Productivity and International Competitiveness in Japan and the United States, 1960-85

The political relationship between Japan and the United States has become increasingly preoccupied with “trade frictions.” These disputes over trade issues have accompanied the massive expansion of Japanese exports to the United States. Explanations for the resulting trade imbalance must include variations in the yen-dollar exchange rate, changes in the relative prices of capital and labor in the two countries, and the relative growth of productivity in Japanese and U.S. industries.