Effect on Prices of Japan's Entry into World Commerce after 1858

Abstract

What happened to price ratios between exportables and importables in Japan as that country moved out of self-imposed economic isolation (ended in 1858) into free trade (the 1870s)? Average prices of exportables rose at least 3.5-fold relative to importables to converge on world market prices. At the extremes, in autarchy, Japan's price ratios on tea and bar iron were out of line with world price ratios no less than eight to one. By crude measures, it is estimated that Japan's national real income rose about 65 percent in the transition from economic isolation to free trade.