The seven largest export nations account for nearly fifty percent of the world exports. (see graph 1). International trade is often at the center of economic policy. International trade enables nations to specialize their production, enhance their resources, productivity, and acquire more goods and services. Sovereign nations can gain by specializing in the products they can produce with greatest relative efficiency and by trading for the goods they cannot produce it's efficiently. The distribution of natural, human, and capital resources among nations is unevenly nations differ in their endowments of economic resources. Efficient production of various goods requires different technologies or combinations of resources (McConnell Brue 730).
b. Why does Japan Trade?.
i. Pre-WWII.
World War I permitted Japan, which fought on the side of the victorious Allies, to expand its influence in Asia and its territorial holdings in the Pacific. Acting virtually independently of the civil government, the Japanese navy seized Germany's Micronesian colonies. .
ii. Post WWII.
International trade and industry was a very powerful influence in Japanese government 1950-1970. It made Japan a centrally-managed economy, funding research and directing investment . " MITI was created with the split of the Ministry of Commerce and Industry in May of 1949 and given the mission for coordinating international trade policy with other groups, such as the Bank of Japan the Economic Planning Agency, and the various commerce-related cabinet ministries. " (Japan 101). This whole agency was created while Japan was still recovering from World War II. " With inflation rising and productivity failing to keep up, the government sought a better mechanism for reviving the Japanese economy" (Japan 101). The postwar era brought Japan unprecedented prosperity. Japan went to the peace conference at Versailles in 1919 as one of the great military and industrial powers of the world and received official recognition as one of the "Big Five" of the new international order.
