US Economic Relations with Japan

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The economic relations beteen Japan and the United States of America are among the most significant ones in the global economy. Both these countries are powerul economic forces and play important roles in international economic relations. The Japanse and Americn economies also have significant impact on other conomies of th world. Together the United States and Japan account for more than 40% of the domestic product of the world.

The US economy is larger than the Japanese economy by 2.5 times on the basis of PPP (Purchasing Power Parity). While both ecoomies have high standards of living, the standard of living in the United States of America is slightly higher than that in Japan. The economic growth in the United States has been robust in recent decades. Japan, on the other hand, has faced phases of recessions and slow economic growth.

The nature of economic relations bteen the United States of America and Japan have changed over time. The relations bteen the countries have also fluctuated ranging from very tense at times to calm relations. However, the two countries remain strategic economi partners and contribute significant shares to each others foreign investment and foreign trade. However, in recent years, the significance of US economic relations has declined to some extent due to two important reasons –

  • NAFTA (North American Free Trade Agreement) has led to increased economic relations of the United States with Mexico and Canada hich has reduced the importance of US-Japan economic relations.
  • China has emerged as a major economic force. This has also had its impact on the conomic relations between the United States and Japan.
    The major import items of the United States of America from Japan are –
  • Computers and computer components
  • Electrical Machinery (Video cameras constitute a significant part)
  • Passenger cars and car parts.
  • Office machinery parts

    According to estimates of 2006, these items constituted 75% of US imports from Japan.

    The major export items from the United States to Japan are –
  • Electrical Machinery (important items are integrated circuits and electrical apparatus for line telephone systems)
  • Computers and computer components
  • Office machinery parts
  • Gas turbines (turbojets, turbo-propellers, etc)
  • Optical and medical equipment
  • Agricultural products (main items are wheat and meat)

    US exports to Japan (Merchandise trade) – 1997-2006 (in billion US dollars)

    1997 – 65.5
    1998 – 57.9
    1999 – 57.5
    2000 – 64.9
    2001 – 57.5
    2002 – 51.4
    2003 – 52.1
    2004 – 54.4
    2005 – 55.4
    2006 – 59.6

    US imports from Japan (Merchandise trade) – 1997-2006 (in billion US dollars)

    1997 – 121.7
    1998 – 122.0
    1999 – 131.4
    2000 – 146.5
    2001 – 126.5
    2002 – 121.4
    2003 – 118.0
    2004 – 129.6
    2005 – 138.1
    2006 – 148.2

    US exports to Japan (Services) – 1997-2006 (in billion US dollars)

    1997 – 34.3
    1998 – 30.7
    1999 – 31.9
    2000 – 33.7
    2001 – 30.5
    2002 – 30.4
    2003 – 30.1
    2004 – 36.0
    2005 – 42.5
    2006 – 42.0

    US imports from Japan (Services) – 1997-2006 (in billion US dollars)

    1997 – 14.9
    1998 – 14.8
    1999 – 17.4
    2000 – 18.8
    2001 – 18.0
    2002 – 18.9
    2003 – 20.0
    2004 – 21.3
    2005 – 23.8
    2006 – 25.5

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