Japan's resource imports

Abstract

The paradox in Japan's external trade arises from the structure of Japan's international trade, that is, from its high dependence on a few major commodities on both the export and import sides. This structure implies that, should, for some reason, Japan's exports and/or imports be severely disrupted, the Japanese economy would be thrown into an economic chaos of formidable magnitude. Such was the case with the first oil shock of 1973-74. As the price of petroleum quadrupled, Japan's trade went into a deficit and its economy was thrown into a heavy recession coupled with a high inflation. On the other hand, when the terms of trade turn in favor of Japan, the economy enjoys a boom with stable prices as in the latest boom which began at the end of 1986. Japan's growth and inflation are quite sensitive to external economic conditions despite its low aggregate dependence on the foreign sector