This chapter outlines my recommendations for the internationalization and restructuring of the Japanese economy. Many of these suggestions can be found in the Mayekawa Report submitted to Prime Minister Nakasone in 1986. I begin by reviewing Japan's external imbalance and economic structure.
Japan's external imbalance and economic structure
After reaching a virtual equilibrium in 1981, following two rounds of oil price hikes, Japan's balance of payments has posted sharply widening surpluses – §20.7 billion in 1983, §35.0 billion in 1984, §49.1 billion in 1985, and §36.0 billion in 1986.
The increasing external imbalance has led some economists to ask whether Japan's balance of payments surplus is cyclical or structural. Around 1985, it was generally recognized that the “export-prone” nature of the Japanese economy is responsible for the persistent external surplus.
In general terms, Japan's export-oriented economic structure can be seen as the historical product of the 40 years since World War II, and also of the even longer period since the abandonment of isolationism in 1867. This structure reflects Japan's lack of natural resources (including oil) and the consequent efforts of corporate and government policy to reinforce the economy through international commerce.
However, some more specific reasons for this orientation can be found in the recent past.