As is known to all, Japan is poor in natural resources because of its mountainous, volcanic and small land. Thus, Japan is often viewed as a heavily export-dependent nation. In order to support its population and growing economy, Japan uses export to earn foreign exchange to pay for the imported goods. This trade pattern is called ‘processing trade’ because Japanese add value to the imported raw materials and then export it to make profits. The Japanese government pays more attention on expansion of exports and regards the economy should be guided based on this directions.
In general, Japan …show more content…
First of all, the government let the import tariffs paid on the imported raw materials by Japanese producers could be refunded to themselves at the time of producing export goods, which means that tax becomes one of a promotion of export. Moreover, in 1951, the export-import bank of Japan was established to deal with producers whose loans were in foreign countries, and the Bank of Japan rediscounted the bills at low interest rate before actual shipment is made so that the exporters could get a low interest loan. In addition, the expansion of exports also benefited from the foreign exchange policy. As a result, Japan avoided the revaluation of the Japanese yen, and the adjustment promoted exports in international market as well. However, in 1964, Japan gave up the policy – the total exemption of export income from