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Japan and the International Financial System

Lessons from the Asian Crisis

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Japan’s Reluctant Realism
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Abstract

We turn finally to those multilateral institutions where Japanese economic success clearly has brought leadership—the international financial institutions established by the allied powers at Bretton Woods. The diplomatic strategy established by Yoshida and other early postwar Japanese leaders required not only alliance with the United States, but also full entry into these institutions. With U.S. support, Japan borrowed more than $862 million from the World Bank between 1953 and 1968 and joined the International Monetary Fund (IMF) in 1956 with a 2.7 percent voting share (approximately one-tenth of the 27.2 percent share of the United States at that time).1 As it grew in economic power, Japan gave generously in return. In the 1980s Japan recycled tens of billions of dollars from its chronic current account surpluses through the international financial institutions—a flood of spending that eventually elevated Japan almost to the top leadership positions in these institutions. By 1984 Japan was already the second largest contributor to the World Bank after the United States, and in 1990 Japan joined Germany to share the number-two spot at the IMF (with a voting share of 6.1 percent compared to 19.62 percent for the United States).2

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Notes

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© 2001 Michael J. Green

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Green, M.J. (2001). Japan and the International Financial System. In: Japan’s Reluctant Realism. Palgrave Macmillan, New York. https://doi.org/10.1057/9780312299804_9

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