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Effects of Industrial Policy on Productivity: The case of import quota removal during postwar Japan

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  • KIYOTA Kozo
  • OKAZAKI Tetsuji

Abstract

This paper attempts to provide a systematic analysis on the effects of industrial policy in postwar Japan. Among the various types of Japanese industrial policy, this paper focuses on the removal of de facto import quotas through the foreign exchange allocation system. Analyzing a panel of 100 Japanese manufacturing industries in the 1960s, we find that the effects of the quota removal on productivity were limited—the effects were significantly positive, but time was required before they appeared. On the other hand, the effects of tariffs on labor productivity were negative although insignificant. One possible reason for this is that the Japanese government increased tariff rates before removing the import quotas and maintained high tariff rates afterward. As a result, the effects of the Japanese industrial policy in the 1960s might be smaller than widely believed in the Japanese economic history literature.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13093.

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Length: 35 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:eti:dpaper:13093

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  1. Kozo Kiyota & Tetsuji Okazaki, 2010. "Industrial Policy Cuts Two Ways: Evidence from Cotton-Spinning Firms in Japan, 1956–1964," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 587 - 609.
  2. Tetsuji Okazaki & Takafumi Korenaga, 1999. "The Foreign Exchange Allocation Policy in Postwar Japan: Its Institutional Framework and Function," NBER Chapters, in: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues (NBER-EASE volume 7), pages 311-340 National Bureau of Economic Research, Inc.
  3. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
  4. Beason, Richard & Weinstein, David E, 1996. "Growth, Economies of Scale, and Targeting in Japan (1955-1990)," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 286-95, May.
  5. Kiyota, Kozo & Okazaki, Tetsuji, 2005. "Foreign technology acquisition policy and firm performance in Japan, 1957-1970: Micro-aspects of industrial policy," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 563-586, September.
  6. Grant, Hugh & Thille, Henry, 2001. "Tariffs, Strategy, And Structure: Competition And Collusion In The Ontario Petroleum Industry, 1870 1880," The Journal of Economic History, Cambridge University Press, vol. 61(02), pages 390-413, June.
  7. Marcus Noland & Howard Pack, 2003. "Industrial Policy in an Era of Globalization: Lessons from Asia," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 358.
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