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STRUCUTURE OF THE ECONOMY
Manufacturing has been the basis 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.
The UNDP 2004 report shows that 11.8% of Japan's population lives below income poverty line (50% of median household income). Gross primary enrollment, which denotes the percent of school-age population, is 101%, with both male and female enrolled equitably. Adult Literacy rate is 99%. Japan is ranked 9th in 177 countries of the world in terms of human development index.
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.
During the 1970s, the world witnessed a fundamental shift in Japan's industrial structure from emphasis on heavy industry to development of new fields, such as the VLSI semiconductor industry.
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By the late 1970s, the computer, semiconductor, and other technology and information-intensive industries had entered a period of rapid growth.
The percentage of Japanese living in cities rose gradually swelling the industrial work force. The economic growth supported by strong private-sector facilities investment based on a high personal savings ratio, was accompanied by significant changes in Japan's industrial structure.
Slow growth of the economy in the late 1990s led some people to express fears about the competitive capability of Japanese industry. Still, technological innovation has enabled Japan to regain a strong market position in the construction of large-scale machinery, while retaining its position as a leader in the semiconductor and automobile industries.
One salient 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 and medium-sized companies, with 300 or fewer employees. The latter accounts for 99% of the manufacturing concerns. 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.
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