economy gained prominence after World War II. In the 1980s and 1990s Japan became a major economic power in the world. Being the third largest in the world, behind only the United States and China.

Why does Japan depend on the foreign market? - Japan

Historical context

At the Edo Period (1603 – 1969) Japan went through a process of economic political isolation and greater rigidity regarding internal economic control. Thus the fiefs were under the imposition of codes of laws. During this period, economic development included urbanization, increased transport of goods, a great expansion of domestic and, initially, foreign trade, and a diffusion of commerce and industries and handicrafts. 

With population growth, Osaka and Kyoto already had more than 400,000 residents, becoming centers of intense trade and service production. The basis of the economy was the rice. It was even common to use contracts to sell rice that had not yet been harvested. This period was also marked by the growing interest in the study of Western science and techniques.

The Meiji Period it was marked by several changes in economy, education, religion, institution and many others. Structural changes interfere too much with a country's money. After Japan's defeat in World War II, he needed help to get back on his feet financially. For this, he had the help of the United States. They used it to regain independence. The post-war economic development process became known as the japanese miracle.

In the 1980s Japan became the world's second largest economy by 2010. In that same decade, rising real estate stocks caused an overheating of the Japanese economy called Japan's financial and housing bubble.

From 1990 to 1992 the Tokyo Stock Exchange crashed and real estate properties peaked in 1991. But from 2001 to 2010 the increase in per capita income surpassed Europe and the United States. Currently a concern with the economy is due to aged population. Because of this, although Japan is a major producer of entertainment in the anime and music world, the country faces heavy competition from China and South Korea, mainly with music.

Why does Japan depend on the foreign market? - japan 1

Japan Economy

The Japanese currency is the yen, it is the third most traded currency on the foreign exchange market after the US dollar and the euro. The Gross Domestic Product (GDP) in 2019 was 5.75 trillion dollars. The most popular economic sectors are industry, technology and finance.

The industrial regions are concentrated in the Honshu, Hokkaido, Shikoku and Kyushu islands. Vegetables, rice, sugar beet, eggs, fish and fruits are the most relevant agricultural products. The products from Japan that are also very profitable are the automobiles, electronics, machinery, chemicals, computers, processed foods and textiles.

Japan usually exports commodities or commodities (goods or products of primary origin of great commercial value) such as semiconductors, transport equipment, electrical machinery and vehicle engines.

The countries that contribute to Japan's foreign market are the United States, China, South Korea and Hong Kong. The ones that Japan itself usually buys are China, Australia and Saudi Arabia. Remembering that there are certainly more countries and each place is interested in certain products, these are just the main ones.

Japan is among the three largest importers of agricultural goods in the world and is the world's largest importer of fish and fish products. Japan decided not to exploit its forest resources for economic purposes.

Agriculture and fishing were the best developed resources, but only with years of great investment and work. Japan built its own manufacturing and processing industries to convert raw materials from overseas markets.

This economic development strategy required the establishment of a strong economic infrastructure to provide the necessary energy, transport, communications and technological expertise. Gold, magnesium and silver deposits help meet industrial demands, but Japan is dependent on foreign market resources for many of its essential ores for the industry. Examples are iron, copper, bauxite (a natural mixture of aluminum oxides), aluminum and forestry products that need to be imported.

Why does Japan depend on the foreign market? - yen

Japanese post-pandemic economy

The pandemic caused by COVID-19 was something that took many by surprise and negatively affected the world economy. In the first half of 2021, Japan's exports decreased and the import cost increased.

According to the Uol Economy, O yen is weaker and rising oil prices have pushed up import costs, affecting Japan's terms of trade (poor in natural resources) and undermining Prime Minister Fumio Kishida's promise to correct inequalities. The cost of living in Japan is rising due to these factors.

Exports increased 13% in September 2021 compared to the same period in 2020. The expectation is that with the foreign market the country will be able to recover. Due to the economic crisis caused by the pandemic, car entrances had almost half of the decline.

As Japan depends on the foreign market, that is, it guarantees itself through exports, crises like these are significant as countries lose interest in technological items and give more priority to more basic items. And the Japanese market is a little “poor” in natural products compared to other countries. But as the pandemic is not completely over, it is not yet possible to know what traces it will leave in Japan's economy and its relations with the foreign market.

Why does Japan depend on the foreign market? - Japan after the pandemic

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