Tetsuji Okazaki

The Evolution of the Financial System in Post-War Japan

The Japanese financial system is regarded as a key factor behind Japans remarkable post-war growth. The main bank arrangements, linking companies with a principal source of funds, and complementary institutional networks were complex and intricate, and underpinned industrial investment and expansion. In the 1950s, the city banks, as the main banks of manufacturers, were asked to supply large amounts of funds to their clients, acting as substitutes of the stock market. As their liquidity decreased, post-war reconstruction policies reduced their risk-bearing capabilities. In order to stabilise the system and to sustain the funds needed for strategic industries, the Ministry of Finance and the Bank of Japan began actively to regulate the financial markets, while the Ministry of International Trade and Industry co-ordinated policy with the industrial sector. It was this system of complementary institutions, including the main banks, long-term financial institutions, and government agencies, which enabled Jap...

Evolution of Economic Systems: The Case of Japan

In this paper, we shall provide a theoretical overview of what are the chief implications of fucusing institutions and economic systems, what are the main sources of their evolution, how are their evolutionary paths affected by various economic factors. In the latter half, we shall provide a brief historical account of evolution of an actual economic system using Japanese economic history as an example.

Effects of a bank consolidation promotion policy: evaluating the 1927 Bank Law in Japan

Este articulo investiga el impacto de las consolidaciones bancarias promovidas por la politica del gobierno, utilizando datos del Japon de antes de la guerra, cuando el Ministerio de Economia promovio consolidaciones bancarias a traves de la Ley Bancaria de 1927. Aducimos que la consolidacion promovida por esta politica tuvo un efecto positivo en el aumento de los depositos, especialmente para el periodo en el que el sistema financiero se encontraba en un punto inestable. Por otro lado, tuvo un efecto negativo sobre la rentabilidad, en particular en los casos donde no habia una entidad bancaria dominante entre los participantes o cuando mas de dos entidades bancarias participaban en la consolidacion. La consolidacion promovida por la politica gubernamental en estos casos solia acompanarse de enormes costes de organizacion.

The Role of the Government in Facilitating TFP Growth during Japan's Rapid Growth Era

Japan experienced high growth of TFP following World War II. This paper studies the sources of this technological growth and documents the role played by different government policies in achieving such growth. We find that in nonagricultural sectors, TFP growth occurred at first through the import of foreign technologies via licensing, and subsequently through the innovation of its own technologies. In agriculture, TFP grew mostly through the development of its own technologies. The Japanese government played a part in the growth of TFP by directing the adoption of foreign technologies, promoting coordination of R&D activities, and setting up channels for the domestic diffusion of available technologies.

Industrial Policy Cuts Two Ways: Evidence from Cotton Spinning Firms in Japan, 1956–1964

A number of studies have revealed a negative effect of industrial policy on productivity growth. Is this because industrial policy fails to control the activities of firms or because it can effectively control them? This paper attempts to answer these questions, using firm-level data from the cotton-spinning industry in Japan for the period 1956–64. We determine that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton-spinning firms, which contributed to the establishment of a stable market structure during the period. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative productivity growth in large firms during this period, industrial policy resulted in negative productivity growth in the industry.

The Supplier Network and Aircraft Production in Wartime Japan

The Japanese aircraft industry, which was very small scale before the Second World War, became Japans largest manufacturing industry by the end of the war. This article explores the basis for the growth of the aircraft industry during this time by focusing on Mitsubishi Heavy Industries Companys No. 5 Works. It was revealed that during the war, the supply of basic inputs increased substantially: labour force, equipment, and ‘machinery parts’ were in sufficient supply and none of these was a binding constraint on production. The binding constraint existed in the supply of ‘special parts’. In other words, aircraft production expanded as the supply of special parts increased. This increase in the supply of special parts and still faster growth in the supply of machinery parts came about through the expansion of the supplier network in terms of both the number of suppliers and the geographical area in which they were located. These findings imply that outsourcing played a key role in the growth of aircraft production in wartime Japan.

Foreign exchange allocation and productivity growth in post-war Japan: a case of the wool industry

Until early 1960s, the Japanese government controlled import by means of foreign exchange allocation system. Rents generated and allocated by the foreign exchange allocation system provided the government with a powerful tool for industrial policy, although there also existed a possibility that this system brought about unproductive rent-seeking. In this paper, we examined the functions of the foreign exchange allocation system, focusing on the case of the wool industry. Through analysis of historical documents, we made clear that MITI utilized the foreign exchange allocation system for such policy goals as export promotion, management of investment and production capacity etc.. Also, using panel data analysis, we could reconfirm and improve the results of Okazaki and Korenaga [1997] that the foreign exchange allocation system actually promoted export and investment. This is because through the foreign exchange allocation system rents were distributed to each firm in an objective performance-based manner. Also, the export-link system had an implication to stimulate efficient use of foreign currency. By regressing foreign exchange allocation to the foreign exchange acquisition rate (FEAR) in the previous term, we found that export-link allocation correlated positively with FEAR. This result implies that the export-link system promoted those firms which used foreign exchange efficiently, through intensively distributing rent to them. On the other hand, the export-link system brought about large firms with great international competitiveness and small and medium-sized firms which was domestic market-oriented. The production capacity-link system played a role to mitigate that difference of capacity utilization rates, which was complementary to the role of export-link system.

The expanding Empire and spatial distribution of economic activity: the case of Japan's colonization of Korea during the prewar period

In 1910, Japan annexed Korea and integrated it into the Empire of Japan. According to its policy of assimilating colonies, the Japanese government intended to remove the tariffs between Japan and Korea, an aim which had almost been realized by 1923. The removal of the tariff barrier was supposed to improve market access between Japan and Korea. This article explores the implications of this event, focusing on the spatial distribution of economic activity in Japan. The regression results suggest that the integration of the Korean market increased population growth rates more in the regions close to the former border between Japan and Korea than in the other regions. Furthermore, after integration, the regions close to Korea that specialized in the fabric industry, whose products were the primary goods exported from Japan to Korea, experienced more population growth than other regions close to Korea did. These results suggest that market accessibility was indeed a determinant of the spatial distribution of economic activity. Our findings also indicate that the economic effect of colonization on the mainland was spatially heterogeneous and that a spatial viewpoint of the history of imperialism is important.