Figure 3 gives the ratio of current account surplus to GNE during the years 1930-76.
Obviously, the ratio was tightly managed until the mid-1960s, with foreign currency
reserves equivalent to import amounts for 2-3 months. Difficulties in foreign borrowing
together with concerns over incoming FDI forced Japan to maintain such a tight
discipline. Today, LDCs may have much greater flexibility in managing foreign
currency reserves and balance of payments, due to active international capital
transactions
active international capital
transactions