The Appreciating Yen and Japanese Cost-Cutting Strategies
Department or Administrative Unit
The globalization of production has significantly changed the magnitude and timing of exchange rate adjustments based on trade flows. Today the appreciation of a currency has much less impact on the price competitiveness of a final product than when production was confined to only one country. Manufacturers are taking advantage of their international production networks to acquire input materials and components from countries with advantageous exchange rates. As a result, adjustment in trade imbalances requires larger exchange rate changes and longer time lags than in the past. This conclusion is supported by the experience of automobile trade between Japan and the United States.
Carbaugh, R., & Wassink, D. (1996). The Appreciating Yen and Japanese Cost-Cutting Strategies. Challenge, 39(3), 58–59. https://doi.org/10.1080/05775132.1996.11471905
© 1996 by M.E. Sharpe. Inc.