Up through the early 1980s, the Ministry of Finance (MOF) and Bank of Japan (BOJ) reigned supreme over all macroeconomic policies that affected the economy as a whole. Recently, however, MOF’s freedom to pursue macroeconomic policies has been undermined by constant foreign pressure on MOF to liberalize Japan’s financial markets, as well as attempts since the September 1985 Plaza Hotel Accord among the Group of Five industrial countries (United States, Britain, France, West Germany, and Japan) to coordinate macroeconomic policy-making with the aim of devaluing the dollar and stimulating world economic growth. In particular, Tokyo has been repeatedly asked to diminish its huge payments surplus with its trade partners, and instead act as an ‘engine of growth’ for the world economy by shifting its own economy from export-led to domestic-led growth. Japan’s government began stimulating domestic growth in late 1987.
KeywordsForeign Direct Investment Monetary Policy Foreign Investment Fiscal Policy Foreign Firm
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