Japan: Economic and Political Outline

Economic Overview

Japan, being the second world's economy, was one of the countries most affected by the international economic crisis of 2009, due to its strong dependence on exports. While in 2010, the country was just recovering from two years of recession, the global economic downturn together wih the earthquake and the following tsunami threw Japan back into recession in 2011. Driven by the resumption of domestic consumption, of exports, of business investment and reconstruction efforts, growth resumed in the second half of 2011 and should remain at around 2% in 2012.

The government intends to implement a tax incentive scheme to stimulate the economy, but its budget situation is rather unfavorable. The public debt reached 200% of GDP and is expected to increase due to the cost of reconstruction and insufficient expenditure control. The strong appreciation of the yen against the dollar threatens growth, and some parts of industrial production have already relocated abroad. In August 2011, the rating agency Moody's downgraded Japan's notation. To rebalance public finances, the Prime Minister has decided to double the consumption tax by 2015, and in order to finance the reconstruction of the country a law has been passed to allow temporary tax increases for 25 years, starting from 2013. At the end of 2011, the government approved a fourth supplementary budget. While the first three were clearly intended to finance the post-quake and tsunami reconstruction, the latter aims to help SMEs, to provide more subsidies for farmers and reduce the cost of health care. The government of the PDI (Democratic Party of Japan) seeks to reform the "iron triangle", a term covering the LDP (Liberal Democratic Party), the administration and powerful businessmen, who have formed the core of the post-war Japanese development model of growth, led by exports and dominated by conglomerates. Trying to learn from the nuclear disaster, the government also decided to redefine its energy policy. Priority is also given to environmental, social and natalist policies. In the long run, the problem of aging population will increase pressure on spending.

The unemployment rate increased under the effects of the crisis, but it remains moderate at about 5%.

Main Sectors of Industry

Japan has few natural resources (some deposits of gold, magnesium, coal and silver), therefore, it depends from exports to supply itself with raw materials and energy resources.  Having a large maritime area, the country is one of the first producers of halieutic (fishing) products. Only 15% of Japan's surface is suitable for cultivation. Tea and rice are the two main crops. The agricultural sector is highly subsidized and protected. Agriculture contributes marginally to the GNP and employs less than 5% of the active population.

The industrial sector is very diversified and it covers basic products (steel, paper), as well as high technology products. Japan dominates the sectors of automobile, robotics, biotechnology, nanotechnology and renewable energy. Japan is the world’s second producer of cars and ships. The industrial sector contributes to nearly 30% of the GNP.

The service sector accounts for more than two thirds of the GDP and employs two thirds of the active population.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

72.8/100

Position:

Mostly free

World Rank:

20/179

Regional Rank:

6/38

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Ministry of the Economy, Trade and Industry
Ministry of Agriculture, Forestry and Fisheries
Japan’s SME policies

Statistical Office

The Japanese Institute of Statistics

Central Bank

The Bank of Japan

Stock Exchange

Tokyo Stock Exchange
Nagoya Stock Exchange
Osaka Securities Exchange
Fukuoka Stock Exchange
Jasdaq Securities Exchange

Other Useful Resources

Einnews Japan economy

Main Online Newspapers

Asahi Shimbun
Japan Times
Japan Today
News on Japan
Nihon Keizai Shimbun - Nikkei

Economic Portals

Economy watch

Political Outline

Type of State

Empire having a parliamentary democracy.

Executive Power

The head of state is the Emperor. His role is largely ceremonial. The leader of the majority party or leader of the majority coalition in the parliament (House of Representatives) is designated as the Prime Minister for a four-year term. The Prime Minister is the head of the government and enjoys the real executive powers which include implementation of the law in the country and running the day-to-day affairs. The Cabinet is appointed by the Prime Minister.

Legislative Power

The legislature in Japan is bicameral. The parliament called National Diet consists of: House of Councilors (the upper house) having 242 members elected through a popular vote for six year terms; and House of Representatives (the lower house) having 480 members elected through a popular vote for four-year terms. The Constitution of Japan states that the nation's "highest organ of state power" is the National Diet. The executive branch of government is directly or indirectly dependent on the support of the National Diet, often expressed through a vote of confidence.

Main Political Parties

Conservatives, right-wing: LDP (Liberal Democratic Party) - made up of various conservative and reformist factions, the largest political party in Japan; DPJ (Democratic Party of Japan) – a liberal, social-democratic party; New Komeito – a conservative, theocratic Buddhist party.
Moderates, left-wing: - JCP (Japanese Communist Party) - a moderate communist party; SDP (Social Democratic Party) - a moderate social-democratic and populist party.

Current Political Leaders

Emperor: AKIHITO (since 7 January 1989) – hereditary
Prime Minister: Yoshihiko NODA, Minshutō (Japan Democratic Party), since 30 August 2011.

Next Election Dates

House of Councilors: 2013

Indicator of Freedom of the Press

World Rank:

22/179

Evolution:

10 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).