The History Of Japanese Economic Development. Origins of Private Dynamism and Policy Competence

219 Pages·2018·5.472 MB·English

by  Kenichi Ohno

THE HISTORY OF JAPANESE ECONOMIC
DEVELOPMENT
This is an easy-to-read book that explains how and why Japan industrialized rapidly. It traces
historical development from the feudal Edo period to high income and technology in the cur-
rent period. Catch-up industrialization is analyzed from a broad perspective including social,
economic and political aspects. Historical data, research and contesting arguments are amply
supplied. Japan’s unique experience is contrasted with the practices of today’s developing
countries. Negative aspects such as social ills, policy failures, military movements and war
years are also covered.
Nineteenth-century Japan already had a happy combination of strong entrepreneurship
and relatively wise government, which was the result of Japan’s long evolutionary history.
Measured contacts with high civilizations of China, India and the West allowed cumulative
growth without being destroyed by them. Imported ideas and technology were absorbed with
adjustments to fit the local context.
The book grew out of a graduate course for government officials from developing coun-
tries. It offers a comprehensive look and new insights at Japan’s industrial path that are often
missing in standard historical chronicles. Written in an accessible and lively form, the book
engages scholars as well as novices with no prior knowledge of Japan.
Kenichi Ohno is Professor at the National Graduate Institute for Policy Studies, Tokyo. He
was born in Kobe, Japan and holds a PhD in Economics from Stanford University, California.
He worked at the International Monetary Fund and taught at the University of Tsukuba and
Saitama University before assuming his current position.

THE HISTORY OF JAPANESE
ECONOMIC DEVELOPMENT
Origins of Private Dynamism and
Policy Competence
Kenichi Ohno
First published 2018
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
 2018 Kenichi Ohno
The right of Kenichi Ohno to be identified as author of this work has been
asserted by him in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Names: Ono, Ken’ichi, 1957- author.
Title: The history of Japanese economic development : origins of private
dynamism and policy competence / by Kenichi Ohno.
Description: First Edition. | New York : Routledge, [2017] | Includes
bibliographical references and index.
Identifiers: LCCN 2017018249| ISBN 9781138215399 (hardback) |
ISBN 9781138215429 (pbk.) | ISBN 9781315444048 (ebook)
Subjects: LCSH: Economic development—Japan—History. | Japan—
Economic policy. | Banks and banking—Japan—History.
Classification: LCC HC462.95 .O626 2017 | DDC 338.952—dc23
LC record available at https://lccn.loc.gov/2017018249
ISBN: 978-1-138-21539-9 (hbk)
ISBN: 978-1-138-21542-9 (pbk)
ISBN: 978-1-315-44404-8 (ebk)
Typeset in Times New Roman
by Swales & Willis, Exeter, Devon, UK
Visit the companion website: www.routledge.com/cw/ohno
CONTENTS
List of figures vi
List of tables viii
List of boxes ix
Introduction 1
1 An overview: evolutionary history and translative adaptation 4
2 The Edo society: preparing conditions for industrialization 21
3 Transition from Edo to Meiji 35
4 Importing and absorbing technology 46
5 Development of key industries 61
6 Budget, finance and the macroeconomy of Meiji 73
7 World War I and the 1920s 82
8 The banking crisis of 1927 95
9 The 1930s and the war economy 104
10 Postwar recovery 1945–49 118
11 The high growth era 131
12 Economic maturity and slowdown 150
13 The asset bubble and prolonged recession 162
Questions and answers 179
Bibliography 195
Index 202
v
FIGURES
1.1 Japan’s multi-layered identity 5
1.2 Integration viewed from outside 7
1.3 Integration viewed from inside 7
1.4 Umesao’s view of the world 9
1.5 Four periods of Japanese history 12
2.1 Population and rice production 25
2.2 General price level 27
2.3 Inter-regional economic linkage in the late Edo period 29
3.1 Survival of millionaires in the late Edo and Meiji period 41
4.1 Production, export and import of cotton yarn 49
4.2 Trade structure 50
4.3 Structure of export and import 51
4.4 Foreign advisors employed by the Meiji government 52
4.5 Technology and factory size 57
4.6 Manufacturing output in prewar Japan 57
4.7 Employment structure in prewar Japan 58
5.1 Profits of Osaka Spinning in the early years 64
5.2 Average duration of male employment in manufacturing 67
6.1 Central and local government expenditure 75
6.2 Yen–dollar exchange rate 76
7.1 Price movement and the composition of gross national expenditure 83
7.2 Estimated tariff protection 86
7.3 Gross capital formation 87
7.4 Timelines of Japanese automobile producers 89
8.1 The balance sheet of the Bank of Taiwan 99
8.2 Share of big five banks 101
9.1 Wholesale price level 106
9.2 Average income of farm households (including non-farm income) 106
9.3 Production of military goods 112
9.4 Supply of consumer goods per head 113
9.5 Maritime transport during the Pacific War 114
10.1 Industrial production index 119
vi
FIGURES
10.2 Retail price inflation in Tokyo 122
10.3 Priority production system in theory (production index) 128
10.4 Priority Production System in practice (production index) 128
11.1 Real GDP growth 131
11.2 Japanese industrial prices relative to US prices 133
11.3 Central government revenue and expenditure 137
11.4 International reserves 138
12.1 The ratio of households owning consumer durables 151
12.2 Money supply and inflation 152
12.3 US bilateral trade balances with Japan and China 158
13.1 GDP growth 163
13.2 Real income per head relative to the United States 163
13.3 Nikkei 225 stock index average 164
13.4 Urban land price 164
13.5 Monetary base, money and bank lending 169
13.6 International reserves 169
13.7 Government debt as percent of GDP 170
A.1 Rice price in semi-log scale 190
A.2 Tokyo’s industrial areas in the Taisho period 190
vii
TABLES
1.1 Outline of Japanese history 15
2.1 Some basic terms of the Edo period 22
2.2 Examples of private professional schools (late Edo period) 32
4.1 Selected foreign investment projects during Meiji and Taisho 53
5.1 Largest enterprises by employment size (1907) 66
6.1 Estimated savings–investment balance by sector 78
9.1 Two major political parties in prewar Japan 108
11.1 Four major pollution lawsuits of postwar Japan 146
viii
BOXES
1.1 The gap between economic and social achievements 18
2.1 Proto-industrialization and population dynamics 33
3.1 The lecture of Natsume Soseki 44
4.1 Meiroku Zasshi 58
5.1 Shibusawa, Yamanobe and others 70
6.1 Japan becomes a new threat to East Asia and the world 80
7.1 Taisho Democracy 92
8.1 Hamaguchi Osachi and Koizumi Junichiro 102
9.1 The origin of the Japanese system 115
10.1 Arisawa Hiromi and Okita Saburo discuss postwar recovery 127
11.1 Honda Soichiro: a postwar business hero 147
12.1 Prof. Komiya and the Japan–US trade friction 159
13.1 The future of manufacturing SMEs 176
ix