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Creative Destruction of Industries: Yokohama City in the Great Kanto Earthquake, 1923

Author

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  • Tetsuji Okazaki

    (Graduate School of Economics, University of Tokyo)

  • Toshihiro Okubo

    (Faculty of Economics, Keio University)

  • Eric Strobl

    (ECOLE POLYTECHNIQUE)

Abstract

The Great Kanto Earthquake occurred on September 1st, 1923 and inflicted serious damage on Yokohama City as well as Tokyo City. For example, about 90% of the factories in Yokohama City were burnt down. However, these manufacturing industries appear to have recovered from the damage swiftly. This paper investigates the existence of creative destruction due to the Great Kanto Earthquake. Using firm-level data on capital (horsepower of motors) before and after the earthquake, we find substantial creative destruction in Yokohama city. Larger firms tend to increase their capital more in seriously damaged areas.

Suggested Citation

  • Tetsuji Okazaki & Toshihiro Okubo & Eric Strobl, 2017. "Creative Destruction of Industries: Yokohama City in the Great Kanto Earthquake, 1923," Keio-IES Discussion Paper Series 2017-021, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2017-021
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    1. Matthew A. COLE & Robert J R ELLIOTT & OKUBO Toshihiro & Eric STROBL, 2013. "Natural Disasters and Plant Survival: The impact of the Kobe earthquake," Discussion papers 13063, Research Institute of Economy, Trade and Industry (RIETI).
    2. Flath, David, 2014. "The Japanese Economy," OUP Catalogue, Oxford University Press, edition 3, number 9780198702405.
    3. Pereira, Alvaro S., 2009. "The Opportunity of a Disaster: The Economic Impact of the 1755 Lisbon Earthquake," The Journal of Economic History, Cambridge University Press, vol. 69(2), pages 466-499, June.
    4. Arimoto, Yutaka & Nakajima, Kentaro & Okazaki, Tetsuji, 2014. "Sources of productivity improvement in industrial clusters: The case of the prewar Japanese silk-reeling industry," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 27-41.
    5. Hallegatte, Stéphane & Ghil, Michael, 2008. "Natural disasters impacting a macroeconomic model with endogenous dynamics," Ecological Economics, Elsevier, vol. 68(1-2), pages 582-592, December.
    6. Andrea Leiter & Harald Oberhofer & Paul Raschky, 2009. "Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 333-350, July.
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    Cited by:

    1. Mathias Hoffmann & Tetsuji Okazaki & Toshihiro Okubo, 2019. "Branch Banking and Regional Financial Markets: Evidence from Prewar Japan," CIGS Working Paper Series 19-001E, The Canon Institute for Global Studies.
    2. Hayato Kato & Toshihiro Okubo, 2022. "The Resilience of FDI to Natural Disasters Through Industrial Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(1), pages 177-225, May.
    3. Kota Ogasawara, 2022. "Persistence of natural disasters on children's health: Evidence from the Great Kantō Earthquake of 1923," Economic History Review, Economic History Society, vol. 75(4), pages 1054-1082, November.
    4. Preeya Mohan & Toshihiro Okubo & Eric Strobl, 2020. "Natural Disasters and Industrial Production Efficiency: Evidence from Prewar Japan," Keio-IES Discussion Paper Series 2020-006, Institute for Economics Studies, Keio University.
    5. Zhou, Ziqiao & Zhang, Lin, 2021. "Destructive destruction or creative destruction? Unraveling the effects of tropical cyclones on economic growth," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 380-393.
    6. Tetsuji Okazaki & Toshihiro Okubo & Eric Strobl, 2020. "The Bright and Dark Side of Financial Support from Local and Central Banks after a Natural Disaster: Evidence from the Great Kanto Earthquake, 1923 Japan," Keio-IES Discussion Paper Series 2020-001, Institute for Economics Studies, Keio University.
    7. Siodla, James, 2021. "Firms, fires, and firebreaks: The impact of the 1906 San Francisco disaster on business agglomeration," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    8. Tatsuki Inoue, 2023. "Health Impacts of Public Pawnshops in Industrializing Tokyo," Papers 2305.09352, arXiv.org.
    9. Bertinelli, Luisito & Mahé, Clotilde & Strobl, Eric, 2023. "Earthquakes and mental health," World Development, Elsevier, vol. 169(C).
    10. Alves, Pedro Jorge & Lima, Ricardo Carvalho de Andrade & Emanuel, Lucas, 2022. "Natural disasters and establishment performance: Evidence from the 2011 Rio de Janeiro Landslides," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    11. Stefania Servalli & Massimo Sargiacomo, 2021. "Natural disasters and accounting: Which contributions form the past?," CONTABILIT? E CULTURA AZIENDALE, FrancoAngeli Editore, vol. 0(1), pages 5-9.

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    More about this item

    Keywords

    natural disaster; Great Kanto Earthquake; creative destruction;
    All these keywords.

    JEL classification:

    • N95 - Economic History - - Regional and Urban History - - - Asia including Middle East
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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