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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 it took time before they appeared. On the other hand, the effects of tariffs on labor productivity were negative although these were 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.

Suggested Citation

  • Kiyota, Kozo & Okazaki, Tetsuji, 2013. "Effects of Industrial Policy on Productivity: The Case of Import Quota Removal during Postwar Japan," PRIMCED Discussion Paper Series 48, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:primdp:48
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    References listed on IDEAS

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    1. 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(2), pages 390-413, June.
    2. 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.
    3. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
    4. 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, pages 311-340, National Bureau of Economic Research, Inc.
    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. 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 286-295, May.
    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, May.
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    Cited by:

    1. Hatase, Mariko & Matsubayashi, Yoichi, 2019. "Does government promote or hinder capital accumulation? Evidence from Japan’s high-growth era," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 245-265.
    2. Tetsuji Okazaki, 2017. "Development state evolving: Japan's graduation from a middle income country," CIGS Working Paper Series 17-007E, The Canon Institute for Global Studies.
    3. Mariko Hatase & Yoichi Matsubayashi, 2016. "Does government promote or hinder capital accumulation? Evidence from Japan' s high-growth era," Discussion Papers 1602, Graduate School of Economics, Kobe University.
    4. Tetsuji Okazaki, 2017. "Development State Evolving: Japan’s Graduation from a Middle Income Country," CIRJE F-Series CIRJE-F-1063, CIRJE, Faculty of Economics, University of Tokyo.
    5. Masaaki Fujii & Akihiko Takahashi, 2018. "Solving Backward Stochastic Differential Equations with quadratic-growth drivers by Connecting the Short-term Expansions," CIRJE F-Series CIRJE-F-1086, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    Keywords

    Import quota; Industrial Policy; Productivity; Postwar Japan;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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