IDEAS home Printed from
   My bibliography  Save this paper

Small and medium-size enterprise support policies in Japan


  • 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.

Suggested Citation

  • Motoshige Itoh & Shujiro Urata, 1994. "Small and medium-size enterprise support policies in Japan," Policy Research Working Paper Series 1403, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1403

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Abla M. Abdel-Latif & Jeffrey B. Nugent, 1996. "Transaction Cost Impairments To International Trade: Lessons From Egypt," Contemporary Economic Policy, Western Economic Association International, vol. 14(2), pages 1-14, April.
    2. Linsu Kim & Jeffrey B. Nugent & Seung-Jae Yhee, 1997. "Transaction Costs And Export Channels Of Small And Medium-Sized Enterprises: The Case Of Korea," Contemporary Economic Policy, Western Economic Association International, vol. 15(1), pages 104-120, January.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.