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The Foreign Exchange Allocation Policy in Postwar Japan: Its Institutional Framework and Function


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  • Okazaki, Tetsuji

    (Faculty of Economics, University of Tokyo.)

  • Takafumi Korenaga

    (Graduate School of Economics, Hitotsubashi University.)


In this paper we will make clear the institutional framework and function of the foreign exchange allocation system in 1950's Japan. Until trade liberalization progressed in the first half of 1960's, MITI executed de facto import quota by means of this system, which generated substantial amount of rent. In order to restrain rent-seeking activities, MITI set clear and objective criteria for foreign exchange allocation by firm, which were in many cases based on export performance and production capacity of each firm, and announced them publicly. This method caused competition to acquire rent thorough foreign exchange allocation among private enterprises, and promoted export and investment. We will quantify the criteria using firm-level data of foreign exchange allocation and also analyze their function through estimating export and investment functions.

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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number 97-F-19.

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Length: 51 pages
Date of creation: May 1997
Date of revision:
Handle: RePEc:tky:fseres:97f19

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Cited by:
  1. Kiyota, Kozo & Okazaki, Tetsuji, 2013. "Effects of Industrial Policy on Productivity: The Case of Import Quota Removal during Postwar Japan," PRIMCED Discussion Paper Series 48, Institute of Economic Research, Hitotsubashi University.
  2. Okazaki, Tetsuji & Takafumi Korenaga, 1998. ""Foreign Exchange Allocation and Productivity Growth in Postwar Japan: A Case of the Wool Industry"," CIRJE F-Series 98-F-9, CIRJE, Faculty of Economics, University of Tokyo.


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