Japan has lagged behind other countries in pursuing bilateral trade agreements.
The government screens foreign investment in some sectors.
This strategy of economic development necessitated the establishment of a strong economic infrastructure to provide the needed energy, transportation, communications, and technological know-how.
Deposits of gold, magnesium, and silver meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry.
Over the past three years, government spending has amounted to 38.7 percent of the country’s output (GDP), and budget deficits have averaged 3.9 percent of GDP. The process for establishing a business is relatively streamlined, but bureaucracy is sometimes stifling.
A propensity for lifetime employment guarantees and seniority-based wages impedes the development of a dynamic and flexible labor market.A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population, and therefore exports goods in which it has a comparative advantage such as engineering-oriented, research and development-led industrial products in exchange for the import of raw materials and petroleum.Japan is among the top-three importers for agricultural products in the world next to the European Union and United States in total volume for covering of its own domestic agricultural consumption.Security concerns include North Korea’s nuclear and missile threats and China’s claims of sovereignty in the East and South China Seas. It enforces contracts and provides secure protection of real and intellectual property.Levels of corruption are low, but close relationships among companies, politicians, and government agencies foster an inwardly cooperative business climate conducive to corruption.The traditional practice of amakudari (granting retired government officials top positions within Japanese companies) is common in several sectors. The top corporate rate is 23.9 percent, which local taxes and an enterprise tax can increase significantly.The overall tax burden equals 30.7 percent of total domestic income.Although the government modified some energy subsidies in 2018, heavy subsidies continue in infant care, education, elderly care, and environmental protection.The combined value of exports and imports is equal to 31.3 percent of GDP. As of June 30, 2018, according to the WTO, Japan had 381 nontariff measures in force.The financial sector is competitive, but state involvement persists.Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates sharply.