What was the relationship between economic growth and trade in western Europe and Japan?
Economic growth has been stagnant in Japan since the early 1990s. While the Japanese economy grew rapidly after World War II and experienced very fast growth in the 1960s, by the early 1990s, growth stagnated and has stayed relatively flat or negative. For example, in the last quarter of 2016, growth in GDP in Japan was .3%. At the same time, Japan has enjoyed a trade surplus. In the 1990s and early 2000s, Japan had a healthy trade surplus, despite its stagnant economy, and in March of 2017, the trade surplus was JPY 614.7 billion. In the European Union, the growth of the GDP has averaged about 1.7% from 1996 to 2017. Since about 2012, the European Union has had a trade surplus as well. For example, it was €17.8 billion in February 2017. In both regions, a surplus balance of trade has existed alongside slow or stagnant growth.
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.
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.