Economic relations between Japan and the United States in the 1980s have been marked by frictions over macroeconomic policy coordination, trade practices, and financial market integration. Perceptions of the frictions have differed with location and over time. A 1987 telephone poll indicated that 55 percent of Japanese labeled relations between the two countries as unfriendly, whereas only 19 percent of Americans did so. In contrast, a similar poll conducted in 1986 revealed that as few as 29 percent of Japanese and 8 percent of Americans felt this way. These tensions led to demonstrations by both public figures and private citizens: In the summer of 1987, members of the U.S. House of Representatives smashed a Toshiba radio on the steps of the Capitol; in the fall of the same year Japanese farmers in Hokkaido demolished an effigy of President Reagan.

The essays in this book review the causes of these frictions and propose ways to avoid them in the future. With one exception, earlier versions of these papers were presented at a symposium entitled “Beyond Trade Friction” held in Tokyo on September 1 and 2, 1986. The symposium was sponsored jointly by the Center for Japan–U.S. Business and Economic Studies of New York University and the Center for Japan–U.S. Relations of the International University of Japan. The remaining paper by Kala Krishna reflects the same concerns as those that inspired the symposium and is therefore included as a complement to the conference proceedings.