A macro theoretical analysis of timber trade problems is essential to any discussion of the forestry policy of Japan, a policy that depends on foreign countries for most of its forest products. In this paper, first by superimposing upon the data the author's theoretical analysis of the effect on domestic forest sustainability within countries involved in the timber trade, we get a rough picture of the relationship between the timber trade and world forest resources. Next, we apply the Stolper-Samuelson theorem to explain trade-induced changes in resource allocation and income distribution, and explain through various data the changes in Japan's agriculture, forestry and fisheries sector (an import substituting industry) and industrial sector (an exporting industry) since the Meiji era. We will see that compared to foreign countries Japan's level of trade dependence is low, and that since steady economic growth allowed wage levels to rise until about 2000, the effect on primary industry ended at scale reduction. However, in recent years employment absorption has reach its limits, and we can see that, in line with the Stolper-Samuelson theorem, distribution changes caused by trade liberalization and movement of capital are occurring. This raises implications for the future development of primary industry (including forestry) within Japan's present industrial structure.
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