In the following decade, however, the scheme changes since cross-national, cross regional, and multinational transaction happens every day, posing an inadequacy to the previous method of selecting laws and regulations applied. Considering the frequency of foreign transactions, it is a tremendous waste of time and energy to dispute about the basic rules implied in every transaction practiced. The need of a basic set of rules and regulations, which can be implied in every multinational transaction, grew from the vast developing idea of globalization.
The situation, once the rule is in effect, becomes the basis for conducting international trade whether it is bilateral or multilateral. We learnt from historical texts that trade have taken part since the existence of human being. While trade is not limited within countries, it develops into what we know as international trade or trade between countries. Paul Krugman and Maurice Obstfeld (1997) say that countries engage in international trade for two basic reasons. First, countries trade because they are different from each other.
Therefore, nations, like individuals can benefit from their differences by reaching an arrangement in which each does the things it does relatively well. Second, countries trade to achieve economies of scale in production. I. 2 Trade Restrictions However, while the benefits of conducting international trade are large, there are people, especially politicians of any countries to provide trade restrictions for some reasons such as unequal internal distribution of the gains from trade, national security and many others.
In fact, economists believe that the benefits of free trade outweigh the disadvantages that might occur. They have several underlying reasons: 1. Free Trade Increases Total Output In this manner, free trade increases output and welfare for the world as a whole. 2. International Trade Provides Competition Under such circumstances, international trade will force producers to operate efficiently, innovate and improve, while keep price down. 3.
Restrictions Based on National Security are often Abused or Evaded Economists believe that trade restrictions are often extended to goods that have little relation to national security. Based on the fact, there should not be any trade restrictions since international trade actually will promote efficiency of industries in a country by increasing competition and finding their own competitive advantage, which in turn favours the industries to spawn many innovative products or services.
Concerning the issue of international trade, this paper will elaborate the economic relations (trade, investments, and technology transfer) between Japan and the three major Asian economies: China, South Korea, and Taiwan. II. Economy of Japan Central Intelligence Agency (CIA, 2006) reveals that as of July 2006, Japan has about 127,463,611 citizens. With land areas about 374,744 square kilometre and water areas about 3,091 square kilometres, Japan has grown into becoming one of powerful economy in the world.
Historically, things that help Japan to be the powerful economy after the U. S. and China are the presence of government-industry cooperation, strong work attitude and ethic, mastery in developing high-tech industries, and a relatively small defence allocation accounts for 1% of countrys GDP (CIA, 2006). The Agency also reveals that key strength of the Japanese economy is the cooperation between manufacturers, suppliers, and distributors, which is called keiretsu. In addition, Japanese also features attractive employment scheme such as the guaranteed of lifetime employment for the urban labour forces (CIA, 2006).