Japan  

With the unemployment rate at 4% and the inflation at close to zero, the Japanese economy is fundamentally sound, and Japanese workers have access to the largest amount of physical capital. With only 1.5% of loans defaulting and low net interest margins of 1.6 percentage points, the financial sector is efficient and competitive. Japan’s exports are mainly finished products, with the second lowest proportion of raw materials as a share of total exports of any developed nation. Export revenues are low, relative to the cost of imported goods, ranking in the bottom half on this variable, at 72nd. Foreign direct investment accounts for only 1% of Japan’s GDP and could improve further. Household expenditure is very high at 29% of GDP and domestic savings rates are slightly above the international average, reflecting a sound domestic market.

Barriers to entry in Japan are about average, with eight formal procedures required to start a new business. However, with over 145,000 new businesses registered, Japan ranks at a strong eighth, internationally, on this variable. In terms of value added within the service industry, Japan ranks inside the top 20. The high level of bandwidth and the number of secure internet servers available to Japanese internet users indicates a welldeveloped communications infrastructure. With over 40 personal computers per 100 people, Japan ranks inside the top quartile on this variable. Japan has capitalised on its wide availability of technology, putting figures for both ICT and high-tech exports in the top 20, internationally. R&D expenditure is 3.6% of GDP and royalty receipts are also amongst the highest, internationally, meaning that the Japanese are able to capitalise on their intellectual property.

The Japanese political system is highly democratic, with multiple parties competing in free, well-regulated elections, at both executive and legislative levels. The judiciary is independent, which prevents interference in legal proceedings from other branches of the government. With more than 50 years since the last regime change, Japan’s political system can be considered extremely stable. Japanese citizens enjoy full and unconstrained freedom to participate in political processes, but have not yet been afforded the same levels of civil liberties. Ranking eighth on this variable, Japan’s system of political constraints, in place to prevent political leaders from acting rashly or arbitrarily, are amongst the most stringent in the international community.

Japan has 100% primary school enrolment and enrolment rates in terms of secondary and tertiary education are also high, placing Japan 17th and 28th on these latter variables. The quality of education, as measured by the teacher to pupil ratio, ranks Japan 47th on this variable, with 19 students per teacher. There is a perfect gender parity, indicating equal opportunity in Japanese schools. A Japanese worker benefits from, on average, 5.6 years of secondary and 4.6 years of tertiary schooling, suggesting strong levels of human capital. Over $9,000 is spent per student in Japan, ranking Japan’s educational expenditure amongst the top 20 internationally.

Japan has the highest number of hospital beds and above average proportions of medical professionals per capita, as well as the highest health-adjusted life expectancy, of all countries. As one would expect only 3% of the Japanese population is undernourished and infant mortality rates are the second lowest, with only three deaths before the age of one per 1,000 live births. Japanese citizens are very optimistic about their health: only 17% of people reported having debilitating health issues, a high proportion said that they felt well rested, and only 17% reported that they had felt pain throughout the day, the day before being surveyed, ranking Japan in the top 10% on these variables.* Although all Japanese citizens have access to improved sanitation facilities, only 77% are satisfied with the water quality and only 71% of people are satisfied with their health, ranking Japan very low at 90th.*

Japan has few or no security challenges related to refugees or human flight and insecurity caused by government-sponsored violence, and political imprisonment is minimal. There are some challenges related to groups with a history of discrimination or other grievances, which rank Japan 20th on this variable. Crime rates are very low in Japan, with extremely low reported instances of homicide, assault, and theft.* Despite this, only 65% of people feel safe walking alone after dark, which ranks Japan at 46th on this variable.*

The rule of law in Japan is enforced universally, with very few exceptions, ranking the country inside the top 20 countries on this variable. Similarly, the quality of regulation in economic and commercial sectors is high, placing Japan just inside the top third for this measure. Government is moderately effective when implementing changes set out by political leaders, placing Japan 43rd, globally. Three out of four Japanese citizens think that local businesses and the local government are corrupt, ranking the country within the top 40 on both variables. Six out of 10 Japanese respondents said that they had confidence in the judicial system, 54% thought that elections were honest, and 71% had trust in the military, ranking Japan near international averages on these variables.*

Japanese citizens have unconstrained freedom to practise their religious beliefs, speak freely without fear of government censorship, and travel freely within and out of their own country. Further, 83% of respondents were satisfied with the freedoms afforded to them in their daily lives.* Tolerance of ethnic minorities and immigrants is around the international average, with 64% of people believing Japan to be a good place for immigrants to live, and 61% believing it to be good for ethnic minorities.*

Despite displaying a well above average amount of trust in other people, ranking Japan 19th on this variable, social capital in group networks is low.* While a quarter of the Japanese population volunteered their time, 29% donated and 28% helped strangers, ranking below the global averages on the latter variables.* Japanese citizens find friends to be very important and 93% believe that they can rely on family and friends in times of need, positioning Japan 20th on the latter factor.*

* Data taken from the Gallup World Poll

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