ABSTRACT
The most serious macroeconomic problem that has confronted the Japanese economy since the mid-1970s is how to balance its aggregate saving and investment. During its rapid-growth period of 1960–1973, the Japanese economy achieved a stunning record. The intraregional trade explains why industrial exports command a higher proportion of domestic industrial output in European countries. Given differential rates of industrial growth among advanced economies, Japan’s industrial exports have not expanded at an inordinate rate. In other words, the long-term performance of Japan’s industrial exports can be explained by standard economic theory. The long-term version of the export-led-growth thesis may run like this. The Service Revolution started in Japan at the end of the rapid-growth period. Japan’s exports increased rapidly in technology-intensive products subject to downward-sloped long-run cost curves. The share of heavy industry in all manufacturing was much less in Japan than in all other developed market economies even in the mid-1960s.
