What was the relationship between economic growth and trade in western Europe and Japan?
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For the most part, both Western Europe (especially West Germany) and Japan relied heavily on trade to create economic growth. During the early years of the post-war period, the United States was the only truly prosperous country. Other countries' growth tended to depend on exports to the US because that is where the consumers were.
The classic example of export-driven development was Japan. They started off selling cheap toys and appliances to US customers. They eventually graduated to supplying us with cars and consumer electronics. By exporting to the US, they built themselves into an economic powerhouse.
Economic relations between Japan and Western Europe have continued to grow since 1980 and in 1991 Japan’s Prime Minister Toshiki Kaifu made the relations official by signing a joint statement of mutual relations with the Dutch prime minister who then headed the European Community Council. Trade between the two entities has continued to grow exponentially except during years when the world’s economy and their individual economies were doing poorly. Japan has been noted to be the 6th largest export and import market to and for the EU seeing economic growth in both regions. The two entities have also established direct investment flows. However, conducting business in Japan has been marred by disputes because of some of the trade barriers making it difficult for foreign businesses to set up operations in Japan.
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