Japan's ¥2.49 trillion trade deficit in 2011 — its first in 31 years — tells you where the economy's development stands in relation to the balance of trade. Let's review how the trade balance has fluctuated in each stage of the nation's postwar development and look at some of the challenges ahead.
In the first stage, which lasted up to the 1960s, Japan was an "immature debtor country." It suffered from a trade deficit and a shortage of domestic savings, forcing it to rely on foreign capital.
The second stage saw Japan turn into a "mature debtor nation." Export industries grew and the country started to post trade surpluses, though it still has external debts and its income balance remains in the red. This stage began in the 1960s, when trade surpluses became the norm for Japan, and continued until the 1970s, when upward pressure started to build on the yen's exchange rate.
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