#90-DOF-8 "Changes in the Japanese Economy and Japan's Trade with 
           North America" 
          (Kazutomo Irie, February 1990.) 

A WHOLE SENTENCE

ABSTRACT

    This paper aims at responding to two questions posed by the 
changes of the Japanese economy since the mid-1980's: how did the 
Japanese economy reorient itself with the yen appreciation from 
export-led growth to growth based upon domestic demand? What changes 
occurred in trade between Japan and her major trading partner, North 
America, in the process of this reorientation?
    The paper first discusses how the Japanese economy shifted its 
emphasis with the yen appreciation from export-led growth to growth 
led by domestic demand , and how this reorientation enabled the 
economy to weather a severe recession caused by the yen appreciation 
and attain wide-spread prosperity . The necessity of the reorientation,
the process of reorientation and the mechanism behind the 
reorientation are explained .
    Next, an overview of changes in Japan's trade during the process 
of the yen appreciation and the economy's reorientation is provided. 
Japan's overall trade surplus peaked in 1986 and has since been 
steadily shrinking . With regard to the contents of Japan's trade, 
high value-added products are accounting for a larger share of total 
exports, while the ratio of manufactured imports to total imports is 
rising.
    In light of this overview, the changes in Japan's trade with North
America during this period are analyzed. Japan's trade surplus with 
North America has shrunk much faster than her overall trade surplus . 
As in the case in overall trade, a shift to higher value-added exports
and a rising ratio of manufactured imports can be seen in the trade 
with North America.
    Finally, the findings of this analysis are summerized.