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Learning by Doing, Export Subsidies, and Industry Growth: Japanese Steel in the 1950s and 1960s

  • Hiroshi Ohashi

    (Faculty of Economics, The University of Tokyo)

The paper examines the Japanese steel industry in the 1950s and 1960s to evaluate the role of export subsidy policies. Export subsidies can be instrumental in increasing an industry's cost competitiveness in the presence of learning by doing, a characteristic of production in the steel industry. The proposed approach addresses identification issues found in the literature. Using a dynamic estimation model, this paper identifies a significant learning rate of above 20%. It also finds little intra-industry knowledge spillover, an observation consistent with the nature of the Japanese employment system at that time. Simulations made with the model indicate that the subsidy policy had an insignificant impact on industry growth. The paper provides underlying economic reasons for the simulation results.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2004/2004cf280.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-280.

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Length: 43 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:tky:fseres:2004cf280
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  1. Harald Gruber, 1998. "Learning by Doing and Spillovers: Further Evidence for the Semiconductor Industry," Review of Industrial Organization, Springer, vol. 13(6), pages 697-711, December.
  2. Feenstra, Robert C., 1986. "Trade policy with several goods and market linkages," Journal of International Economics, Elsevier, vol. 20(3-4), pages 249-267, May.
  3. Irwin, Douglas A. & Pavcnik, Nina, 2004. "Airbus versus Boeing revisited: international competition in the aircraft market," Journal of International Economics, Elsevier, vol. 64(2), pages 223-245, December.
  4. C. Lanier Benkard, 2000. "Learning and Forgetting: The Dynamics of Aircraft Production," American Economic Review, American Economic Association, vol. 90(4), pages 1034-1054, September.
  5. 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.
  6. Miravete, Eugenio J., 1998. "Infant-industry tariff protection with pressure groups," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 749-784, November.
  7. Robert E. Baldwin, 2003. "Openness and Growth: What's the Empirical Relationship?," NBER Working Papers 9578, National Bureau of Economic Research, Inc.
  8. Dasgupta, Partha & Stiglitz, Joseph E, 1988. "Learning-by-Doing, Market Structure and Industrial and Trade Policies," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 246-68, June.
  9. Itoh, Motoshige & Kiyono, Kazuharu, 1987. "Welfare-Enhancing Export Subsidies," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 115-37, February.
  10. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  11. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
  12. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
  13. Rebecca Achee Thornton & Peter Thompson, 2001. "Learning from Experience and Learning from Others: An Exploration of Learning and Spillovers in Wartime Shipbuilding," American Economic Review, American Economic Association, vol. 91(5), pages 1350-1368, December.
  14. "Miwa, Yoshiro" & "Ramseyer, J. Mark", 2001. "Japanese Economic Policy and Policy Evaluation―The Case of “Industrial Policy”―," Economic Review, Hitotsubashi University, vol. 52(3), pages 193-204, July.
  15. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
  16. Head, Keith, 1994. "Infant industry protection in the steel rail industry," Journal of International Economics, Elsevier, vol. 37(3-4), pages 141-165, November.
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