International Trade Report: Economic Development of Japan and Thailand

This report provides an analysis of international trade, with a specific focus on the economic landscapes of Japan and Thailand. It begins with an economic overview of both nations, highlighting key export items and economic indicators. The report then delves into globalization measures, using the trade-to-GDP ratio as a primary indicator of economic integration. It further examines the degree of openness in Thailand and Japan, illustrating trends with data from 1985 to 2005. A key section explores the relationship between economic development and openness, providing correlation coefficients for both countries. The report concludes by examining the drivers of openness in each nation, detailing the trade policies and historical events that have shaped their international trade strategies, including the impact of financial crises and trade liberalization efforts. The analysis is supported by references to relevant academic literature.

Running head: INTERNATIONAL TRADE
International Trade
Name of the Student
Name of the University
Course ID

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Table of Contents
Answer 1....................................................................................................................................2
Economic overview of Japan and Thailand...........................................................................2
Answer 2....................................................................................................................................2
Globalization measures..........................................................................................................2
Answer 3....................................................................................................................................3
Degree of openness in Thailand and Japan............................................................................3
Answer 4....................................................................................................................................4
Relation between economic development and openness.......................................................4
Answer 5....................................................................................................................................5
Drivers of openness in Thailand and Japan............................................................................5
List of References......................................................................................................................7

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Answer 1
Economic overview of Japan and Thailand
Japan is known as an island country located in East Asia. The country is situated in
Pacific Asian and lies off the eastern region of Asian continent. The national boundary of
Japan extends from Sea of Okhotsk in north to Philippine Sea in the south and to China Sea
in the east. Japan’s economy is one of the highly developed nations based on the principles of
market economy (Lockwood 2015). Japan is an open economy importing and exporting bulk
amount of goods. Primary exports of Japan include Cars, Integrated Circuits, Vehicle parts,
Machinery having different function, industrial printers and others. Japan, the third largest
economy is one of the richest nations of the world.
Thailand is located in the Asian continent covering 510890 kilometers land area and
2230 kilometers water area. The west and north east of the nation are bordered by Myanmar.
In the south west of Japan there is Andaman Sea, east and north east of the nation are covered
by Lao PDR, and Cambodia is situated in south east of Thailand. The main exported items of
Thailand are parts of office machines, integrated circuits, cars, delivery trucks, broadcasting
equipment and others (Jomo 2019). The second largest economy of Southeast Asia, Thailand
is counted as one of the richest nations in the world.
Answer 2
Globalization measures
The ratio of trade to GDP measures one form of economic globalization capturing
integration in the global economy. Trade/GDP of a nation measures share of total exported
and imported goods in gross domestic product of a nation. The measure actually shows
proportion of total production moving across the border (Surugiu and Surugiu 2015).
International trade is one important indicator that captures integration of a nation with the

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global economy. As the ratio of trade to GDP shows cross border movement of goods and
services, this is taken as an indicator of globalization.
Other than trade/GDP, there are other measures that can be considered as a
globalization measure. Some of the measures related to globalization include inflow and
outflow of investment, transaction of foreign exchange, international tourism, foreign
remittances, credits and debit amount of Balance of payment, share of foreign multinationals
in domestic output and others (Hirst, Thompson and Bromley 2015).
Despite different other measures of globalization, openness is more useful than any
other measures because of easy availability of data related to degree of openness. The
measure is also relatively easy to interpret and hence, give a clear indication of openness.
Answer 3
Degree of openness in Thailand and Japan
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
40
60
80
100
120
140
160
Openness in Thailand
Year
Trade/GDP
Figure 1: Trend in Trade/GDP in Thailand

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1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
15
17
19
21
23
25
27
29
Openness in Japan
Year
Trade/GDP
Figure 2: Figure 1: Trend in Trade/GDP in Thailand
Openness measured by share of trade in GDP shows a steady upward rising trend for
Thailand. This implies from 1985 to 2005, percentage share of trade in GDP increased
overtime meaning that overtime has become more open. For Japan, openness declined in the
initial years. After 1994, trade share in the GDP started to increase making Japan more and
more open. Since 1999, openness of Japan increased at a much faster rate.
Answer 4
Relation between economic development and openness
Increasing participation in trade is generally beneficial for a nation which contributes
to economic growth and development. This can be understood from examining the
correlation coefficient between openness and economic development. For Thailand, the
correlation coefficient between economic development and openness is 0.91. The positive
correlation indicates positive association between degree of openness and economic
development of Thailand. The correlation closer to 1 suggesting a strong association between
trade and economic prosperity. The estimated correlation coefficient for Japan is 0.24. The

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value of correlation coefficient suggest a positive but weak relation between economic
openness and per capita GDP.
Answer 5
Drivers of openness in Thailand and Japan
The trade policy development of Thailand has resulted from a number of different
transformation. In order to promote trade, government during 1980s adapted policies
supporting export promotion. The policy towards economic openness was taken in order to
rescue the economy from the economic recession. Several policies were implemented in
order to promote export competitiveness. Industries producing for domestic market were
encouraged to in an industrial processing zone for developing export market. Government
also set up import and export bank in order to support, finance and facilitate export and
import entrepreneurs (Le, Kim and Lee 2016). The trade promotion polices remained
dominant from the late 1980s to 2000s. The balance of payment crisis in 1997 was led to
Asian financial crisis adversely affecting export market. To rescue the crisis structural
adjustment were made for the processed manufactured and agricultural goods.
In Japan, the policies towards economic openness were taken to establish a good
connection of the economy with the global market. The trade liberalization policy in Japan on
its initial days focused on the practice of “most-favored-nation” principle. This policy helped
Japan to get access to the international market and become a member of OECD nations. The
nation agreed to lower different restrictions on import through successive rounds of
negotiations in GATT (Van Hoa and Limskul 2017). Successive reform within the economy,
large-scale investment in abroad and trade liberalization were the three pillars of international
economy of Japan. The Asian financial crisis in 1997 was responsible for a sharp turn away

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of Japan from multilateral trade agreement. The nation however recovered the crisis and
again went on the path of bilateral trade policy.

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List of References
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley &
Sons.
Jomo, K.S., 2019. Southeast Asia's misunderstood miracle: industrial policy and economic
development in Thailand, Malaysia and Indonesia. Routledge.
Le, T.H., Kim, J. and Lee, M., 2016. Institutional quality, trade openness, and financial sector
development in Asia: An empirical investigation. Emerging Markets Finance and
Trade, 52(5), pp.1047-1059.
Lockwood, W.W., 2015. Economic development of Japan (Vol. 2161). Princeton University
Press.
Surugiu, M.R. and Surugiu, C., 2015. International trade, globalization and economic
interdependence between European countries: implications for businesses and marketing
framework. Procedia Economics and Finance, 32, pp.131-138.
Van Hoa, T. and Limskul, K., 2017. Japan’s ODA in Globally Integrated CLMV Economies:
Aid Effectiveness and Political Economy. Korea and the World Economy, 18(3), pp.299-327.