ABSTRACT
When the oil crisis struck, the Japanese economy was in its first period of export surplus and favourable balance of payments since the war, The balance moved towards surplus about 1965 and from 1968 to the outbreak of the oil crisis in October 1973 we earned huge export surpluses. Over that period trade restrictions were abolished over a wide range of goods and trade liberalisation was completed. At the same time liberalisation of capital movements both inwards and outwards was broadly achieved for the first time and we saw a rush to investment abroad (see Chapter 2). With the sudden increase in oil payments the current balance of payments again turned towards recovery. We had a switch in policy from the restriction of capital inflow and encouragement of outflow to the opposite. Is the trend of export surpluses and overseas investment expansion that continued from 1965 to October 1973 now to be reversed by the oil crisis? I believe that the trend has been only temporarily interrupted by the oil crisis and is likely to continue at least until around 1980.
