Historical evolution of modified technology in silk-reeling industry during the early Meiji era: case of Gifu

We empirically confirm the performance and diffusion of technology introduced from developed countries, and then, modified in developing countries. Using plant-level panel data, we focus on the machine-reeling segment with modified technology in Hida and Mino in Gifu prefecture, Japan in the early Meiji period to measure total factor productivity (TFP) growth and estimate production function. The TFP growth of Gifu prefecture’s machine-reeling industry in this era was relatively larger than that in the later Meiji era. This growth was achieved by rapid output expansion observed in Gifu prefecture, especially in Mino. In the estimation results of the production function, estimated parameters of deepening of the joint work; generation of steam, instead of a power source, for boiling cocoons; use of water wheel; and participation in the regional silk-reeling association in Hida are significantly positive as explanatory factors of the TFP. Factors, such as competitive environment and regional production share of cocoon, also have a significantly positive impact on TFP. Due to the flux in a fierce competitive market condition among small-scale plants, the estimated parameter of operational months is insignificant. In the measurement results of technical efficiency using the stochastic frontier model, no difference is found between the production efficiency of modified technologies used in Mino and Hida. In the early stage of industrialization, the private segment improved these modified technologies using region-specific resources through the local government’s indirect support, thus realizing their proliferation.