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Political Indicators Political Stability Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: "Japan's current domestic goal is to strengthen the political party system. In recent years, a series of scandals have damaged the integrity of not only individual politicians, but also entire parties" (Fraser). Since the 1970's, there have been several changes in the government due to all the scandals. Since 1996, stability has been restored to the political system due to the election of Ryuturo Hashimoto (Fraser). Japan's government strongly distanced itself from communist countries during the Cold War but now currently has ties to several Asian countries. Lately Japan has developed a more 'westernized' approach in regards to its political system, and things will continue to get better due to an increased public trust in the current majority, the liberal democrats.

Even though Japan has a multi-party system, it has generally been dominated recently by this party. The government is divided into three branches, and the liberal democrats hold a majority of the seats in the legislative branch (Fraser). Japan will continue to incorporate a more global approach to its policies and model their political structures and policies on the west. This has worked as no major scandals have occurred in the past ten years, and politics there will become more stable. Public Policies Impacting Foreign Direct Investment Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: All the major policies regarding business in Japan are decided by 12 ministries in Tokyo, and then local governments implement them ("1996 Country Commercial Guide"). They have power over the Japanese economy with the thousands of required licenses, permits, and approvals that regulate business there.

"Although Japanese businesses have prospered for many years in a tightly regulated environment, in Japan's current recession, they are now calling for deregulation because they can deal with foreign competition and that the government's over-regulation is only protecting inefficient small companies while forcing manufacturing to move offshore" ("1996 Country Commercial Guide"). American companies initially start at a disadvantage in Japan, but become successful after a short period of time when a presence has been established. A little over 200 of the U.S. Fortune 500 companies have a direct investment in Japan, and 45 of the 50 leading exporters in the U.S. do so as well ("1996 Country Commercial Guide"). The government in Japan has removed most of the legal restrictions on exports to and from the foreign investment there and is currently seeking ways to increase this trade ("1996 Country Commercial Guide").

"The U.S. and Japanese governments continue to work on removing anti-competitive and exclusionary business practices through bilateral dialogue" ("1996 Country Commercial Guide"). The average tariff in Japan is now one of the worlds lowest. The country expanded their list of duty-free manufactured products by 2400 items out of 7000 items listed on the tariff schedule ("1996 Country Commercial Guide"). In addition to customs, there is a 3% tax on all goods sold in Japan and payment is required at the time of import.

The statistics prove that U.S. firms in Japan are very successful; this trend will most definitely continue as relations between the two countries will only get better. Views of Political Leaders Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan has several major political parties with differing views including the: Liberal Democratic Party, Democratic Party, Social Democratic Party, Liberal Party, Communist Party, Heiwa Kaikuku, Komei, and Sakigake (Ito). Liberal Democratic Party: This has been the most dominant party in the last 40 years. Despite the name, the party is conservative and protects business interests.

The LDP controls 101 seats in the upper house and 263 in the lower house (Ito). Democratic Party: The Democratic Party is the largest opposition of Japan's bicameral system. They are interested in seeking more open markets, greater deregulation and tax cuts. The Democratic Party has 47 seats in the upper house and 92 in the lower house (Ito). Social Democratic Party: This political group is strongly opposed to the Liberal Democratic Party with views on expanding Japan's military role and strengthening relations between the U.S. Support for the party was gained through unions, but they have recently waned; seats in the upper house are 13 while having 15 in the lower house (Ito).

Liberal Party: The Liberal Party believes in deregulation and more of a participation in government affairs controlling 12 seats in the upper house and 40 in the lower house (Ito). Communist Party, Heiwa, Kaikuku, Komei, Sakigake: These parties have few seats in Japan's bicameral legislative system whose views are independent of other major parties. The political system and views of Japan are similar to those of the United States, except for the fact that they have more active parties in power, with one holding a very large majority, the Liberal Democratic Party. Having such a dominant party is not good for change, but Japan has maintained government stability and should continue to do so for years to come. Major Political Events Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The realignment of the Japanese political system, which began in the early 90's, is continuing today and is the only major political event that has changed the face of Japanese politics. It will probably take several years before all the consequences of the new electoral system for the Lower House of the National Diet make itself felt ("1996 Country Commercial Guide").

Most believe that Japan will continue to be governed by coalitions as the political landscape continues to evolve. The Liberal Democratic Party has been in control for about ten years and continues to introduce conservative bills catering to interests of businesses. The political landscape looks to remain stable for several years. Democracy Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan has a very strong democratic system because it believes in respecting human rights much like the United States. The role of the Emperor is merely symbolic such as the Queen of England. A parliamentary form of government exists in Japan with a head of government, the prime minister which is elected by parliament, and the National Diet ("1996 Country Commercial Guide").

Elections for the prime minister take place in the Lower House, the more powerful legislative house, and are held once every four years ("1996 Country Commercial Guide"). Upper house elections are every three years. Citizens of Japan do not have a say in the selection of the prime minister or elections in the National Diet. However, politicians respect the values and beliefs of individuals and this trust is what guides them. Of course, corruption occurs in Japan just as it does in the United States, and politicians in the U.S. are supposed to carry out the wishes of citizens just like Japan. Tensions between U.S. and Japan Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The relationship with Japan and the United States is characterized by a close cooperation on many important issues and is anchored by the U.S. - Japan Security Treaty ("1996 Country Commercial").

The policies of Japan compliment those of the United States. These two countries are currently working together to tackle problems such as AIDS, growth of the population, and environment protection. Excellent relations exist between Japan and the U.S. and they will only get closer. Support for Current Government Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The only series of movements that were due to distrust of government policies occurred in the 60's and 70' when Japan was growing at a phenomenal rate which caused severe pollution (McCargo 146).

Government acted quickly to impose laws restricting pollution and catered to the needs of the people. By the time the 1980's came, the government was clearly supported. In the mid-1980's, the Liberal Democratic Party had acted to make accommodations for citizens by adjusting policies for everyone's best interest (McCargo 148). Since the late 80's there have been little to no protests against the government, due to them hearing citizen's issues and acting upon them quickly.

A trust has been created between the people and the government, and it still continues today. Influence of Anti-Business Groups Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The economy is doing very well in Japan, therefore there are not many anti-business groups. The majority LDP party supports the interests of business and so do most of the other political parties in Japan (Ito). Once again loyalty comes into play as it is part of Japanese culture; citizens are loyal to government as government is loyal to citizens.

Businesses provide individuals with lifelong job and acceptable living conditions. This trend has occurred several years ago and will definitely continue in the future as long as the Japanese economy is stable. Public Opinion of Foreign Ownership Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japanese are open to FDI and the government has liberalized the process. In 1991, the government of Japan amended several foreign trade laws so businesses do not need "prior notification" for non-restricted industries but the same rules apply to restricted industries such as the petroleum industry ("1996 Country Commercial Guide").

In the sectors that require "prior notification", the Japanese government can restrict the entrance of foreign business if it feels that it will affect the performance of the economy. Business parks in Tokyo, Osaka, and Nagoya constantly seek opportunities of foreign businesses. Also, in 1994, several laws were changed to encourage foreign retailers in Japan which included the changing of the closing time, the raising of a reporting obligation from 500 square meters to 1000 square meters, and a reduction of the number of annual closing days ("1996 Country Commercial Guide"). Since land is scarce, there are still restrictions on foreigners acquiring land and real estate; lease and rental of existing buildings is preferred. Another investment incentive is the lenience of government towards business tax treatment. The people of Japan support foreign investment because it encourages business and provides several employment opportunities.

Japan has grown to what it is today also due to the fact that firms have invested in the country, and in order to keep business growing in Japan, FDI needs to be encouraged. The Japanese government and citizens will continue to support FDI for a long time to come. External Threats of War Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: "Japan is reshaping its military forces as it attempts to tackle a perceived nuclear threat from North Korea and strengthen its role in multinational peacekeeping operations" (Tiron). Due to this, parliament recently passed a series of bills that gave the government an increase of power in military emergencies. North Korea has the ability to launch nuclear warheads at Japan, and has previously launched tests over Japan's airspace. Japan is currently devising a military expansion plan that could be used to help defend the country against North Korea or China (Brooke).

These countries are both sensitive to this idea. Toshiyuki Shibata, a defense analyst says that the major threats at the moment are guerillas, refugees, or missiles from North Korea as well as terrorism and also the long term interests of Japan and China will collide (Brooke). China has nothing to gain from an attack on Japan, due to Japan being a major investor in the country, but conflict may arise over the island of Taiwan (Cortazzi). The country may not have an immediate threat of war, but failing talks with North Korea to cease their nuclear program are not a good sign. The U.S. will protect Japan under a nuclear attack, but since the stakes are extremely large, danger remains unpredictable. Economic Indicators Economic Growth Rates Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: As of January 4th, 2004, Japan's GDP growth was 2.3% ("Global Statistics").

Japan had a very strong economic growth period from the 60's all the way up to the 80's, but it slowed severely in the 90's (1.7%) due to over investment. The government tried to revive the economy, but that failed due to the global recession from 2000-2003. The economic growth rate of 2004 in Japan was the highest recorded since 1996, but that was due to an exceptional 1st quarter, but a lackluster 2nd, 3rd, and 4th quarter (Jones). The factor that is currently helping Japan is the double digit rises in exports that began in 2003.

"The positive effect of rising exports on profits has been magnified by corporate restructuring that has reduced costs, particularly through cuts in employment and wages, and improved balance sheets boosting profits in 2002-2003 with more gains in 2004" (Jones). These improved conditions have driven investment up to 6% (Jones). The economy should rebound in 2005 due to favorable monetary conditions, continued world trade growth, and rising profits. The slowdown in 2004 was mostly attributed to the rising cost of oil. Growth in Japan's export market is expected to continue at double digit rates in 2005 and 2006 (Jones). Inflation Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The inflation rate of Japan in the last several years has basically remained unchanged only deviating +-0.6%.

The current inflation rate is -0.3% ("Japan Inflation Rates"). This deflation is mainly due to a decline in economic growth, a decline in earnings, and an increase in the unemployment rate. "Concerns about inflation have caused the Bank of Japan to attempt to 'reflate' the Japanese economy in recent months" ("The Wizard of Oz Visits Japan"). Something needs to be done to change this trend or else consumers and businesses will expect deflation to continue and not spend. If all think that prices will fall, it will lead to a reduction in demand, leading to lower prices ("The Wizard of Oz Visits Japan"). The deficit of the Japanese government is only getting bigger, and there are no signs that the policies the Bank of Japan is implementing are working.

Deflation will most likely continue on the same path as it has in the past 5 years, but increased unemployment and an aging society will not help. Unemployment Rates Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: As of February 2005, the unemployment rate was 4.7%, rising from 4.5% in January ("Japan's Jobless Rate Rises"). In the same period of time, consumer spending fell and the job-to-applicant ratio stayed unchanged at 0.91 ("Japan's Jobless Rate Rises"). This slight increase is not a current worry because an export-led economic recovery has increased profits for many corporations and in turn helped boost employment.

The unemployment rate has been marginally decreasing and this trend is expected to continue. Current U.S. unemployment is at 5.2%, so the Japanese do not have much to worry about ("Employment Situation Summary"). The economy will continue to improve due to the increase of exporting. Investment Policies Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The Japanese government is open to investment from foreign firms. In 1991, Japan modified many foreign trade laws so businesses do not need "prior notification" for non-restricted industries but the same rules apply to restricted industries such as the petroleum industry ("1996 Country Commercial Guide").

Another investment incentive is the lenience of government towards tax treatment. The relationships between banks and companies in Japan are much closer than those of the U.S. Banks take an interest in the operations of the firm and this unique relationship is a longstanding one; Japanese companies rarely changes banks and would probably not 'shop around' for better credit deals ("1996 Country Commercial Guide"). For U.S. companies, teaming up with a Japanese partner in a joint venture will be advantageous in receiving preferential treatment from Japanese banks. Also, when a bank in Japan lends money to a foreign owned company, they check the credit status of the parent company before the loan goes through. These policies will most likely continue as some are traditional and others cater to outside companies to revive the recently stagnant Japanese economy.

Fiscal Policies Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Corporate tax rates have dramatically lowered from around 50% in the early 90's to 30% in 2003 ("The Changing Climate for FDI into Japan"). The government has reduced rates to encourage growth, foreign investment, and profitability in the corporate sector. Government revenues as of 2003 were $1.327 trillion, but budget expenditures are $1.646 trillion (Central Intelligence Agency). This has been a major problem since the early 1990's as the current budget deficit is 150% of GDP, where in 1993 it was less than 70% (Mieko). In 10 years the deficit has more than doubled.

"Since August 1992, large-scale economic measures have been undertaken, more than 12 supplemental budgets adopted, permanent tax cuts implemented, and an economic stimulus plan to boost public investment was enacted; but none produced the anticipated economic effects" (Mieko). Recent budgets have proposed severe cuts on civic construction spending and services (Hennock). The government understands that due to the sluggish economy, revenues are not as high, and spending still needs to be increased for the well-being of society, thus creating a very large deficit. Officials are taking measures to curb all possible costs, and the current improvement of the economy should drive down the deficit. Tax rates have also been reduced to encourage investment.

Foreign Debt Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan has had absolutely no foreign debt for the past couple of decades; countries actually owe them money (Ostrom). Moody's Investor Services rating agency lifted Japan's foreign debt rating to triple-A, only three other countries in the world are at this high level (Brinsden). This trend will definitely continue for several decades to come. Infrastructure Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan has an excellent infrastructure of highways, roads, railroads, airports, harbors, telecommunications and warehouses for distribution of all types of goods and services ("1996 Country Commercial Guide"). The expansion of public works projects have decreased recently due to cuts in the national budget. Even though such a fully developed system exists, there is still a major problem in the physical infrastructure of Japan which hinders the distribution of goods.

This is mainly due to the over-centralization of large cities, high prices for land, and regulations rest rioting the size of stores. Retail space in Japanese stores is small, requiring the constant delivery of products from wholesalers which constantly drive through the narrow roads of the city's congesting traffic. Over congestion is a problem that cannot be alleviated, but only dealt with. New regulations have raised the size of stores, but they are still small compared to other countries. Remittance of Earnings Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan has no restriction on the inward or outward flow of cash as it is a member of G 7 ("The G 7 Members"). Policy will most definitely not change in the near future.

Per Capita Income Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Japan's GNP per capita is number 5 compared to the rest of the world and right behind the United States at $34,510 in 2003 ("Global Income Per Capita 2004"). The country also has a very large middle class with only 4.8% receiving the lowest 10% of income while 21.7% receive the highest 10% of income. Income is distributed evenly across the entire population This trend has generally continued from the post-war period, and Japan will continue to rank in the top five in terms of per capita income. Competitive Forces Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: American companies' direct investment position in Japan ranks fourth (Alexander).

The only countries that lead Japan are the UK, Canada, and Germany. Investment there is large in size, grows rapidly, and offers high returns. The desire to invest in Japan is very strong because it is one of the world's largest economies with a high standard of living and great infrastructure system. "Additionally, technology and productivity are distributed unevenly across sectors; this means that profitable opportunities exist for foreign companies that have developed innovative products, services, and methods elsewhere" (Alexander). The government also encourages investment by offering several tax breaks and other incentives. Competition in Japan is much like competition in the United States; the ultimate survivor is the one that offers the best product at the best price.

Due to its democracy, Japan is a competitive society with several opportunities for investment. This will hold true in the future as the government has recently offered several new incentives for foreign firms Social / Cultural IndicatorsEducationRating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Schools in Japan are praised for their success and Japanese students are in the top on international tables in areas including literacy, numeracy, and scientific knowledge. This is a result of a highly demanding system which is organized around entrance exams. There is enormous pressure to succeed in them because many companies look at the results of these tests (McCargo, 129). Males tend to go to school longer than females, 15 versus 14 years, a figure that is opposite of the United States ("Social Indicators").

Japan spends $139 billion on education, but the United States spends more at $500 billion ("Worldwide Education and Library Spending"). Japan also lags behind in expenditure on education in relation to GDP by tallying in at 1.1% while the United States spends 4.8%, but spending on education has remained virtually flat in the last 15 years ("Japan's Education at a Glance 2004"). Considering spending has remained the same along with near top ranks on educational factors, Japan's education system leaves little room for changeCrimeRating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The crime rate in Japan is rising gradually, but is still low. "The per murder capita rate in the United States is about six times that of Japan's" ("Crime Rate for Different Countries"). Total robberies in 1999 for the entire country were 4,237, with 2.71 robberies per 100,000 while compared to the United States at 169.02 ("Crime Rate for Different Countries"). Murders are still low with Japan having.

58 murders per 100,000 people versus the United States at 6.32 per 100,000 people. Japan has one of the lowest crime rates, but it is rising slowly only in comparison with its population increase. There are no imminent threats of extreme violence since historically crime has been very low. Labor Force Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Employees in Japan generally work for a company throughout their entire lifetime.

An employee is provided with job security until around the age of 55 (McCargo 48). Pay is determined by seniority and not by merit, but the opposite side to all this is that sometimes workers have to be loyal to their company. This loyalty includes working unpaid overtime, accepting transfers, and not working for competitors. Also, most Japanese employees receive around 40% of their annual salaries from bonuses (McCargo 48). The system the Japanese have is far different from the United States where people undergo multiple career changes, must be paid for all their time worked, and can decided whatever they want on decisions regarding the company.

Skilled workers account for about 60% of the workforce while the rest are unskilled. In 2003, there were 66.66 million people in the work force, . 3% less than last year; this rate has been decreasing for the past five years ("Statistical Handbook of Japan"). This is due to a steady increase in unemployment, but it is still lower than the United States: 5.3% versus 6% (Central Intelligence Agency). Employment in the past 15 years of primary and secondary industry (agriculture, manufacturing, etc.) has gone down while tertiary industry (communications, real estate, etc.) has gone up due to advancements in the field of information communications, service-oriented activities, declining births, and the aging of the society ("Statistical Handbook of Japan"). There are far more labor unions in Japan than the United States.

While labor disputes have generally gone down over the past 20 years, they are still higher than the US at 209 disputes in 1995 lasting a combined 77 thousand days versus 31 disputes lasting a combined 5.7 million days (McCargo 48). Japanese tend to resolve issues quicker than Americans. There is room for improvement in Japan, but statistics show that all these trends will continue at the same pace, not making much room for either enhancement or retrenchment. Ethnic Conflict Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: There used to be an ethnic conflict with the Ainu minority and the Japanese majority. They make up less than 5% of the Japanese population and are not "pure blooded" Japanese (Dabb).

Many rights to them have been denied due to their differing heritage up until the 1960's, where they eradicated their culture. The UN has pressured Japan recently to recognize them as an ethnic minority. The Koreans are the largest ethnic minority in Japan. Japanese firms refuse jobs to Koreans due to their foreign citizenship and are immediately expelled or dismissed when discovered (Yi). More discrimination occurs with the Koreans and the police, and entrance to schools, therefore bringing about a high unemployment rate among them. Even though Japan has a past of discrimination, they have recently passed some new laws making certain practices illegal, but inequity still exists today and will most likely continue to exist in the future since most of the Japanese favor a homogeneous society.

Continued pressure from the UN will make them pass new laws against the profiling. Social Cohesion Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: There is no main problem in the social cohesion of the Japanese. "There are low divorce rates, exceptional longevity, cost-effective health care and welfare systems, a high degree of popular satisfaction, widespread self-identification as middle class, an increasing recognition of women's roles in the workforce, improving conditions for minority groups, and growing internationalization" (McCargo 77-78). Most Japanese people reject a class based system and roughly 75% identify themselves as middle class. Individuals in Japan highly praise merit as well. Considering there is no main problem in Japan between groups of people, there remains little disagreement since most are satisfied with their lives.

This trend will continue to exist. Quality of Life Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: The Japanese have exceptional longevity, with life expectancy at birth to be 81.04 years, the fourth highest in the world (Central Intelligence Agency). The country is also ranked as the fourth most developed country in the world (Byrnes). Japan is a very dense country with 333 people per square mile as opposed to the United States with 28 people per square mile (Byrnes). On average, retail prices in New York are only 75% of what they are in Japan, making the country very expensive.

People in the United States also have a larger average for housing floor space with 691 square feet compared to 323 square feet. Japan fares worse than the U.S. in these factors: per capita GDP, amount of leisure time, housing conditions, and social conditions; other aspects make it better than the U.S. : affordable public transportation, less crime, lower infant mortality rates, less family income inequality, lower divorce rates, and better health insurance (Byrnes). About 75% of people are currently satisfied with their life while about 25% are dissatisfied. Given future trends, it looks like the satisfied number will grow smaller. Japanese are also changing their diets which will result in more cardiovascular disease along with higher smoking rates in young women.

If Japanese life expectancy and low birthrate continue, the country will have only half of its present population at the end of the 21st century (McCargo 75). The population is also aging very quickly due to an ever growing elderly population. Family Stability Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Traditionally Japan has an extended family structure, making it common for three generations to live in the same household. They live in much more crowded conditions than in Europe and North America. The average ages of marriage of the Japanese have risen from 26.6 for men and 23.8 for women in 1955, to 29.4 for men and 27.6 for women in 2003 (McCargo 62).

Dropout rate for high school students in Japan is only 2.2% (McCargo 62). The country also has a very low birthrate at only 9.56 births per 1000 people, and it keeps declining yearly (Central Intelligence Agency). Japan's number of divorces in 2003 were 283,906, or 2.25 per 100 people as opposed to 5.9 per 1000 people for marriages. ("Statistical Handbook of Japan") Trends show that the number of households in Japan have increased from 30,297 in 1970 to 46,782 in 2000, but members per household have decreased due to the low birthrates and aging of the population ("Statistical handbook of Japan"). Overall, these statistics are right on track with more developed and industrialized societies, and are fairly stable. Bribery Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: According to statistics in 1997, about 170 government officials were under arrest, 150 of which were accused of taking bribes (Hasegawa).

Cases in which public officials are involved with bribery are few but most bribery instances are carefully planned. When nominations are made on bids for government contracts, the contractors usually bribe the government officials for a more favorable chance. Even though much bribery exists, Japan has a special investigation department which tries to interrupt bribes that are in progress as well as strict penal codes. It can be seen that strict laws work because Japan now ranks 24th in the global corruption index, its lowest level in five years. In general, the same amount of corruption occurs in the US as it does in Japan, just between different people. This bribery and corruption trend will most likely tend to decrease since it has been decreasing for the past 5 years.

Cultural Barriers Rating: 2005: 1 2 3 4 5 6 72010: 1 2 3 4 5 6 7 Analysis: Language and cultural differences are a major problem for relations with the Japanese and United States. A joint venture operation is needed to relate to firms in Japan. Individuals take pride in their culture and have done so for generations leaving very little room for change, but in order to do business internationally, many firms are starting to take measures to deal with foreigners. Overall Summary Overall Summary for Japan Political Indicators Current (2005) 5 Year Forecast (2010) 1. Political Stability 6 72. Public Policies Impacting F.D.I. 6 73.

Views of Political Leaders 6 64. Major Political Events 6 65. Democracy 7 76. Tensions with U.S. 7 77. Support for Current Government 7 78. Influence of Anti-Business Groups 7 79.

Public Opinion of Foreign Ownership 7 710. External Threats of War 6 4 Total: 65 65 Average: 6.5 6.5 Rating: Low Risk Economic Indicators Current (2005) 5 Year Forecast (2010) 1. Economic Growth Rates 5 62. Inflation 6 53.

Unemployment Rates 6 64. Investment Policies 7 75. Fiscal Policies 5 66. Foreign Debt 7 77.

Infrastructure 6 68. Remittance of Earnings 7 79. Per Capita Income 7 710. Competitive Forces 7 7 Total: 63 64 Average: 6.3 6.4 Rating: Low Risk Social Indicators Current (2005) 5 Year Forecast (2010) 1. Education 7 72. Crime 7 73.

Labor Force 6 64. Ethnic Conflict 5 65. Social Cohesion 7 76. Quality of Life 6 57.

Family Stability 6 68. Bribery 5 69. Cultural Barriers 4 5 Total: 53 55 Average: 5.9 6.1 Rating: Low Risk Summary Analysis Overall Total: 181 Country Average: (181 / 29) 6.24 Rating: Low RiskComaprison: o Ranked 24th in global corruption o Ranked 6th in lowest inflation (-0.3%) o Ranked 3rd in lowest infant mortality rate (3.3 per 1000) o Ranked 4th in life expectancy (81.0) o Ranked 4th in most developed country of the world One of the densest countries Per capita murder rate in Japan is 6 times lower than that of the U.S. o 1.1% of GDP for education in Japan versus 4.8% for the U.S. o Ranked 4th in direct investment o Ranked 5th in GNP per capital Ranked Triple-A from Moody's on foreign deb to Member of G 7 Summary: Japan continues to be a very eye-catching country for direct investment as it is ranked 4th compared to the rest of the world in investment. The country is politically stable with government policies encouraging investment from abroad. It is also very democratic much like the United States, and both countries are aligned with one another. There are not many anti-business groups because society encourages business as well as the majority Liberal Democratic Party.

Japan is currently devising a military expansion plan due to a perceived nuclear threat from North Korea. The economy is currently undergoing a decent growth rate of 2.3%. There have been many attempts to revive the economy due to the recession of the 90's, but lately businesses have been successful due to an increase in exports. Deflation is currently occurring due to lack of consumer spending and unemployment rates are still low at 4.7%. Once again the government is very comforting to investment in Japan in order to help the economy, and they have recently lowered corporate tax rates and amended laws to accommodate businesses.

The country has absolutely no foreign debt and a great infrastructure. Education in Japan is ranked among the highest in the world, with also a very low crime rate. This creates an excellent workforce that is dedicated in working for a company its entire life. Society in Japan is generally cohesive, with a high quality of life, low divorce rates, and high longevity. The only barrier in Japan is the language and culture since many are keen on tradition. Overall, all ratings on political, economic, and social indicators will increase in the next 5 years.

The government is doing a lot to encourage investment and spending. Society is very stable and focused on tradition and loyalty. The economy is currently lackluster but shows hope for the future. Japan will only continue to become more attractive. End Notes End Notes Following are pictures that represent Japanese culture and infrastructure: A typical Japanese city courtesy of. netA bridge in Kobe, Japan courtesy of katha r. comA Japanese eatery courtesy of. orgA cramped bedroom courtesy of. org Narrow roads and pathways courtesy of. orgA train station in Harajuku, Japan courtesy of. comA skyline of Igor, Japan courtesy of ch anime. na rod. ru A canal in Asakusa, Japan courtesy of. com Bibliography

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