Japan is one of the world’s leading trading nations, as measured by their exports. Its imports and exports totaled about $525 billion in 1990. Their main exports at the time, in terms of value, were iron and steel, passenger cars and electronic equipment. Petroleum was Japan’s chief import that accounted for 35 per cent of the total value of imports (World Book). Most of the time since the mid-1960s, Japan has had a favorable balance of trade-that is, the value of its exports has exceed the value of its imports. Japan maintained a favorable balance of trade by one, exporting manufactured products throughout the world at competitive prices and second, through restricting imports by means of various trade barriers, such as tariffs and quotas. Japan’s trade policies have contributed to unfavorable trade balances for countries that import large qualities of Japanese goods but face barriers to exporting their own goods to Japan. In an effort to reduce these barriers, a number of Japan’s trading partners began criticizing the country’s trade practices. To maintain good trade relations, Japan begun responding to these request. It reduced its exports of automobiles to the United States. It also relaxed restrictions on imports of U.S. food products, but U.S. officials still criticize the serious trade imbalance that remain in Japans favor. However, over the past five years from current date, Japan has shifted their ideology by seeking free trade agreements (FTA) with a number of countries. In doing so, Japan hopes to revitalize its economy as well as to compete with other major countries, like China for influence in Asia.
A steady increase of labor productivity, particularly in the manufacturing industries, contributed substantially to the nation’s economic development. Labor productivity was unusually high in the late 1970s, when Japan's wages first became competitive with other industrialized nations. But productivity rose at an annual average rate of only 2.6 percent between 1978 and 1987 (Country studies). At the same time, Japan was able to keep its unemployment rate between 2.8 and 2.2 percent from 1987 to 1992 (Country studies). The way, in which the nation’s employment system and labor management relations were structured, was the source of its coveted performance. In the early 1990s, employment rate stood at 62.4 percent of the total population over the age of 15. Throughout the 70s and 80s, 95 percent of Japanese men ranging between the ages of twenty-five and fifty-four were employed and by the 1990s the retirement aged increased into their 60s. The Japanese employment structure was proving to be just as successful, if not more successful than any other industrialized nation, with a far lower unemployment rate, of only 2.2 percent in 1992. Wages however differed according to industry and type of employment. The highest earning employees worked in finance, real-estate, public service,...