Industrialisation through Full Utilisation of Foreign Trade: The Case of Some East Asian Economies

This paper examines the development experience of Japan, and its implication for contemporary developing countries in Asia. Japan achieved rapid industrialisation by full utilisation of foreign trade. Through foreign trade she not only obtained raw materials unavailable domestically, but also introduced new products and technology and developed modern industrial production through import substitution at home and exportation abroad. As a late-starting industrial country in the late nineteenth century, Japan’s industries typically followed the ‘catching-up product cycle’ (CPC) process of development.1 She started as a primary exporter at the take-off stage and then succeeded in achieving export substitution, first in labour-intensive manufactures and later in capital- and technology-intensive ones. This pattern is relevant for developing countries with similar resource endowments in Asia after the Second World War. We will first examine the different stages of Japan’s development and then take a comparative look at recent experience of the Asian developing countries.