IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Small and medium-size enterprise support policies in Japan

Listed author(s):
  • Motoshige Itoh
  • Shujiro Urata

The authors examine how Japan's public and private sectors support small and medium-size enterprises (SMEs). They focus on technical, financial, and marketing assistance. Their findings are based on a survey of 107 firms; 40 that produce silverware, 33 engaged in synthetic textile weaving, and 34 that manufacture auto parts. Each sector represents a distinctive form of industrial organization, but they also share several characteristics: each industry is concentrated in a particular region, each involves close subcontracting relationships, and each has overcome difficulties and achieved a certain measure of industrial success. Technical support for these SMEs came largely through private channels, including parent firms, equipment suppliers, and other firms in the same line of business. Public institutions played only a subordinate role. Marketing support also came largely from parent firms, trading companies, and other private sources. Producers of intermediate goods in particular - such as auto parts and synthetic textiles - relied heavily on subcontractors. Most loans for Japan's SMEs were provided under competitive market conditions but three sources of directed credit - loans from specialized parastatals, loans channeled through local governments, and loan guarantees - accounted for about 20 percent of all SME borrowing and 35 to 60 percent of investment borrowing. Default rates averaged less than one-half of one percent of outstanding loans, and real interest rates were positive. The majority of firms surveryed used and valued directed credits. The smallest firms in particular valued them. Public institutions complemented the private marketplace in all three areas. Public technical and marketing support helped create and maintain private networks. In finance, Japan successfully embedded directed credit in a well-functioning, predominantly private, competitive, and prudential financial system. Through partnerships, public support continues to play both a direct and an indirect role in supporting the development of SMEs in Japan.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1403.

in new window

Date of creation: 31 Dec 1994
Handle: RePEc:wbk:wbrwps:1403
Contact details of provider: Postal:
1818 H Street, N.W., Washington, DC 20433

Phone: (202) 477-1234
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1403. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.