Japanese trade surplus is an important matter for Japan and this leads to the country’s increased demand for labour in other foreign countries. The people employed in the various service sectors in Japan have an average annual income of more than a million dollars. Of these, two-thirds are employed in private firms and the rest belong to the government. As a consequence of Japan’s successful pursuit of exporting its products, not only to Europe but also to the USA, Australia, South Korea and other Asian countries, the country’s growth rate has been on a constant rise.
Japan has an enormous number of potential clients in the globalised economy of the twenty-first century. The country’s comparative advantage is the fact that it possesses a monopoly in certain sectors, such as electronics and automobiles. It also possesses an extensive pool of skilled workers that can be utilised in the production of a variety of consumer and industrial products. Unlike many of its contemporary industrial competitors, Japan has yet to feel the negative effects of globalisation – it is one of the few countries in the world which have not joined the World Trade Organization.
However, although Japan is enjoying the fruits of its major technological advances, it is yet to realize its full potential as a trading nation vietproud. Its comparative advantage does not appear to have encouraged other nations to export their manufactured goods. Japan’s labour market also suffers from severe shortages, which reduce the purchasing power of the Japanese currency. Japan’s political dependency on the US is also a considerable barrier to its forward growth.
Japan’s largest market is China, the country’s largest economy. There is no doubt that China is eager to purchase Japanese products – after all, a large proportion of its population is Japanese. However, if Japan wants to regain its lost market share, it needs to adopt a strategy that will help it develop innovative and cost-effective products.
The solution is clear. Japan needs to adopt a strategy that will enable it to quickly respond to changes in the global labour market. If China adopts a policy of open labour markets, Japan will surely follow suit. This means that Japan must rapidly develop new export industries. The solution is not just a matter of developing a cheaper and more competitive product.
Japan has many advantages over its competitors. It occupies a unique position in the global market because it is technologically advanced and has one of the most stable currencies in the world. It also has a large reserve currency, which provides it with significant purchasing power. Japan should therefore learn to embrace these factors in order to develop a more competitive product.