Japan is now one of the most advanced manufacturing destinations and top economies across the globe. There is an industrious and well-educated young workforce and a high population that makes Japan one of the largest consumer markets. Until the previous decade, the economy of Japan was the second-largest in the world, behind the United States of America. Later after 2010, they were overtaken by the Chinese economy. The GDP of Japan was estimated at USD $4.7 trillion back in 2016, and its domestic production was 126.9 million. Japan also enjoys a fair per capita income of USD $40,000 and has high living standards.
Kavan Choksi Japan explains how Japan had revived from the ashes of World War II. Considering the Asian markets, Japan was one of the first to climb up in the value chain. They were producing cheaper textiles for automobiles and advanced technology goods and services. Manufacturing accounts for the majority of Japan’s GDP. It is also the biggest employment sector in Japan, whereas the primary industries like agriculture account for hardly 1% of the GDP. Japan achieved a commendable economic growth rate from the 1960s to the end of the 80s. Here are some of the contributors to this exponential growth: –
- High investment in production plants and manufacturing units.
- The industrial revolution promoted the use of more efficient technology and industrial tools.
- Ensuring high standards of education and technology learning.
- Good labor-management practices and government policies.
- Easy and quick access to the latest technologies and fair investment in terms of research and development.
- An open framework for world trade.
- A huge market of discerning consumers gives the businesses an extra edge in their operational scale.
In Japan, manufacturing has always been one of the most remarkable and renowned sectors, which contributed to the nation’s economic growth. This made Japan the world leader in manufacturing electronics, electrical, and automobile. Over the last few decades, China came up as a giant in manufacturing by overriding Japan. However, Japan still remains on top of the best. The service sector is also strong in Japan, like financial services, which also significantly boosts the Japanese economy. The service sector accounts for 75% of Japanese GDP. Tokyo Stock Exchange is a leading financial center with global attention.
Wrapping things up
Along with all these, as Kavan Choksi Japan points out, international trade contributions are also significant in the growth of the Japanese economy. The exports now account for 16% of the GDP. The key exporting goods of Japan include machinery, vehicles, precision tools, machinery, and various consumer goods. There were many economic reforms also happened in Japan lately, which encouraged trade liberalization. It now aims to make the Japanese economy more flexible and open. The challenge for the government is to help the country cope with the increasing market challenges, which they are effectively taking care of.