"Foreign Exchange Allocation and Productivity Growth in Postwar Japan: A Case of the Wool Industry"
AbstractUntil early 1960's, the Japanese government controlled import by means of foreign exchange allocation system. Rents generated and allocated by the foreign exchange allocation system provided the government with a powerful tool for industrial policy, although there also existed a possibility that this system brought about unproductive rent-seeking. In this paper, we examined the functions of the foreign exchange allocation system, focusing on the case of the wool industry. Through analysis of historical documents, we made clear that MITI utilized the foreign exchange allocation system for such policy goals as export promotion, management of investment and production capacity etc.. Also, using panel data analysis, we could reconfirm and improve the results of Okazaki and Korenaga  that the foreign exchange allocation system actually promoted export and investment. This is because through the foreign exchange allocation system rents were distributed to each firm in an objective performance-based manner. Also, the export-link system had an implication to stimulate efficient use of foreign currency. By regressing foreign exchange allocation to the foreign exchange acquisition rate (FEAR) in the previous term, we found that export-link allocation correlated positively with FEAR. This result implies that the export-link system promoted those firms which used foreign exchange efficiently, through intensively distributing rent to them. On the other hand, the export-link system brought about large firms with great international competitiveness and small and medium-sized firms which was domestic market-oriented. The production capacity-link system played a role to mitigate that difference of capacity utilization rates, which was complementary to the role of export-link system.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number 98-F-9.
Length: 26 pages
Date of creation: Mar 1998
Date of revision:
Contact details of provider:
Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC
Other versions of this item:
- Okazaki, Tetsuji & Korenaga, Takafumi, 1999. "Foreign exchange allocation and productivity growth in post-war Japan: a case of the wool industry," Japan and the World Economy, Elsevier, vol. 11(2), pages 267-285, April.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fuss,Melvyn A. & Waverman,Leonard, 1992. "Costs and Productivity in Automobile Production," Cambridge Books, Cambridge University Press, number 9780521341417, October.
- Kozo Kiyota & Tetsuji Okazaki, 2005.
"Foreign Technology Acquisition Policy and Firm Performance in Japan, 1957-1970: Micro-aspects of Industrial Policy,"
CIRJE-F-329, CIRJE, Faculty of Economics, University of Tokyo.
- Kiyota, Kozo & Okazaki, Tetsuji, 2005. "Foreign technology acquisition policy and firm performance in Japan, 1957-1970: Micro-aspects of industrial policy," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 563-586, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office).
If references are entirely missing, you can add them using this form.