Evaluating the Production Capacity Expansion Plan comprehensively: Background, Achievement, and Long-Run Impact of the Production and Investment Plan in Wartime Japan

This paper investigates the meaning and outcomes of the Production Capacity Expansion Plan formulated and implemented in Japan during the World War II. In addition to laying the foundation for military expansion, ministries in charge of economic policies, including the Ministry of Finance, aimed to expand Japanʼs macroeconomic supply capacity by this plan. Given the unavoidable persistent large-scale military expenditures, the Ministry of Finance and other economic ministries accepted and promoted the Production Capacity Expansion Plan as economic policies for expanding the countryʼs productive capacity. Regarding the outcomes, the paper shows that while the achievement rate of the production targets was low, the original Four-Year Plan was largely achieved in terms of production capacity. In terms of consistency with the Materials Mobilization Plan, both the production plans and the materials allocation plans maintained a high degree of consistency through 1941 FY; however, in 1942 FY, consistency̶particularly in the materials allocation plans̶declined significantly. As for the long-term results, quantitative analysis demonstrates that from 1937 onward, the industries targeted by the Four-Year Production Capacity Expansion Plan experienced higher growth rates of employment than other industries, including heavy and chemical industries. The gap in scale that emerged between the targeted and non-targeted industries in the early 1940s persisted until the early 1950s. The long-term impact of the Production Capacity Expansion Plans on the scale of the industry in terms of employment is consistent with the finding that the expansion of production capacity had largely achieved the original targets by fiscal year 1941. This suggests that the facilities expanded under these plans may have supported production in the targeted industries through the postwar reconstruction period.