The Prospects for Japan's Trade Structure.

(From Journal of Japanese Trade & Industry (JJTI))

Byline: Hatakeyama Noboru

The first White Paper on International Trade was published 55 years ago. In 1949, Japan's exports amounted to around $500 million, almost one-thousandth of the amount of this year.

Of course, at that time most Japanese industries had not recovered from the damage they suffered during World War II. Japan's international trade was severely restricted by the occupied forces. The export level was only 16.2% of the pre-war figure. The export dependency ratio (ratio of exports to gross domestic product, or GDP) at that time was only 5%.

However, even in an ordinary year, Japan's export dependency ratio has not been as high as many people might suppose. Last year, it was 12.2%, the highest percentage since 1985. This figure was much lower than the rates for such European countries as Germany (33.4%), France (29.9%), Italy (28.4%) or the United Kingdom (27.2%). The United States is well known for its low trade dependency ratio for both exports and imports. Its export dependency ratio in 1997 was 11.2%, a bit higher than Japan's (11.1% in the same year). The export dependency ratio of the United States in 1999 was 10.4%, exactly the same as Japan was. In other words, Japan's export dependency ratio has been about the same as that of the United States recently, although many people in the world may have the impression that Japan's export dependency ratio is much higher than the U.S.'s. Exports can be divided into two categories: namely, goods and services. Japan's export dependency ratio in goods has always been bigger than that of the United States. This may be the reason why many people tend to think that Japan's export dependency ratio is much higher than that of the United States. The gap between them has been expanding recently. For example, the gap between Japan's export dependency ratio in goods and that of the United States has expanded for the last 10 years, from 1994 to 2003 respectively - 0.9%, 0.3%, 0.7%, 1.3%, 1.8%, 1.6%, 1.8%, 2.1%, 3.4% and 3.9%.

However, when it comes to trade in services, the situation between Japan and the United States is the other way round. The U.S. export dependency ratio in services has always been bigger than Japan's. In this case, however, the gap between the U.S. and Japanese figures has been shrinking as follows from 1994 to 2003 respectively - 1.6%, 1.8%, 1.7%, 1.5%, 1.4%, 1.6%, 1.5 %, 1.4%, 1.1% and 1.0%.

The narrowing gap between the U.S. and Japanese figures may indicate that Japan's export dependency in services may catch up with the United States within 10 years or so.