Plaza Accord
The transformation was, in fact, a product of the oil crises and United States intervention. Since the oil price rose tenfold, the cost of production also soared. After the oil crises, to save costs, Japan had to produce products in a more environmentally friendly manner, and with less oil consumption. The biggest factor that invited industrial changes after the oil crises was the increase in energy prices including crude oil. As a result, Japan converted to a technology-concentrating program, ensuring the steady increase of its economy, and standing out beyond other capitalist countries that had been significantly wounded during the oil crises. Another factor was the friction between the United States and Japan, as Japan's rapid economic growth could potentially harm the economic interests of the United States. In 1985, the United States signed the "Plaza Accord" with Japan, West Germany, France and Britain. The "Plaza Accord" was an attempt to devalue the US dollar, yet harmed Japan the most. Japan attempted to expand international markets through the appreciation of the Japanese yen, yet they over-appreciated, creating a bubble economy. The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan.