IntroductionThe emergence of a single imperial line in Japan probably dates from the 6th century AD, if not earlier. By the 7th century, the country was unified as an empire modeled largely on the Chinese state. Over subsequent centuries, however, the emperor's control declined and local feudal lords, served by the samurai warrior class, began to hold the real power. In 1192 Minamoto Yoritomo became shogun, or military governor, and the shoguns were in effect Japan's rulers until 1867.As the European powers began to seek trade and colonies in Asia, the Tokugawa shoguns (1603-1867) tried to preserve Japan's culture by banning Christianity, expelling foreigners, ending almost all trade ...view middle of the document...
The Americans rolled back Japanese gains in the Pacific with an island-hopping campaign, but dropped atomic bombs on Hiroshima and Nagasaki in 1945 rather than risk a bloody invasion of Japan itself.Defeat changed Japan radically. Hirohito renounced his claim to divinity and Japan lost its colonies. The country was occupied from 1945 to 1952 by a largely American force led by Douglas MacArthur. The new constitution of 1947 established popular sovereignty made the emperor a figurehead, established extensive guarantees of civil rights and renounced the state's right to use military force. Protected by an American security guarantee, Japan focused on its economy. GDP grew by stunning rates in the 1950s and 1960s and was the world's second-largest by 1980, but a protracted slump began in the early 1990s. Politics has been dominated by the conservative and business-friendly Liberal Democratic Party, which has run Japan almost continuously since 1955.Economic structureA two-tiered economySome parts of Japan's economic structure are similar to those of developed European countries. Japan's companies, like their German counterparts, have historically relied more on bank financing than equity and bond issuance, and employees at larger companies generally stay with the same firm throughout their careers. Another striking feature of Japan's economy is that it consists of two distinct tiers--the large and powerful multinational companies, many of which are now household names abroad in the last three decades; and a plethora of small, often family-owned, enterprises. According to recent data from the Ministry of Economy, Trade and Industry, in 2000 99.4% of manufacturing concerns were small to medium-sized companies, with 300 or fewer employees. The value of shipments by these companies, meanwhile, accounted for just 55.5% of total manufacturing shipments in the same year. This two-tiered structure has been cited as one of the reasons for the dynamism of some parts of Japan's industry, with the smaller companies providing the flexibility and innovation that is often lacking in larger enterprises.The dominance of manufacturingManufacturing has been the mainstay of Japan's economy since the 1960s and today accounts for just over 20% of current-price GDP. The electronics and car industries continue to dominate Japan's manufacturing sector and have had huge success in penetrating international markets. Both have, however, suffered in recent years from the strength of the yen, which has prompted a wave of outward direct investment into lower-cost countries, to Asia in particular. Japan is also the world's largest maker of machine tools, much of the output of which is exported to countries such as the US and South Korea. Japan is also one of the world's most important iron and steel makers, although Arcelor of Luxembourg has now overtaken Nippon Steel as the world's largest steelmaking company in terms of production.High investment ratesAnother striking feature...