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Japan’s Modern Economy

Japan’s Modern Economy. September 11, 2007 Economics 272. Models of growth. Extensive growth Expansion of margins Constant returns to scale; quantitative not qualitative Intensive growth Higher output per inputs Labor productivity Y/L: Y is GDP, L is pop or LF

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Japan’s Modern Economy

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  1. Japan’s Modern Economy September 11, 2007 Economics 272

  2. Models of growth • Extensive growth • Expansion of margins • Constant returns to scale; quantitative not qualitative • Intensive growth • Higher output per inputs • Labor productivity • Y/L: Y is GDP, L is pop or LF • Total factor productivity • Relative to inputs of labor and capital

  3. Why growth? • Solow capital intensive • Hits diminishing returns, cf. old USSR • Smithian growth • Specialization and trade • Leads to higher productivity • “Division of labor is limited by the extent of the market” • Schumpeter technology-led growth • “Modern” growth • Historically all fought against Malthus!

  4. Dfn “Modern” = ? • Smithian “division of labor” • Non-farming population, esp urbanization • Commercial agriculture • Within monetary economy • Transportation / extent of market • Public order

  5. Government role • Government taxation paid for urbanization • Created a huge (cash) market • Edo was world’s largest city from by 1700 • the Edo “bakufu” fostered navigation • port and lighthouse development • maps etc. all by around 1720 • formal financial markets promoted • rice futures market in Osaka by 1720 • transferring money in place of in-kind taxes • insurance markets (esp. casualty) • local (rural) finance by 1800s

  6. Market-oriented economy • especially intense development in several regions • cash-crop farms around Osaka (farmers bought food!) • large urban consumer market • commercial elite for whom political advancement was foreclosed (cf. English Dissenters) • education spread. • ukiyoe were for mass-market (wedding presents…) • lots of agricultural handbooks - 200+ titles in print

  7. Specialization by the “kuni”(export products) • Silk, cotton, salt, lumber, paper, fish • Some regions largely industrial • Seasonal “proto-industry” often accompanied by regional migration • Both men & women active in wage labor outside the home

  8. Standard of Living • transformation of consumption • various rough fibers replaced by cotton; silk worn by more than just elite • new (and better foods). peppers, sweet potatoes / taro, corn, etc. • new and better housing: tatami mats off the ground • vast increases in protein-laden soybean-related consumption (miso, soy sauce) • Education • Literate society, perhaps more so than England! • Vast outpouring of books, circulated through lending libraries • Even nascent “western” studies, esp. in 1800s

  9. Mid-16th Century Han(“countries”)

  10. Shipping Routes after 1720

  11. Loom (karabikibata) c. 1770

  12. Agriculture Outgrows Population

  13. Osaka as an Entrepot (1714)Principal non-Rice Imports / Exports Imports Exports Marine products 20.2% Oil & beeswax 36.4% Agricultural items 19.5 Clothing & textiles 25.2 Clothing & textiles 15.4 Misc tools 7.5 Oilseed 12.9 Misc exports 7.3 Mining products 7.5 Processed food 6.1 Fertilizer 6.4 Accessories & decorations 5.8 Wood products 5.9 Lacquerware & pottery 4.6 Misc Imports 4.1 Seedcake (fertilizer) 3.4 Tea & tobacco 2.8 Furniture 0.5 Tatami 2.0 Weapons 0.5 Kyoto crafts 0.9 Arts & crafts 0.4% Total (Ag value) 286,561 kan Total 95,800 kan

  14. Growth of a National MarketRice Price Movements Converged in the 17th Century

  15. Structure of National Output– 1874 – • shortly after “opening” to the West • before significant structural change from • new technologies • convergence of domestic & international prices

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