1999 Fiscal Year Final Research Report Summary

The Foreign Exchange Allocation Policy in Postwar Japan

Research Project

Project/Area Number	09630075
Research Category	Grant-in-Aid for Scientific Research (C)
Allocation Type	Single-year Grants
Section	一般
Research Field	Economic history
Research Institution	The University of Tokyo
Principal Investigator	OKAZAKI Tetsuji University of Tokyo, Professor of Economics, 大学院・経済学研究科, 教授 (90183029)
Project Period (FY)	1997 – 1999
Keywords	Industrial policy / Foreign exchange control / Japan
Research Abstract	In this research, we made clear the institutional framework and function of the foreign exchange allocation policy in 1950's Japan. Until trade liberalization progressed in the first half of 1960's, the Ministry of Industrial Trade and Industry (MITI) executed de facto import quota by means of the foreign exchange allocation, which generated substantial amount of rent. In order to restrain unproductive rent-seeking activities of the private firms, MITI set the 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 the criteria publicly. We quantified the criteria, using firm-level data of foreign exchange allocation, concerning the wool spinning industry. Also, we analyzed the effects of the foreign exchange allocation by estimating export and investment functions, and found that the rent distributed thorough the foreign exchange allocation, stimulated export and investment.