Japanese & American Economic Relations INTRODUCTION To outward appearances, ten

To outward appearances, tensions in JapaneseAmerican relations appear to have been trending steadily upward since the end of the American military occupation of Japan subsequent to the end of the Second World War. This research examines bilateral economic factors subsequent to 1950, as one means of assessing this thesis.

THE JAPANESEAMERICAN ECONOMIC RELATIONSHIP

The American international trade deficit (the largest in the world in the last years of the twentieth century), and the Japanese international trade surplus (also the largest in the world in the last years of the twentieth century) invite comparisons of the economic performance of the two countries.1Such comparisons become compelling, when it is considered that America's largest bilateral international trade deficit is with Japan, and that Japan's largest bilateral trade surplus is with the United States.2 This bilateral disparity in Japanese/Amer ican trade has developed without (1) Japan becoming America's

1Council of Economic Advisers, Economic Indicators, January 1990, 1; The Conference Board, International Economic Scorecard, September 1989, 2.

1 2 largest trading partner, and (2) in the absence of any significant petroleum trade between the two countries.3 One of the factors often emphasized in comparisons of the economic performance of Japan and the United States is producti

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ted States than they did in Japan. These differences have contributed significantly to the ability of the Japanese to sell their products more easily than could the Americans. The ability to sell more easily meant that the Japanese could increase production levels to a greater extent than could the Americans; a fact that has enabled the Japanese to further narrow the gap in absolute productivity levels between the two countries. 4 EXPLANATIONS OF PRODUCTIVITY DIFFERENCES There is no single explanation for the differences in productivity growth between Japan and the United States. Only a small part of the difference may be explained by the difference in the base productivity levels for the two countries. One idea which has been advanced is the greater use of robotics by the Japanese. While there is likely some merit in this claim, it, too, can account for only a small portion of the difference, because labor input hours in Japan have increased significantly since 1977, while those in the United States have decreased significantly. Another idea which has been advanced to explain the dif ferences in productivity growth between the two countries is that differences in management techniques in the two countries lead

Category: Economics - J