Closed-End Country Funds and International Diversification Benefits

Abstract

At the end of World War II, Japan lay in ruins, her industrial capacity virtually destroyed in the military campaign. With foresight and well-spent financial support, the economy experienced a period of unprecedented growth that catapulted the nation from one of the most destitute to one of the richest on the face of the earth. Given the tremendous success of the Japanese economy, it is frequently not remembered that the recovery process was initially extremely fragile. Early on, in an effort to encourage local business, the Japanese government enacted strict restrictions on imports and on foreign ownership. While many economists argue that the protectionism that dominated the Japanese government’s business policy for decades is partly responsible for their current recession, there is little doubt that the policies served their initial purpose.