Structure of Japanese International Trade in Case of Comparative Advantage Model

Topics: International trade, Comparative advantage, Economics Pages: 11 (3101 words) Published: April 21, 2013

In last ten years Japan’s economy is one of the biggest. The nominal GDP of Japan in 2010 was 5458 million dollars – so it was the third one, after USA and China. Of course this was not an easy task for Japan. It’d made a really mysterious level of economic development, and entered the top of wealthiest countries, in spite of nearly totally destructed economy after the World War II. The economic development was generally provided by enlarging amount of international trade, especially exporting of manufactured goods. The secrets which allowed to reach the “Economic Miracle” consist of highly effective economic and trade policies in the presence of impartial civil service.[1]

But in our investigation the most interesting thing is international trade of Japan. On the year 2010 the total amount of exported goods in Japan was counted up to 769,8 million dollars. This characteristic leads Japan to the fourth place exporting country, just behind China (1577 million dollars), Germany (1268,8 million dollars), and USA (1278,1 million dollars). So it means that Japan is really attractive to be investigated in our work. [2]

So high indexes of export are also affected by following factors: 1) Advantages of Japan’s geographical location – it is relative close to main international trade partners. Such partners in 2009 were: China – 18,88% of export share; USA – 16,42%; Korea – 8,13%; Taiwan – 6,27%; Hong Kong – 5,49%. In 2010 the total equivalent of imported goods was 636,8 million dollars. The main partners were: China – 22,2% in import share; USA – 10,96%; Australia – 6,29%; Saudi Arabia – 5,29%, Korea – 3,98.[3] 2) Temperate climate without temperature shifts;

3) National idea – “All for the homeland”;
4) Export stimulated by the government, for example export-promoting tax system.

The aim of work is to investigate the structure of Japan’s external trade structure; the process consequences. In general, trade theory consider a wide range of problems such as: reasons of international trade existence; influence of capital endowment changes and labour supply on good’s and factor’s prices; analysis of benefits from international trade and tax system’s influence on the wealth; also which role may play the change of country’s trade structure within this country and worldwide. Based on this we have a range of goals:

1) Investigation of Japan’s trade;
2) Investigate the resource endowment dependence from industry and production amount; 3) Investigate the amount of export in some industries;
This work will check the Ricardian model application and such one for the comparative advantages theory to Japan’s trade. The Ricardian model says that a country exports the goods in which it has comparative advantages, but the comparative advantages theory says that a country exports the good which is cheaper to produce within a country then it’s price on the world market. Those theories have a strong bond between each other so answering the question of their usefulness we will manage to solve all goals we’ve set.

Main part

Talking about sources of information one should mention that there was a big amount of articles and books used through the project developing. It will be helpful to briefly analyze some of them.

The first one is “Trade with Japan: Has the Door Opened Wider?” by Paul Krugman. It provides us a wide range of information such as yena exchange rate data in dynamic, compared with a world used currency. Then, this data is applied to the export-import ratio of Japan. So the book tells us that a strong increase of yena’s rate on the world market has leaded to a straight extension of import, and a little bit less intensive growth of export.

This can be explained by looking on the trade partners of Japan. All of Japan’s production is based on imported resources, that’s why Japan has a big amount of trade with developing Asia’s countries, with...
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