Investment Analysis: Japan
Japan is an island state in the Eurasian continent. It is located between 20o and 45o north and between 123o and 154o east. Its major islands are Okinawa, Hokkaido, Shikoku, Honshu, and Kyushu. Japan measures about 378,000 km2. The country constantly experiences cases of earthquakes and volcanic eruptions due to tectonic movement on in the region. Japan has a temperate marine climate, although it is prone to changes depending on ocean currents and seasonal winds. The topography of Honshu, which is mountainous, also influences climate in the country, bringing humid conditions and heavy rains during winter. Japan is one of the economically stable countries. While the economic stability makes it an attractive investment destination, the question that arises is whether other factors, such as political climate, favor investment in the country.
As of 2017, Japan’s total population was 126.71 million people, ranking 11th in the world. In 2015, its population density was 340.8 individuals per square kilometer. The child population (0-14 years) in 2017 was 15.59 million, comprising 12.3% of the total population (Statistics Bureau, 2018). Individuals aged between 15 and 64, which is the productive age group, were 75.96 million, making up to 60 percent of the country’s population (Statistics Bureau, 2018). The dependent population, which comprises children and the elderly, is high, accounting for 66.8% as of 2017. While the Japanese population is still high, it has been declining over the last decade due to factors such as low birth rate.
Important Ethnic or Racial Groups and Divisions
Japan is significantly homogenous, ethnically and racially. However, there are distinct ethnic groups within the country, although they are the minority. They include Ainu, Okinawans, Burakumin. The Ainu are indigenous people of Japan; they have a distinct culture and language, although most of them have now been assimilated in the general Japanese society, culturally and linguistically (Yamashiro, 2013). Historically, the Ainu were physically different from mainstream Japanese, described as taller and hairier. However, due to assimilation, they have become less physically distinct.
The Okinawans are also an indigenous group, historically living in the southern part of Japan. They are one of the major minority groups in the country, with a population of about 1.3 million. Like the Ainu, most Okinawans have been assimilated in the mainstream Japanese language and culture (Yamashiro, 2013). However, while Ainu have mostly been dispersed, the Okinawans and their culture have relegated to the prefectural level with dialects, customs, and local foods. As such, they have been able to maintain certain aspects of their original culture.
The Burakumin are a minority group which is described as an invisible minority because they are not different from the mainstream Japanese in terms of language, ethnicity, and culture. However, despite the assimilation, the Burakumin are treated differently within Japanese society (Yamashiro, 2013). They have experienced racial discrimination based on perceived biological differences. They are considered impure by the mainstream Japanese.
Per Capita Gross Domestic Product
The per capita GDP for Japan has been fluctuating over the years. For example, in 2018, the country registered a per capita GDP in 2018 of 39,286.738 US dollars, an increase from 38,331.979 dollars registered in 2017 (The World Bank, 2019). In 2012, Japan’s per capita GDP was 48,603.477 dollars (The World Bank, 2019). The fluctuating per capita GDP is a reflection of how the country has been performing economically. It shows that Japan has been going through periods of economic boom and recession.
UN Human Development Index Rankings
The human development index measures the level of progress in three areas: health, standard of living, and knowledge access. Japan’s human development index value in 2017 was 0.909, putting it at position 19 out of 189 countries. The index has been increasing over the years, indicating that the country had improved in the three highlighted areas. For instance, in 1990, the index was 0.819, improving to 0.909 in 2017 (UNDP, 2018). From the HDI value and ranking, Japan is performing well in health, literacy, and standard of living. It is also a reflection of the country’s economic performance at the individual level.
Freedom House Scores For Political Rights and Civil Liberties
Japan is a democracy, with people allowed the free will to participate in the political process. The Freedom House scores for political rights is 40/40, implying that people have the right to choose their political representatives (Freedom House, 2019). People are also allowed to join or form political parties of their choice. For instance, in 2017, a number of legislators left the Democratic Party (DP) and formed the CDP party (Freedom House, 2019). Yuriko Koike, the Tokyo governor, on the other hand, formed the Party of Hope which later merged with DP to form the Democratic Party for the People (DPFP) (Freedom House, 2019). The freedom to participate in a political process and support or join the political party of choice is an indication of the high political rights in Japan.
The Japanese constitution guarantees civil rights, which include freedom of expression and belief. However, while freedom of the press is guaranteed in the constitution, there are laws such as the Act on the Protection of specially Designated Secrets, which limit this freedom (Freedom House, 2019). The law allows for the prosecution of journalists who reveal state secrets. Apart from freedom of media, people are allowed to exercise other civil liberties. For example, citizens are free to exercise their faiths without restriction. They are also allowed to express political views without restriction or fear of retribution (Freedom House, 2019). However, there have been concerns that the anti-conspiracy and antiterrorism laws enacted in 2017 could result in undue surveillance, making it hard for people to discuss sensitive topics without retribution (Freedom House, 2019). Nonetheless, civil liberties are respected in the country.
The Economic Position of Japan
Japan is one of the most developed countries in the world economically. It 2018, the country ranked third in the world in terms of GDP (World Bank, 2018). The main factors that influence Japan’s economic growth include an export boom and sound economic policies. The economic policies adopted have seen growth in various sectors, which include the small and medium enterprise, the banking sector, and tourism. Increased exports, on the other hand, have increased the country’s foreign exchange.
Classification and Structure of Government
Japan is a parliamentary democracy, with the prime minister being the head of government, elected by members of parliament. The head of state, on the other hand, is the emperor (Freedom House, 2019). The prime minister serves for a term of four years before seeking reelection. However, the prime minister may lose his seat if voted out by the parliament.
One of the philosophers that have influenced the political history and system of government in Japan is Kitaro Nishida. Japan’s political history in the context of Nishida focuses mainly on foreign policy. Nishida grew up an era when Japan was faced by the dilemma of allowing modernization but lose its identity to western influence or refuse modernization and be compelled to adopt it by superior western powers (Kawamura, 2013). Eventually, Japan decided to modernize. However, in his philosophical work, Nishida opposed modernization and western influence. He advocated for the establishment of the East-Asian co-prosperity sphere with Japan not only controlling the countries in East Asia for its benefit but also for the sake of preventing Western powers from gaining influence in the region. In short, the political philosophy of Nishida focused on maintaining the cultural authenticity of Japan even in the face of Western influence (Kawamura, 2013). Most of these ideas were adopted, and Japan has maintained its cultural identity even though it has increased its relations, both political and business, with other nations. It has also emerged as a major political player in East Asia, limiting the influence of Western powers in the region.
Concerning system government, Nishida ideas influenced the establishment of a democratic system of government where people have a right to vote for their preferred candidates. In his philosophical discourse, Nishida advocated for the rationality of society based on the interplay between a free individual (Kawamura, 2013). He argued that government institutions should respect individual freedom. While Nishida did not explicitly advocate for a government elected by people, his ideas of individual freedom influenced the establishment of the democracy in Japan where people were free to choose political leaders of their choice and have differing political views.
The electoral system in Japan is mixed. The House of Representatives has 500 members elected on a four-year term, among whom 300 are from single-seat constituencies where voters have one vote and the individual who gets the highest number of votes becomes the representative. The remaining 200 are elected by proportional representation where voters in a particular region do not vote for an individual but a party (Sasanuma, 2004). The number of seats a party receives depends on the proportion of votes obtained. Consequently, parties then give the seats to top candidates.
There are 252 members in the house of councilors, elected for a term of six years. Among them, 24 individuals are elected from single-seat districts, 52 from multi-seat constituencies, and 50 from proportional representation. Multi-seat constituencies have between 3 and 5 representatives (Sasanuma, 2004). As such, during elections, the first 3 or 5 individuals with the highest number of votes get elected into the house of councilors.
The judicial system in Japan comprises different levels of courts, with the highest one being the Supreme Court. The Supreme Court is mandated with carrying out judicial review. The court exercises appellate jurisdiction on appeals against a ruling (Hahn, 1983). It also has the final jurisdiction on legal proceedings that involve impeachment of National Personnel Authority Commissioners.
System of Government
Japan is a unitary system. The central government controls local government and their policies. As such, the central government can modify policies that affect local governments. Policies are administered through ministries and administrative boards (Sasanuma, 2004). For example, borrowing policies at local governments is overseen by the Ministry of Home Affairs.
Japan has a constitution which was promulgated in 1946 and became operational in 1947. It highlights the roles of the executive, legislature, and judiciary. It also highlights the bill of rights that must be respected (Hahn, 1983). Through the separation of powers and bill of rights, the constitution protects the people of Japan from excessive exercising of power by the government.
Control of the Government on the Economy
The Japanese government has significant control over the economy. While the direct involvement of the government in economic activities is limited, its control over the business is stronger. The control is exercised through indirect involvement in banking and constant consultation (Statistics Bureau, 2018). The government has various agencies and departments which deal with various aspects of the economy, such as investment, exports and imports, prices, and the general economic growth.
Competition, Stability, and Civil Society
Japan is a democracy that allows for the existence of many parties. However, the strongest party in the country is LDP, which has been in power for most of the time since World War II. There are no major differences between parties based on political ideology (Freedom House, 2019). Democracy is high in the country, with the party that has the majority in parliament forming the government.
Voting is not compulsory but rather a constitutional right that one may choose to or not to exercise. Voter turnout is moderately high in Japan. For example, in 2014, the parliamentary voter turnout was 52.7% (IDEA, 2019). The most recent elections took place in 2017 after the Prime Minister dissolved the lower house. The LDP won 281 seats, CDP 54 seats, Kometo 29 seats, and Party of Hope got 50 seats (Freedom House, 2019). With LDP winning a majority of the seats, it confirmed Abe as the Prime Minister. The next elections would be held in 2021.
There are no recent political changes in Japan. However, there have been social movements in the country over various issues, the most recent one being against the Secret Protection Law (Ogawa, 2015). Immediately after the law was passed, protests broke out led by a group known as Students Against Secret Protection Law (SASPL). Members of this group are mostly university students.
Economic Environment in Japan
The economic environment is favorable considering the recent economic growth. There is an increase in exportation, which has increased the country’s economic performance. The level of productivity in different economic sectors has also improved significantly (Statistics Bureau, 2018). While there are always risks of economic recession, the Abe government has adopted effective monetary and fiscal policies that are aimed at countering the risks. The government has also adopted policies that are aimed to encourage foreign investment.
Japan is a politically stable and economically sound country that is ideal for investment. There are no political conflicts in the country that can negatively affect business. On the other hand, the positive economic performance provides an avenue for foreign companies to thrive. Furthermore, the policies adopted by the government have opened the country to foreign investment, providing an opportunity for foreign investors to establish themselves in the country.
Freedom House (2019). Freedom in the world 2019: Japan. Retrieved from https://freedomhouse.org/report/freedom-world/2019/japan
Hahn, E. J. (1983). An overview of the Japanese legal system. Nw. J. Int’l L. & Bus., 5, 517. Retrieved from https://pdfs.semanticscholar.org/4ce2/8913491f935ea2b44a70c4494f482e0cfa83.pdf
IDEA. (2019). Japan. Retrieved from https://www.idea.int/data-tools/country-view/155/40
Kawamura, S. (2013). Introduction to the “Nishida Problem”: Nishida Kitarō’s Political Philosophy and Governmentality. Studies in Multicultural Societies, 15, 1-13. Retrieved from https://afrasia.ryukoku.ac.jp/phase2/english/publication/upfile/wp15.pdf
Ogawa, A. (2015). Japan’s awakening protest movement. Retrieved from http://asaa.asn.au/japans-awakening-protest-movement/
Sasanuma, J. M. (2004). Japanese Electoral Politics: Reform, Results, and Prospects for the Future.
Statistics Bureau (2018). Statistical Handbook of Japan. Ministry of Internal Affairs and Communications Japan. Retrieved from https://www.stat.go.jp/english/data/handbook/pdf/2018all.pdf
The World Bank (2019). GDP per capita (current US$). Retrieved from https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=JP-KR
UNDP (2018). Japan: Human Development Indicators. Retrieved from http://hdr.undp.org/en/countries/profiles/JPN#
World Bank (2018). Gross domestic product, 2018. Retrieved from https://databank.worldbank.org/data/download/GDP.pdf
Yamashiro, J. H. (2013). The social construction of race and minorities in Japan. Sociology Compass, 7(2), 147-161. Retrieved from https://www.researchgate.net/publication/264486971_The_Social_Construction_of_Race_and_Minorities_in_Japan