Kicking Away the Ladder. Development Strategy in Historical Perspective

What did government enterprise accomplish between 1686 and 1880? Quantitatively, not much: a score or so of modern factories, a few mines, a telegraph system, less than a hundred miles of railway. On the other hand, new and difficult ground had been broken: managers and engineers had been developed, a small but growing industrial labour force trained, new markets found; perhaps most important, going enterprises had been developed to serve as a base for further industrial growth.[181]

In addition, the Japanese government implemented policies intended to facilitate the transfer of advanced foreign technologies and institutions. For example, it hired many foreign technical advisers; their number peaked at 527 in 1875[182] but fell quickly to 155 by 1885, suggesting a rapid absorption of knowledge on the part of the Japanese. The Ministry of Education was established in 1871; by the turn of the century it claimed a 100 per cent literary ratio.[183]

Moreover, the Meiji state tried to import and adapt from the more advanced countries those institutions that it regarded as necessary for industrial development. It is not easy to ascribe exactly the ‘templates’ for different Japanese institutions of the time to particular foreign countries, but it is clear that what emerged initially was an institutional patchwork.[184] The criminal law was influenced by the French law, while the commercial and civil laws were largely German, with some British elements. The army was built in the German mould (with some French influence), and the navy in the British. The central bank was modelled on the Belgian one, and the overall banking system on the American. The universities were American, and the schools initially American but quickly changed to the French and German models, and so on.

Needless to say, it took time for these institutions take root. However, the speed with which the Japanese assimilated and adapted them is regarded by historians as remarkable. Various institutional innovations, such as lifetime employment and durable subcontracting networks, which emerged during the postwar period, also deserve attention.

Following the ending of the unequal treaties in 1911, the post-Meiji Japanese state started introducing a range of tariff reforms intended to protect infant industries, to make imported raw materials more affordable and to control luxury consumer goods.[185] Once again, we can see great similarities between these policies and those previously used by other countries during their developmental periods.

As we can see in table 2.1, by 1913 Japan had become one of the more protectionist countries, although it was still less protective of its manufacturing industries than the USA. In 1926, tariffs were raised for some new industries, such as woollen textiles. Despite this, tariff was ‘never more than a secondary weapon in the armoury of economic policy’,[186] although some key industries were indeed heavily protected (e.g, iron and steel, sugar, copper, dye-stuffs, and woollen textiles). Here we can find some parallel between Japan after 1911, on the one hand, and Germany and Sweden in the late nineteenth and early twentieth centuries, on the other hand. All of them used ‘focused’ tariff protection, whereby the overall tariff regime remained moderately protective but strong protection was accorded to some key industries, rather than the ‘blanket’ protection used by countries such as the USA, Russia and Spain at the time.

During the 1920s, under strong German influence, Japan began to encourage the rationalization of key industries by sanctioning cartel arrangements and encouraging mergers, which were aimed at restraining ‘wasteful competition’, achieving scale economies, standardization and the introduction of scientific management.[187] These efforts were intensified, and government control over cartels was strengthened, in the 1930s in response to the world economic crisis following the Great Depression and the war efforts, especially with the enactment of the 1931 Important Industries Control Law. Thus the basic pattern of postwar industrial policy was established.[188] As in many other NDCs, Japan’s military build-up during the 1930s is believed to have contributed to the development of heavy industries (although with an ultimately disastrous political outcome) by stimulating demand and creating technological spillover.[189]