Growth Patterns of the Japanese Economy in the 1980s: Before and After the Appreciation of the Yen

Input–output tables are used to examine output and employment growth patterns in Japanese industries between 1980–85 and 1985–88. The purpose is to determine if substantial structural change in output and employment had occurred following the sharp real appreciation of the yen against the dollar and other currencies in 1985. The results indicate Japan had shifted from export-led growth in 1980–85 to domestic-demand-driven growth in 1985–88. There were substantial changes in the composition of Japanese imports, including a much larger proportion of manufactured goods. Employment growth in manufacturing industries slowed in the late 1980s indicating the structural change was not painless. Japan's new growth pattern appears to be favorable for other export-oriented developing Asian countries and may help offset slower imports by the USA as it reduces its macroeconomic imbalances.