The international balance of payments is divided into “current balance,” “balance of capital accounts,” and “financial accounts." The majority of the current balance is in “trade balance” made by calculating the balance of exports and imports, and the balance on services, such as income from travel and patent royalties. The balance of payments post World War II for Japan, between the 1950s and the early half of the 1960s, was in the red. In the latter half of the 1960s, there was a period of exceptional economic growth and while Japan’s capital balance had been in the red, its trade balance improved so much that the capital balance went into the black. The balance of capital accounts is the balance between investments made outside the country and investments made by foreign nations within Japan itself. If the balance for trade and tourism is in the red, the economy does not work well, unless investment is sought from foreign nations. Japan’s trade was in good shape, but in 1973, due to the OPEC crisis, the price of oil – a commodity essential to Japanese industry – soared and Japan went deeply into the red. By the 1980s, Japan had overcome the oil crisis by embracing things like ecologically-friendly technologies and the country’s current balance went into the black, with these huge profits turning Japan into the world’s greatest investor. When Japan’s trade balance went so far into the black, the USA became intensely critical of Japan, making the exchange rate for the yen against the dollar even higher. Nevertheless, in 2005, money earned overseas exceeded profits from trade revenue. In other words, Japan invested money earned in the past from trade and other sources overseas, gaining a profit from its overseas assets. Japan has continuously earned approximately 10 trillion yen every year in trade. However, due to the accident in the Fukushima nuclear power plant caused by the Great East Japan Earthquake in 2011, it has increased the amount of energy imported. In addition, the yen went up to 76 yen against the dollar and as a result, Japan’s trade balance between 2011-2015 went into the red. On the other hand, the balance of services, which had always been in the red, went into the black for the first time in 2015 because of the travel industry. The number of tourists to Japan exceeded 30 million in 2019. Revenues for intellectual property are also increasing, with increasing payments of royalities for patents from overseas nations. However, with the worldwide spread of COVID-19 in 2020, Japan has been urged to take new measures.
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