Japan Table of Contents

A mountainous, island nation, Japan has inadequate natural resources to support its growing economy and large population. Although many kinds of minerals were extracted throughout the country, most mineral resources had to be imported in the postwar era. Local deposits of metal-bearing ores were difficult to process because they were low grade. The nation's large and varied forest resources, which covered 70 percent of the country in the late 1980s, were not utilized extensively. Because of the precipitous terrain, underdeveloped road network, and high percentage of young trees, domestic sources were only able to supply between 25 and 30 percent of the nation's timber needs. Agriculture and fishing were the best developed resources, but only through years of painstaking investment and toil. The nation therefore built up the manufacturing and processing industries to convert raw materials imported from abroad. This strategy of economic development necessitated the establishment of a strong economic infrastructure to provide the needed energy, transportation, communications, and technological know-how.


The mainstay of infrastructure development is the construction industry, which employed 9.4 percent of the labor force in 1990 and contributed some 8.5 percent of GDP. After the two oil crises in the 1970s, construction investment turned sluggish, and the share of construction investment in GNP decreased gradually. In 1987, however, business expanded through investor confidence, continued increase in corporate earnings, improvement of personal income, and rapid rise in land prices. The share of construction investment in GNP rose sharply, especially for more sophisticated and higher value-added private housing and private nonhousing structures.

Construction starts in FY 1990 covered a total area of about 283 million square meters, with about 134 square meters exclusively for housing. Total construction costs were estimated in excess of 49 billion.

Although demand for new private housing is expected to grow in the 1990s, even greater growth is expected for new urban office buildings. A number of large projects are underway, suggesting that the construction industry would experience continued growth throughout the 1990s. These include projects for Tokyo's waterfront and other urban redevelopment, highway construction, and new or expanded airports.

Japan's construction technology, which includes advanced earthquake-resistant designs, is among the most developed in the world. Major firms compete to improve quality control over all phases of design, management, and execution. Research and development focuses especially on energyrelated facilities, such as nuclear power plants and liquid natural gas (LNG) storage tanks. The largest firms are also improving their underwater construction methods.


Mining was a rapidly declining industry in the 1980s. Domestic coal production shrank from a peak of 55 million tons in 1960 to slightly more than 16 million tons in 1985, while coal imports grew to nearly 91 million tons in 1987. Domestic coal mining companies faced cheap coal imports and high production costs, which caused them chronic deficits in the 1980s. In the late 1980s, Japan's approximately 1 million tons of coal reserves were mostly hard coal used for coking. Most of the coal Japan consumed is used to produce electric power.

Japanese coal is found at the extreme ends of the country, in Hokkaido and Kyushu, which have, respectively, 45 and 40 percent of the country's coal deposits. Kyushu's coal is generally of poor quality and hard to extract, but the proximity of the Kyushu mines to ports facilitates transportation. In Hokkaido, the coal seams are wider and can be worked mechanically, and the quality of the coal is good. Unfortunately, these mines are located well inland, making transportation difficult. In most Japanese coal mines, inclined galleries, which extended in some places to 9.7 kilometers underground, were used instead of pits. This arrangement is costly, despite the installation of moving platforms. The result is that a miner's daily output is far less than in Western Europe and the United States and domestic coal costs far more than imported coal.


Japan lacks significant domestic sources of energy except coal and must import substantial amounts of crude oil, natural gas, and other energy resources, including uranium. In 1990 the country's dependence on imports for primary energy stood at more than 84 percent. Its rapid industrial growth since the end of World War II had doubled energy consumption every five years. The use of power had also changed qualitatively. In 1950 coal supplied half of Japan's energy needs, hydroelectricity one-third, and oil the rest. In 1988 oil provided Japan with 57.3 percent of energy needs, coal 18.1 percent, natural gas 10.1 percent, nuclear power 9.0 percent, hydroelectic power 4.6 percent, geothermal power 0.1 percent, and 1.3 percent came from other sources. During the 1960-72 period of accelerated growth, energy consumption grew much faster than GNP, doubling Japan's consumption of world energy. By 1976, with only 3 percent of the world's population, Japan was consuming 6 percent of global energy supplies.

After the two oil crises of the 1970s, the pattern of energy consumption in Japan changed from heavy dependence on oil to some diversification to other forms of energy resources. Japan's domestic oil consumption dropped slightly, from around 5.1 million barrels of oil per day in the late 1970s to 4.9 million barrels per day in 1990. While the country's use of oil is declining, its consumption of nuclear power and LNG has risen substantially. Because domestic natural gas production is minimal, rising demand is met by greater imports. Japan's main LNG suppliers in 1987 were Indonesia (51.3 percent), Malaysia (20.4 percent), Brunei (17.8 percent), Abu Dhabi (7.3 percent), and the United States (3.2 percent). Several Japanese industries, including electric power companies and steelmakers, switched from petroleum to coal, most of which is imported.

In 1990, the latest year for which complete statistics were available, Japan's total energy requirements were tabulated at 428.2 million tons of petroleum equivalent. Of this total, 84 percent was imported. Consumption totaled 298 million tons: 46.7 percent of which was used by industry; 23.3 percent by the transportation sector; 26.6 percent for agricultural, residential, services, and other uses; and 3.3 percent for non-energy uses, such as lubricating oil or asphalt.

In 1989 Japan was the world's third largest producer of electricity. Most of the more than 3,300 power plants were thermoelectric. About 75 percent of the available power was controlled by the ten major regional power utilities, of which Tokyo Electric Power Company was the world's largest. Electricity rates in Japan were among the world's highest.

The Japanese were working to increase the availability of nuclear power in 1985. Although Japan was a late starter in this field, it finally imported technology from the United States and obtained uranium from Canada, France, South Africa, and Australia. By 1991 the country had forty-two nuclear reactors in operation, with a total generating capacity of approximately 33 million kilowatts. The ratio of nuclear power generation to total electricity production increased from 2 percent in 1973 to 23.6 percent in 1990.

During the 1980s, Japan's nuclear power program was strongly opposed by environmental groups, particularly after the Three Mile Island accident in the United States. Other problems for the program were the rising costs of nuclear reactors and fuel, the huge investments necessary for fuel enrichment and reprocessing plants, reactor failures, and nuclear waste disposal. Nevertheless, Japan continued to build nuclear power plants. Of alternative energy sources, Japan has effectively exploited only geothermal energy. The country had six geothermal power stations with a combined capacity of 133,000 kilowatts per hour in 1989.

Research and Development

As its economy matured in the 1970s and 1980s, Japan gradually shifted away from dependence on foreign research. Japan's ability to conduct independent research and development became a decisive factor in boosting the nation's competitiveness. As early as 1980, the Science and Technology Agency, a component of the Office of the Prime Minister, announced the commencement of "the era of Japan's technological independence."

By 1986 Japan had come to devote a higher proportion of its GNP to research and development than the United States. In 1989 nearly 700,000 Japanese were engaged in research and development, more than the number of French, British, and West Germans combined. At the same time, Japan was producing more engineers than any country except the Soviet Union and the United States. Similar trends were seen in the use of capital resources. Japan spent US$39.1 billion on government and private research and development in 1987, equivalent to 2.9 percent of its national income (the highest ratio in the world). Although the United States spent around US$108.2 billion on research and development in 1987, only 2.6 percent of its income was devoted to that purpose, ranking it third behind Japan and West Germany.

The Japanese reputation for originality also increased. Of the 1.2 million patents registered worldwide in 1985, 40 percent were Japanese, and Japanese citizens took out 19 percent of the 120,000 patent applications made in the United States. In 1987 around 33 percent of computer-related patents in the United States were Japanese, as were 30 percent of aviation-related patents and 26 percent of communications patents.

Despite its advances in technological research and development and its major commitment to applied research, however, Japan significantly trailed other industrialized nations in basic scientific research. In 1989 about 13 percent of Japanese research and development funds were devoted to basic research. The proportion of basic research expenses borne by government is also much lower in Japan than in the United States, as is Japan's ratio of basic research expenses to GNP. In the late 1980s, the Japanese government attempted to rectify national deficiencies in basic research by waging a broad "originality" campaign in schools, by generously funding research, and by encouraging private cooperation in various fields.

Most research and development is private, although government support to universities and laboratories aid industry greatly. In 1986 private industry provided 76 percent of the funding for research and development, which was especially strong in the late 1980s in electrical machinery (with a ratio of research costs to total sales of 5.5 percent in 1986), precision instruments (4.6 percent), chemicals (4.3 percent), and transportation equipment (3.2 percent).

As for government research and development, the national commitment to greater defense spending in the 1980s translated into increased defense-related research and development. Meanwhile, government moved away from supporting large-scale industrial technology, such as shipbuilding and steel. Research emphases in the 1980s were in alternative energy, information processing, life sciences, and modern industrial materials.

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Source: U.S. Library of Congress