Gary R. Saxonhouse

A Tale of Japanese Technological Diffusion in the Meiji Period

Fifteen or so years ago and for many decades before that, popularly speaking, it was not uncommon to think of the Japanese as slavish imitators of foreign technology. As research workers in economic history, we recognize that slavish imitation of foreign technology is no easy matter. Foreign technical practice is hardly uniform. Choice among a number of competing technologies is hardly childs play. Young Japanese students of a century ago were enjoined to go overseas, discover what was best and make it Japanese. Such injunctions by a semi-feudal oligarchy and its intellectual supporters while progressive in spirit were naive. One process rarely dominates international industry. What was useful for the worlds leader might not be appropriate for the human and nonhuman resource endowment of late nineteenth-century Japan. Initially, Japans worldwide search led it to adopt a French-style army, an American-style banking system, and a British-style cotton textile industry. In time each of these models were either discarded in favor of other national models or otherwise modified to meet the imperatives of assimilation.

Productivity Change and Labor Absorption in Japanese Cotton Spinning 1891–1935

Accounting for productivity change and labor absorption, 196.—Data and data sources, 199.—The estimation of the Japanese cotton-spinning industry production function, 200.—Results on the conventional production function, 204.—The estimation of the fundamental equations, 209.—Summary and conclusion, 218.

The Bubble and the Lost Decade

In this overview of the Symposium papers, we note that the bubble that occurred in Japans asset markets in the late 1980s came at a time when the conventional indicators of Japans economic performance were relatively stable. Following the collapse of the bubble, neither the Bank of Japan (BOJ) nor the Ministry of Finance (MOF) took timely and effective measures to deal with the recession that followed. While the evidence suggests that looser fiscal policy would have been ineffective, monetary policy measures might have worked. However, the BOJ followed a relatively tight monetary policy in 1991–93. In the face of the liquidity trap that ensued in the last of the 1990s, the conventional tools of stabilisation policy appeared to be of limited use. To help the Japanese economy to recover from the ‘lost decade,’ we thus discuss a number of unconventional and bold measures that the BOJ and MOF could pursue. It appears, however, that the political will is absent to undertake such measures. So long as this is the case, the effects of the lost decade will continue to act as a drag on the economy.

Regional Initiatives and US Trade Policy in Asia

This article gives an account of US trade policy towards Asia, with particular reference to regional preferential trading agreements. The outcome of fifteen years of US pursuit of regional trade policies could possibly be a network of preferential trade arrangements centred around the USA; a more likely outcome is an increasingly strengthened multilateral system based on the World Trade Organisation (WTO). A stronger WTO may prove capable of constraining even its most powerful members. This outcome is certainly in the long‐term interest of the USA.

Technological and information transfer: How do some nations learn what other nations know? Japan's experience

Abstract The returns to the rapid acceleration in the growth of gross global product per capita in the past century and a quarter have been very inequitably distributed across nations. Nations that were already relatively wealthy in 1870 have received most of the benefits of this increase in material well‐being. Japan is thus far the only major example of a country that has been able to fully traverse the vast gulf that separates poorer from wealthier nations. Lately other economies in East Asia have experienced such sustained high rates of growth in gross domestic product per capita as to suggest they too will join Japan as non‐Western examples of the worlds wealthiest nations. Some doubt has been cast on these optimistic projections by findings that economies such as Taiwan and Korea have grown rapidly, seemingly Soviet‐bloc style, without the benefit of rapid growth in total factor productivity change. Characterizing growth without total factor productivity change as Stalinist, however, is ahistorical...

Analysis of the Causes

The difference in the technological development of the Japanese and Indian textile industries is indeed quite startling. Both operated in labour surplus economies, and both obtained initial technology and early technical advice from Britain, mostly from the same firm. Yet one transformed the technology in ways appropriate to its environment much better than did the other. Our objective here is to identify as many plausible reasons as possible why this occurred; it is necessarily difficult, if not impossible, to present any single satisfactory causal explanation — or to engage in multivariate analysis placing appropriate quantitative weights on each. In what follows, we have instead attempted to attribute at least qualitative weights to various plausible causal explanations.

The supply of quality workers and the demand for quality in jobs in Japan's early industrialization

In the West, historical treatments of the rise of the factory system have always stressed the attitudes, pressures, and discontents of the workers. Despite this historical interest most economic analysis of early European and American industrialization has stressed changes not in the supply but in the demand for labor, particularly technological developments, capital accumulation, and the opening of markets. Not surprisingly, the few systematic international historical comparisons of labor supply which have been made have come up with widely diverse conclusions. Morris (1960) concludes explicitly that labor supply was a “slack variable” and extends this assertion not only to India (1855-1914) but to Great Britain (17701830) and remarkably to New England (17921840): “In no case did the shortage of skilled labor . . . inhibit the pace at which the industry would otherwise have expanded . . . I think it is safe to say that the supply of raw unskilled labor was never an inhibiting factor in economic growth.” In contrast Gerschenkron (1%2) has made the inelasticity of the supply of such labor in the early stages of development, regardless of national demographics, a foundation block in his understanding of the industrial development of the various continental European countries. Lacking the traits of stability, reliability, and discipline, it is argued the underemployed peasants and urban poor of nineteenth-century Central and Eastern Europe did not necessarily translate into a ready supply of labor for the newly borrowed Western European factory system. For Japan, quite unlike the experience of Europe and the United States, historical economists and economic historians have not neglected the description and economic analysis of the supply of labor in early industrialization. Drawing on an already venerable Marxist tradition in the 1920s and 193Os, academic members of the two Marxist factions, the

How Japan First Began to Export Machine-Made Manufactures to East Asia

Drawing on late Meiji period data, the efforts of Japans cotton spinning mills to overcome overseas competition and establish themselves in the Chinese, Korean and Hong Kong markets are examined. Estimating a probit model of the decision to export, it is found that despite readily available export finance and commercial networks that should have greatly lowered the costs of participating in East Asian markets, sunk entry costs still appear to have been quite large. Many otherwise capable mills apparently saw little prospect of entering tariff-less East Asian markets, notwithstanding the possibility of generous subsidies and trade association devised predatory strategies.

Optoelectronics in Japan: A Market Evaluation of Government High-Technology Policy

In survey after survey of US firms, the business environment is viewed as the greatest area of disadvantage for high-technology firms. In this area such surveys suggest that American high-technology firms are at their greatest disadvantage when compared with firms operating in Japan. It is argued that the role the Japanese government plays within the Japanese economy puts American firms at a particular disadvantage when competing globally with Japanese firms. The most commonly cited Japanese government practices include ‘financial support . . . . . including R&D grants/credit, favorable tax treatment and low interest rate loans to finance exports, R&D and investment’ (US Department of Commerce, 1994, p. V-8). This particular characterization of Japanese government practices comes from the responses of firms included in the US Department of Commerce’s assessment of the US optoelectronics industry. When these firms were asked, however, to provide specific examples of such practices, the US Department of Commerce notes many companies mentioned MITI of Japan, but few gave specific examples of how MITI programs benefitted the optoelectronics industry’ (p. V-8). This paper attempts to fill this gap. The first section of the paper discusses the distinctive characteristics of the optoelectronics industry and why a government might want to promote its competitiveness. The second section catalogues aid given by the Japanese government and contrasts these programs with US government activities. In the final section of the paper, the impact of Japanese government programs on the competitiveness of Japanese and US firms is assessed.

BIOTECHNOLOGY IN JAPAN: INDUSTRIAL POLICY AND FACTOR MARKET DISTORTIONS

There is a widespread feeling that the Japanese government is unfairly acquiring for its economy the few really good tickets to prosperity in the twenty-first century. Foreign reactions to Japanese targeting have ranged from concern that such practices are unfair and inconsistent with the international economic system and that Japan should be forced to eliminate them, to intense admiration and a hope the other countries can somehow emulate Japan. Understanding Japanese practices, particularly as they relate to high technology industries, requires an analysis not only of the relationships between government and business in Japan, but also of the relationships between government and education and between education and business. From the perspective of an analysis of the interrelationships between these institutions, it is possible to understand the character of the market distortions and market failures with which Japanese policy has sought to cope. It should also then be possible to assess whether other co...