The Yen Appreciation and the International Economy

241 Pages·1993·24.59 MB·English

by  Dilip K. Das (auth.)

Dilip K. Das
THE YEN APPRECIATION AND
THE INTERNATIONAL ECONOMY
THE YEN APPRECIATION AND THE INTERNATIONAL
ECONOMY
Also by Dilip K. Das
INDIA AND THE INTERNATIONAL FINANCIAL MARKETS
INTERNATIONAL CAPITAL MARKETS AND THE
DEVELOPING ECONOMIES
MIGRATION OF FINANCIAL RESOURCES TO
DEVELOPING COUNTRIES
INTERNATIONAL TRADE POLICY
KOREAN ECONOMIC DYNAMISM
IMPORT CANALISATION
THE YEN
APPRECIATION AND
THE INTERNATIONAL
ECONOMY
Dilip K. Das
M
MACMILLAN
© Dilip K. Das 1993
Softcover reprint of the hardcover 1st edition 1993
All rights reserved. No reproduction, copy or transmission of
this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
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or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published 1993 by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
ISBN 978-1-349-12814-3 ISBN 978-1-349-12812-9 (eBook)
DOI 10.1007/978-1-349-12812-9
A catalogue record for this book is available
from the British Library
For
Vasanti, Tanushree and Siddharth
Yang Chu, weeping at the crossroads, said, 'Isn't it here that you take
a half-step wrong and wake up a thousand miles astray.'--a saying
of the Confucian Hsun-tsu
Contents
List of Tables ix
List of Figures xi
Preface xii
List of Acronyms and Abbreviations xvi
1 THE YEN APPRECIATION AND THE
JAPANESE ECONOMY 1
The Backdrop 1
How the Yen Appreciated 2
Macroeconomic Policy Management and the Maekawa
Committee Report 12
Dynamism of Industrial Restructuring 14
Changes in the Import Structure 18
Strong Yen and Current Account Surplus: a Paradox? 21
Streamlining and Rationalisation at the
Corporate Level 28
The Endaka Recession 31
Summing Up 34
2 INTERACTION WITH THE
INTERNATIONAL ECONOMY 37
Inroduction 37
Pax Japonica? 39
The Japan-US Economic Asymmetry 44
The Japan-EC Discordance 52
The Japan-Asia Synergism 56
The Corporate Globalisation 64
Summing Up 68
3 TRANSFORMATIONS IN THE WORLD OF
INTERNATIONAL BANKING AND FINANCE 71
Surge of a New Creditor 71
Deregulation and Uberalisation 78
Movements in Long-Term capital Accounts 84
vii
viii Contents
Modest Internationalisation of the Yen 95
The Contractional Phase 106
Summing Up 113
4 ACCELERATION IN FOREIGN
DIRECT INVESTMENT 116
Coming on the Scene 116
Post-Appreciation Escalation 119
A Theoretical Perspective 121
Long-Term Factors at Work 123
Regional Distribution 128
Sectoral Distribution 136
FDI in Japan 139
Summing Up 141
5 ECONOMIC ASSISTANCE TO THE
DEVELOPING COUNTRIES 143
Genesis 143
Post-Appreciation Spiralling 150
The Recycling Strategems 153
Philosophy or the Lack of it 157
The New Ethos 163
Private Sector Slant 167
Summing Up 170
6 THE YEN BLOC 172
The Nascence of a Concept 172
The Region's Economic Dynamism 176
Integration 180
The Yen Appreciation and the Yen Bloc 185
The Short- and Long-Term Prospects 187
Summing Up 190
Notes and References 193
Bibliography 208
Index 220
List of Tables
1.1 Current Account Imbalances 1984-85 (in Billions
of$) 3
1.2 Export and Import Ratios for Selected Industrialised
Economies 4
1.3 Monthly Yen Appreciation After the Plaza Accord
(Yen per Dollar) 8
1.4 Yen Exchange Rate Against the US Dollar, 1980--90 9
1.5 The Index Numbers of Nominal and Real Effective
Exchange Rates of Yen Against 15 Other Industrial
Countries' Currencies 10
1.6 Import Trend, 1985-89 19
1.7 Imports of Manufactures, 1985-89 20
1.8 Sales and Current Profits of Industrial Enterprises,
1984--90 (in per cent) 30
1.9 The Decadal Economic Trend, 198~9 32
2.1 Japan-US Trade, 1982-89 46
2.2 Japan-EC Trade, 1982-89 54
2.3 Japan-ANIEs Trade, 1982-89 59
3.1 International Positions by Nationality of Ownership
of International Assets, 1985-90 (in Billions of $) 73
3.2 Japan's Capital Account, 1980-90 (in Billions of $) 85
3.3 Japan's and Foreign Investors' Investment in
Securities, 1980-90 (in Billions of $) 87
3.4 Japan's Long-term Capital Outflows: Broken up into
Types of Flows; USA, 198~9 (in Billions of $) 89
3.5 Japan's Long-term Capital Outflows: Broken up into
Types of Flows; EC, 198~9 (in Billions of$) 89
3.6 Foreign Securities Investments by Institutional
Investors 91
3.7 Yen Invoicing of Japanese Trade, 1975-89 (in per
cent) 97
3.8 Currency Breakdown of Exchange Reserves,
198~9 (in per cent) 100
3.9 Current Valuation of the SDR Basket 102
ix