Evaluating the Production Capacity Expansion Plan for the Iron and Steel Industry in Japan during World War II: Background, Achievement, and Long-Run Impact

This paper explores the impact of the Production Capacity Expansion Plan during World War II on steel production. We trace the construction progress of individual facilities included in the implementation plans and show that many of them—particularly blast furnaces and both open-hearth and converter furnaces—were completed during the war. The production capacity of facilities constructed under the Production Capacity Expansion Plan accounted for high percentage in the total production capacity not only at the end of the war, but also at the middle of the 1950s. Furthermore, a regression analysis using plant-level data on steel products shows that the plants for which the expansion of rolling facilities was included in the implementation plans exhibited higher output from 1942 onward, compared with other plants, relative to the pre- implementation period. This relationship remains statistically significant in 1950, 1955, and 1960. Taken together, these results suggest that the Production Capacity Expansion Plan had a positive impact on Japan’s steel production from the wartime period through the early phase of postwar high economic growth, primarily through the expansion of production facilities.