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Effects of Industrial Policy on Productivity: The case of import quota removal during postwar Japan

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  • KIYOTA Kozo
  • OKAZAKI Tetsuji

Abstract

This paper attempts to provide a systematic analysis on the effects of industrial policy in postwar Japan. Among the various types of Japanese industrial policy, this paper focuses on the removal of de facto import quotas through the foreign exchange allocation system. Analyzing a panel of 100 Japanese manufacturing industries in the 1960s, we find that the effects of the quota removal on productivity were limited—the effects were significantly positive, but time was required before they appeared. On the other hand, the effects of tariffs on labor productivity were negative although insignificant. One possible reason for this is that the Japanese government increased tariff rates before removing the import quotas and maintained high tariff rates afterward. As a result, the effects of the Japanese industrial policy in the 1960s might be smaller than widely believed in the Japanese economic history literature.

Suggested Citation

  • KIYOTA Kozo & OKAZAKI Tetsuji, 2013. "Effects of Industrial Policy on Productivity: The case of import quota removal during postwar Japan," Discussion papers 13093, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:13093
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    1. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
    2. Kozo Kiyota, 2012. "Trade liberalization, economic growth, and income distribution in a multiple-cone neoclassical growth model," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 655-674, October.
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    9. Kozo Kiyota & Tetsuji Okazaki, 2010. "Industrial Policy Cuts Two Ways: Evidence from Cotton-Spinning Firms in Japan, 1956-1964," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 587-609.
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    Cited by:

    1. Hatase, Mariko & Matsubayashi, Yoichi, 2019. "Does government promote or hinder capital accumulation? Evidence from Japan’s high-growth era," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 245-265.
    2. Tetsuji Okazaki, 2017. "Development state evolving: Japan's graduation from a middle income country," CIGS Working Paper Series 17-007E, The Canon Institute for Global Studies.
    3. Mariko Hatase & Yoichi Matsubayashi, 2016. "Does government promote or hinder capital accumulation? Evidence from Japan' s high-growth era," Discussion Papers 1602, Graduate School of Economics, Kobe University.
    4. Tetsuji Okazaki, 2017. "Development State Evolving: Japan’s Graduation from a Middle Income Country," CIRJE F-Series CIRJE-F-1063, CIRJE, Faculty of Economics, University of Tokyo.
    5. Masaaki Fujii & Akihiko Takahashi, 2018. "Solving Backward Stochastic Differential Equations with quadratic-growth drivers by Connecting the Short-term Expansions," CIRJE F-Series CIRJE-F-1086, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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