In the wake of the devastating World War II, the machine tool industry in Japan remained dormant for about ten years with almost zero production. It was only after the mid-1950s that production began to gradually increase. During this period, many Japanese machine tool builders learned machine tool manufacturing technologies from America and Europe, and while competing for technological development, they pressed ahead with prototype development and basic technology researches through collaboration among the industry, government and academia. As a result, technical standard of machine tools made in Japan improved rapidly, leading to successive development of new products and a dramatic production expansion. Indeed, production in 1970 topped ¥300 billion, boosting Japan to the fourth largest machine tool producer in the world, following Germany, the United States and the Soviet Union at the time. Although machine tool demand in Japan experienced a significant sluggishness in the first half of the 1970s due to adverse effects of the sharply appreciated yen against the dollar and the oil shock. However, the machine tool industry overcame the difficulty each time and marked a record production of ¥1,303.4 billion in 1990. Good times didn't last long, though. The collapse of the bubble economy in Japan sent machine tool demand spiraling down again, causing production in 1994 to plummet to ¥554.1 billion or only 42.5 percent of the peak production in 1990. However, production entered a recovery phase thereafter on the back of increased exports and topped ¥1,000 billion in 1997 for the first time in six years. Since then, ups and downs of the economy repeated themselves in the forms of a recession triggered by the currency crisis in Asia, a boom generated by active IT-related investments, a reactionary adjustment phase and stagnated demand in the wake of 9/11. The 2006 demand grew to a 15 year high and production went up 9 percent over the previous year and was the largest volume since 1998. Japan has remained the global leader of machine tool production for 24 years since 1982. In the meantime, as regards machine tool trade, the amount of exports generally continued to increase since 1982 when exports outran imports for the first time on the back of increased international competitiveness of NC machine tools weathering recurrent bad times. Notably, in the five-year period from 1994 to 1998, exports continued to renew the record high of the year before. Recent demand has been increasing since 2002 due to the recovery of the demands in the USA and Europe, in addition to the expansion in China and the growing markets including Brazil, Russia, East Europe and India. Machine tool imports, on the other hand, were ¥135.6 billion in 2006 or only one seventh of the exports in the same year. Although they fluctuate according to the trends of domestic demand, imports in 2006 accounted for 31.9 percent (amount of imports/domestic demand (productionexports+ imports)) of total domestic demand in nominal terms.