Exports are often regarded as the driving force of Japanese economic recovery in the 1930s. This paper focuses on the background of export recovery and the effects of exchange rate depreciation on the export expansion at that time. A detailed examination of the export recovery process during the 1930s reveals that the main export items and destinations changed considerably over time. This paper attempts to verify the effects of relative price decreases caused by exchange rate depreciation upon export expansion for different industries, destinations, and periods. The United States, India, and Korea are selected as destinations of Japanese export products, namely, raw silk, cotton fabrics, and heavy industrial and chemical products. Empirical analyses are conducted to measure the effects of exchange rate depreciation and income effects on exports to these different destinations. The results suggest that factors influencing real exports differ significantly from destination to destination, and that the effects of devaluation were thus not identical on exports to all destinations.
Keywords: Exchange rate; Export; Gold embargo; Interwar economy
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.