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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.

Suggested Citation

  • Hiroshi Ohashi, 2004. "Learning by Doing, Export Subsidies, and Industry Growth: Japanese Steel in the 1950s and 1960s," CIRJE F-Series CIRJE-F-280, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2004cf280

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    References listed on IDEAS

    1. 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.
    2. 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.
    3. Harald Gruber, 1998. "Learning by Doing and Spillovers: Further Evidence for the Semiconductor Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(6), pages 697-711, December.
    4. 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.
    5. 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.
    6. Itoh, Motoshige & Kiyono, Kazuharu, 1987. "Welfare-Enhancing Export Subsidies," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 115-137, February.
    7. Robert E. Baldwin, 2004. "Openness and Growth: What's the Empirical Relationship?," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 499-526 National Bureau of Economic Research, Inc.
    8. 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.
    9. 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 246-268, June.
    10. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    11. Head, Keith, 1994. "Infant industry protection in the steel rail industry," Journal of International Economics, Elsevier, vol. 37(3-4), pages 141-165, November.
    12. 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.
    13. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    14. 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.
    15. Miravete, Eugenio J., 1998. "Infant-industry tariff protection with pressure groups," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 749-784, November.
    16. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
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    Cited by:

    1. Tsuyoshi Nakamura & Hiroshi Ohashi, 2011. "Matrix Exponential Stochastic Volatility with Cross Leverage," CIRJE F-Series CIRJE-F-813, CIRJE, Faculty of Economics, University of Tokyo.
    2. Mbaye, Samba, 2012. "Currency Undervaluation and Growth: Is there a Productivity Channel?," MPRA Paper 44261, University Library of Munich, Germany.
    3. Thompson, Peter, 2010. "Learning by Doing," Handbook of the Economics of Innovation, Elsevier.
    4. Park, Sangin, 2009. "An empirical evaluation of the 1986 Semiconductor Trade Arrangement," Japan and the World Economy, Elsevier, vol. 21(4), pages 349-357, December.
    5. Namsuk Choi, 2011. "Accounting for Learning-by-Doing in Foreign Trade," Korean Economic Review, Korean Economic Association, vol. 27, pages 115-138.
    6. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2011. "Marshallian externality, industrial upgrading, and industrial policies," Policy Research Working Paper Series 5796, The World Bank.
    7. Liao, Hailin & Wang, Bin & Li, Baibing & Weyman-Jones, Tom, 2016. "ICT as a general-purpose technology: The productivity of ICT in the United States revisited," Information Economics and Policy, Elsevier, vol. 36(C), pages 10-25.
    8. Tatsuo Hatta, 2017. "Competition Policy vs. Industrial Policy as a Growth Strategy," Working Papers DP-2016-40, Economic Research Institute for ASEAN and East Asia (ERIA).
    9. Satoshi Myojo & Hiroshi Ohashi, 2009. "Assessing the Consequences of a Horizontal Merger and its Remedies in a Dynamic Environment," CIRJE F-Series CIRJE-F-609, CIRJE, Faculty of Economics, University of Tokyo.
    10. Sacchidananda Mukherjee & Debashis Chakraborty & Julien Chaisse, 2014. "Influence of Subsidies on Exports empirical estimates,policy evidences and regulatory prospects," Working Papers 1422, Indian Institute of Foreign Trade.
    11. Zhao, Wei, 2013. "Estimating Dynamic Merger Effciencies with an Application to the 1997 Boeing-McDonnell Douglas Merger," MPRA Paper 63184, University Library of Munich, Germany, revised 11 Sep 2014.
    12. Hiroshi Ohashi & Tsuyoshi Nakamura, 2005. "Technology Adoption, Learning by Doing, and Productivity: A Study from Steel Refining Furnaces," 2005 Meeting Papers 28, Society for Economic Dynamics.
    13. Tsuyoshi Nakamura & Hiroshi Ohashi, 2005. "Technology Adoption, Learning by Doing, and Productivity: A Study of Steel Refining Furnaces," CIRJE F-Series CIRJE-F-368, CIRJE, Faculty of Economics, University of Tokyo.

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