S. FOLEY
embassy: 10-5, Akasaka 1-chome, Minato-ku, Tokyo 107-8420
mailing address: Unit 45004, Box 205, APO AP 96337-5004
telephone: (3) 3224-5000
FAX: (3) 3224-5856
consulate(s) general: Naha (Okinawa), Osaka-Kobe, Sapporo
consulate(s): Fukuoka, Nagoya

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@Japan:Economy

Economy - overview: Government-industry cooperation, a strong work
ethic, mastery of high technology, and a comparatively small defense
allocation (1% of GDP) have helped Japan advance with extraordinary
rapidity to the rank of second most technologically powerful economy
in the world after the US and third largest economy in the world after
the US and China. One notable characteristic of the economy is the
working together of manufacturers, suppliers, and distributors in
closely knit groups called keiretsu. A second basic feature has been
the guarantee of lifetime employment for a substantial portion of the
urban labor force. Both features are now eroding. Industry, the most
important sector of the economy, is heavily dependent on imported raw
materials and fuels. The much smaller agricultural sector is highly
subsidized and protected, with crop yields among the highest in the
world. Usually self-sufficient in rice, Japan must import about 50% of
its requirements of other grain and fodder crops. Japan maintains one
of the world's largest fishing fleets and accounts for nearly 15% of
the global catch. For three decades overall real economic growth had
been spectacular: a 10% average in the 1960s, a 5% average in the
1970s, and a 4% average in the 1980s. Growth slowed markedly in
1992-95 largely because of the aftereffects of overinvestment during
the late 1980s and contractionary domestic policies intended to wring
speculative excesses from the stock and real estate markets. Growth
picked up to 3.9% in 1996, largely a reflection of stimulative fiscal
and monetary policies as well as low rates of inflation. But in
1997-98 Japan experienced a wrenching recession, centered about
financial difficulties in the banking system and real estate markets
and exacerbated by rigidities in corporate structures and labor
markets. In 1999 output started to stabilize as emergency government
spending began to take hold and business confidence gradually
improved. The crowding of habitable land area and the aging of the
population are two major long-run problems. Roboti