Golden Rules in Global Corporate Strategy
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Japan’s remarkable economic progress was in part underpinned by the rapid expansion of its export sector, especially between 1950 to 1970. The history was closely related to an exchange rate system that worked as follows. In 1949, a fixed exchange rate system began working at a rate of JY360 per US dollar. In August 1971, a floating exchange rate system was introduced. However, in December 1971 the system returned to a fixed exchange rate at JY208 per US dollar in order to prevent sudden yen appreciation. Although international trade and investment proceeded smoothly under the fixed system, in February 1973 the system was moved back again to a floating rate, and has continued like this ever since. In the two decades up to 1993, owing to inexpensive labor costs and a favorable exchange rate in Japan, exports strengthened the balance of payments and GDP. Consequently, corporations reinvested profits in equipment.