Following decades of rapid growth, the economy of Japan entered a stagnant period in the 1990s, although living standards remained among the highest in the world. The industrial base of Japan has shifted from light industries to heavy industries, chemicals, and electronics, which together constitute at least three-fourths of the total value of yearly exports. In the late 1990s, the annual gross national product of Japan (about $4.8 trillion) was the largest in the world after the U.S.; the GNP per capita exceeded $37,000. The estimated national budget included revenues of $528 billion and expenditures of $673 billion.

Before and during World War II much of the Japanese economy was controlled by about a dozen wealthy families, collectively called the Zaibatsu (“wealth cliques”). The greatest of these families were the Mitsui, Iwasaki (operating under the company name Mitsubishi), Sumitomo, and Yasuda; they controlled most of the coal, steam-engine, pulp, and aluminum industries. In 1945–46 family ownership of these immense trusts was dissolved by the Allied occupation authorities. The business organizations remained intact, however, and have since acquired even greater economic power by expanding into shipping, banking, and other industries.

An enormous increase in the number and membership of trade unions took place in the country following World War II. In 1946 more than 12,000 trade unions had a combined membership of about 3.7 million. By the late 1970s the number of unions had increased to more than 70,000. In 1989 the nation’s two largest trade union confederations merged to form the Japan Trade Union Confederation, known as JTUC-Rengo, with about 9 million members. Overall, in the early 1990s, some 12.4 million workers (nearly 25% of the labor force) belonged to trade unions.

The number of Japanese farm households and the farm population have declined in recent decades. In the early 1990s the farming sector employed about 6% of the labor force and accounted for 2% of the annual gross domestic product. More than 40% of the cultivated land is devoted to rice production. Rice remains the staple of the Japanese diet; wheat and barley are other important grain crops.

In the early 1990s annual production in metric tons included rice, 13.3 million; potatoes, 3.7 million; sugar beets, 3.8 million; apples, 1 million; mandarin oranges, 1.4 million; cabbage, 2.5 million; sweet potatoes, 1.3 million; onions, 1.3 million; and cucumbers, 870,000. Other crops include melons, tomatoes, wheat, soybeans, tea, tobacco, and other fruits and vegetables.

Because arable land is scarce and consequently valuable, relatively little acreage is used for livestock. Nevertheless, Japan in the early 1990s had 11 million pigs, 5 million cattle, and 335 million poultry. The arable land is divided into small farms, and almost 70% of this land consists of farms of 1 ha (2.5 acres) or less. Most of the farmers also work part-time in industry. The land is tilled intensively; almost all farms have electricity and most use modern machinery. Japanese farmers frequently raise two or more crops yearly. Much of the country’s land suffers from soil exhaustion. Heavy use of chemical fertilizers, improved strains, and advanced techniques, however, have made Japanese farms among the most productive in the world.

Forestry and Fishing.
About two-thirds of the total land area of Japan is woodland, some two-fifths of which contain softwoods. Approximately two-thirds of the forest area is privately owned. Although Japan ranks high in world production of timber, the steadily increasing domestic demand for lumber requires the country to import much of its needs. The annual timber harvest in the early 1990s was about 28.3 million cu m (999 million cu ft).

Fish is a food staple for the Japanese and is second in importance only to rice. Consequently, fishing is one of the most important industries, both for the domestic and export markets. The Japanese fishing fleet is one of the world’s largest. The industry may be divided into three principal categories: offshore, coastal, and deep-sea fishing. Offshore fishing from medium-sized boats accounts for about one-fourth of the volume and nearly one-half the value of the annual catch. Deep-sea fishing is conducted by large vessels in international fishing grounds, while coastal fishing is carried out by small boats, set nets, or cultivation. In the early 1990s the annual catch in Japan totaled some 20.9 million metric tons and included sardines, bonito, crab, pike, prawn, salmon, pollack, mackerel, squid, clams, saury, sea bream, tuna, and yellowtail. In addition, Japan is among the world’s few remaining whaling countries; more than 20,000 whales were caught in 1991. More than 700,000 metric tons of seaweed and other marine plants were harvested annually in the early 1990s.

The mineral resources of Japan are varied but limited in quantity. Coal is the principal mineral, but it is primarily low-grade bituminous coal. Other minerals include copper, lead, zinc, manganese, petroleum, natural gas, limestone, pyrites, and quartzite, but quantities of these are insufficient to meet domestic demand.

Japanese industry suffered extensive damage in World War II. Subsequently, the country undertook a reconstruction that resulted in a complete modernization of its manufacturing facilities. Primary emphasis was placed on the chemical and petrochemical industries and the heavy-machinery industry. By the mid-1950s industrial production had surpassed prewar levels; manufacturing growth averaged 9.4% annually during 1965–80 and 5.8% a year during 1980–92. In the early 1990s Japan was the leading shipbuilding country in the world and among the leading world producers of electrical and electronic products, steel, and motor vehicles. Crude steel production in the early 1990s was some 98.1 million tons; and pig iron output was about 73.1 million tons. Japanese industry also produced 9.4 million passenger cars, 477 million watches and clocks, 26.1 million videocassette recorders, 13.4 million color televisions, 17.7 million 35-mm cameras, 4.3 million microwave ovens, 5.2 million refrigerators, 4.5 million facsimile, or fax, machines, 2.7 million photocopying machines, and numerous other electric and electronic items for home and workplace.

In the early 1990s Japan was also among the leading world producers of basic chemical raw materials. Japan was one of the leading textile manufacturers in the world and among the three largest world producers of synthetic fibers. Japanese industries faced increasingly stiff competition from other Asian manufacturers in the 1990s.

Japan is among the world’s leading countries in the annual production of electricity. In the mid-1990s Japan had an installed electricity-generating capacity of 234 million kw, and the yearly output of electricity in the country exceeded 1 trillion kwh. About 61% of the electricity was generated in thermal plants using coal or petroleum products; hydroelectric facilities accounted for 9%, and nuclear power plants 30%. Although nuclear power’s share of annual electrical output more than doubled between 1980 and 1995, there have been numerous safety lapses, and public opposition to nuclear power has been growing. The worst nuclear accident in Japanese history occurred on Sept. 30, 1999, when an uncontrolled chain reaction at the Tokaimura uranium-reprocessing facility, NE of Tokyo, exposed plant workers and residents of the surrounding area to extremely high radiation levels.

Lacking adequate domestic energy resources, Japan depends on fuel imports to meet more than 80% of its energy needs. Because of improvements in energy efficiency and conservation, Japan’s annual growth in energy consumption decreased from 6.1% during 1965–80 to 2.8% during 1980–94. Mineral fuels represented about 16% of all merchandise imports in the early 1990s.

Currency and Banking.
The Bank of Japan, established in 1882, is the central bank, acts as general fiscal agent for the government, and is the sole issuer of currency. Some 140 private commercial banks constitute the heart of the financial system. The Tokyo Stock Exchange is one of the world’s leading securities markets. The basic unit of currency is the yen, which consists of 100 sen (110.34 yen equal U.S.$1; Sept. 2004). The U.S. intervened on world currency markets when the value of the yen depreciated rapidly in June 1998, reflecting concerns over the weakness of the Japanese banking system. In October the legislature enacted a plan committing more than $500 billion in government funds to shore up ailing banks.

Foreign Trade.
Before World War II Japan ranked fifth in world trade. In 1939 Japanese exports amounted to about $928 million, and imports totaled some $757 million. Most Japanese exports went to territories controlled by the empire, such as Manchuria and occupied China. The yearly trade balance with other countries, such as the U.S. and Great Britain, was unfavorable; annual imports from the U.S., for example, exceeded exports to that country by more than $70 million. Allied occupation authorities permitted a resumption of foreign trade by private enterprises in 1946. By the early 1990s yearly imports totaled about $198.5 billion, and exports totaled about $330.9 billion, ranking Japan third as an export nation. The U.S. absorbs about 28% of Japan’s exports and supplies about 22% of its imports; Japan’s annual trade surplus with the U.S. exceeded $40 billion in the early 1990s. The country’s manufactured goods accounted for more than 90% of total exports; crude and refined petroleum, for approximately 16% of total imports.

Foreign trade is essential to the Japanese economy. The domestic market is unable to fully absorb the manufactured goods that are produced by Japanese industry. Furthermore, because Japan must import much of the raw material on which its industries depend, the country also must export a substantial proportion of its annual national product to effect a favorable balance of trade. Japan has used the huge trade surpluses accumulated in recent decades to invest heavily overseas, thus becoming the world’s leading creditor nation. Japanese economic assistance to other countries was more than $120 billion between 1970 and 1993.

In the early 1990s, Asian countries accounted for about 45% of Japan’s imports and purchased nearly 39% of its exports. Japan’s leading Asian trade partners were South Korea, China, Taiwan, Hong Kong, Indonesia, Thailand, and Singapore. During the same period, EUROPEAN Union (EU) countries—most notably Germany, France, and Great Britain—provided 14% of Japan’s imports and purchased 19% of its exports. Other principal trade partners included Australia, Canada, and Saudi Arabia.

During the early 1990s, about 3 million foreigners visited Japan each year, while an estimated 13 million Japanese traveled overseas. Japanese citizens traveling abroad spend at least $20 billion more each year than foreign visitors spend in Japan.

The major railroads were nationalized in 1907; they were reorganized and transferred to the private sector in 1987. Railroad routes in the early 1990s totaled about 23,170 km (about 14,400 mi), of which about 71% was electrified. Construction of a high-speed rail network spanning about 7000 km (about 4350 mi) and connecting the country’s principal cities was begun in the early 1970s.

Japan has about 1,112,840 km (about 691,490 mi) of roads, of which more than 70% are paved. Motor vehicles in the early 1990s included about 39 million passenger cars and 22.7 million commercial vehicles. Japan’s four main islands are connected by a series of bridges, including the Akashi Kaikyo (1998), the longest suspension bridge in the world, which connects Kobe on the mainland with the island of Awaji.

Japan ranks among world leaders in the size of its merchant fleet, with more than 10,000 vessels, aggregating a total of about 37.8 million deadweight tons. Japan Air Lines, established in 1951, provides service from Tokyo to major population centers throughout the world. All Nippon Airways, primarily a domestic service, has expanded its international operations in recent years.

In the early 1990s Japan had more than 55 million telephone subscribers. About 112.5 million radios and 76 million televisions were in use. The people of Japan are among the world’s most avid newspaper readers. Some 120 daily newspapers were published; their combined circulation exceeded 71 million. The newspapers with the largest daily circulation were Tokyo’s Asahi Shimbun and Yomiuri Shimbun.