96-F-14. Okazaki, Tetsuji, "The Foreign Exchange Allocation Policy in Postwar Japan: Its Institutional Framework and Function", July 1996.

In this paper we will make clear the institutional framework and function of the foreign exchange allocation system in 1950s Japan. Until trade liberalization progressed in the first half of 1960s, MITI executed de facto import quota by means of this system, which generated substantial amount of rent. In order to restrain rent-seeking activities, MITI made clear and objective criteria for foreign exchange allocation by firm, which were in many cases based on export performance and production capacity of each firm, and announced them publicly. This method caused competition to acquire rent through foreign exchange allocation among private enterprises, and promoted export and investment. We will quantify the criteria and their function of export and investment promotion using firm-level data of foreign exchange allocation.