ABSTRACT
Japan’s recovery from the widespread physical damage and economic dislocations was slow, painful, and heavily dependent on American financial assistance. In trade policy, Japan’s postwar trade and payments restrictions gave way to a process of trade liberalization during the 1960s. The major component of Japan’s global trade surplus has been its surplus with the United States. Through foreign exchange regulations, control over foreign investment and acquisition of technology, and a variety of other measures, industrial policy allocated and guided resources into targeted industries. The bulk of the US direct investment in Japan has been concentrated in manufacturing and petroleum. Foreign investment in the United States continues to grow; and the global US trade deficit for 1986 is estimated at over $170 billion. Nor is there a sign that the trade imbalance with Japan is narrowing or is about to narrow in the near future.
