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Japan, after the US and the China, continues to be the world's third largest economy. Real GDP was USD 4,902 trillion in 2013. Thus Japan generated approximately 6.9 percent of world GDP with a population of a mere 127.3 million inhabitants. Consequently, the GDP per capita stood at 38,491 USD for the country, one of the highest in the world. In terms of economic structure the country has a broad-based, technologically advanced and export-oriented economy.
Japan is poor in terms of natural resources and is dependent on imports in both energy and food supply. Therefore innovation-friendly economic structure based on research, development and production in mechanical engineering and the automotive industry, electronics, and chemical industry was a necessity for the country. This allowed for a heavily export based economy which continues to fuel growth (GDP growth rate: 1.5 percent, 2014) in a rapidly aging population. Japan’s export-based economy is further helped by the coming of age of its Asian neighbors as trade volume with them has exponentially increased over the decades.
Exports in 2013 increased by 15 percent compared to last year imports with a higher demand for fossil fuels (mainly LNG and crude oil) which began after the 2011 shutdown took place at almost all Japanese nuclear power plants. The resulting lost energy share of 75 percent is covered by importing these fuels. This has resulted in record trade deficits (6.9 trillion yen, 2013) for the Japanese economy which had consistently been managing surpluses for 40 years straight since 1970.
In March 2013, Japan and the EU have started the negotiations on a free trade agreement. Particularly the accession to the negotiations on the TPP (Trans-Pacific Partnership) is seen positive for the development of the Japanese economy which is in dire need to correct its trade shortfalls.
Why invest in Japan?
- Japan is home to one of the most industrious and productive work forces in the world, which has a strong work ethic and commitment towards success.
- Japan’s economy is back on a recovery track after two decades of lackluster progress. This has been achieved mostly due to large scale monetary easing, tax reform and various deregulations.
- Japan has been a hub of innovation for much of its history. It is ranked first in the world by the number of patents registered in patent offices of Japan, Europe and the US. Also, for the number of patents granted per nationality of the applicant, Japanese nationals hold the top place.
- Japan has one of the most well-developed transport infrastructure and healthcare system.