Economic Development of Japan
No.4 Meiji 2&3
Meiji Mura
P.56
Cumulative history, Edo achievements,
national unity and nationalism
Japan’s economic growth was driven mainly by private
dynamism while policy was also helpful
Private-sector dynamism
and entrepreneurship
(primary force)
Policy support
(supplementary)
Rapid
industrialization
esp. Meiji and
post WW2 period
Policy was generally
successful despite criticisms:
--Power monopoly by former
Satsuma & Choshu politicians
--Privatization scandal, 1881
--Excessively pro-West
--Unfair by today’s standard
PP.57-58
Chronology of Meiji Industrialization
1870s - Monetary confusion and inflation
US banking system adopted with little success
Printing money to suppress Saigo’s Rebellion (1877)
Early 1880s - Matsukata Deflation
Stopping inflation, creating central bank (Bank of Japan)
Landless peasants & urban poor (“proletariat”) emerge
Late 1880s - First company boom
Masayoshi Matsukata
(Councilor of Finance)
Osaka Spinning Company and its followers
Series of company booms (late 1890s, late 1900s, WW1)
Postwar management (after J-China War & J-Russia War)
Fiscal spending continued even after war  BoP crisis
Active infrastructure building (local gov’ts) & military buildup
P.230
Inflation in Meiji Period
Rice Price per Koku (Yen/150kg)
25000
Matsukata deflation
20000
15000
10000
5000
Source: Management and Coordination Agency, Historical Statistics of Japan, Vol.4, 1988.
1912
1909
1906
1903
1900
1897
1894
1891
1888
1885
1882
1879
1876
1873
0
Money and Inflation in Early Meiji
250
Money i n ci rcul a ti on
( mi l l i on y en)
200
150
R i ce pri ce
( 1868=100)
100
50
Sa i g o's R ebel l i on
Ma ts uk a ta
def l a ti on
1890
1889
1888
1887
1886
1885
1884
1883
1882
1881
1880
1879
1878
1877
1876
1875
1874
1873
0
First
Company
Boom
6000
5000
Banking
Transport
Commerce
Industry
Agriculture
4000
3000
2000
1000
Legal capital
350
(million yen)
300
1892
1891
1890
1889
1888
1887
1886
1885
0
1884
Number of
companies
250
Banking
Transport
Commerce
Industry
Agriculture
200
150
100
50
1892
1891
1890
1889
1888
1887
1886
1885
0
1884
Yoshio Ando ed,
Databook on Modern
Japanese Economic
History, 2rd ed, Tokyo
Univ. Press, 1979.
PP.62-65
Technology Transfer
1. Foreign advisors (public and private sector)
2. Engineering education (studying abroad, Institute of
Technology; technical high schools)
3. Copy production, reverse engineering, technical cooperation
agreements (esp. automobiles, electrical machinery); sogo shosha
(trading companies) often intermediated such cooperation
Technical Experts
Private-sector experts, 1910
Mining
513 (18.0%)
Textile
300 (10.6%)
Shipbuilding 250 (8.8%)
Power & gas 231 (8.1%)
Trading
186 (6.5%)
Railroad
149 (5.2%)
Food
149 (5.2%)
TOTAL
2,843 (100%)
(Graduates of Technical Univs. & High Schools)
16000
14000
12000
Private sector
Public sector
10000
8000
6000
4000
2000
0
1880
1890
1900
1910
1920
P.64
Studying Abroad (Early Engineers)
• First students: bakufu sent 7 students to Netherlands
in 1862 (naval training)
• By 1880s, 80 Japanese studied engineering abroad
(shipbuilding, mechanics, civil engineering, mining
& metallurgy, military, chemistry)
• Destination: UK (28), US (20), France (14), Germany
(9), Netherlands (8)
• They received top-class education and could easily
replace foreigners after coming back
• They mostly worked in government (no modern
private industries existed at first)—Ministry of
Interior, MoF, Army, Navy, Ministry of Industry
Kobu Daigakko 工部大学校
P.64
(Institute of Technology)
• 1871 Koburyo of Ministry of Industry; 1877 renamed to Kobu
Daigakko; 1886 merged with Tokyo Imperial University (under
Ministry of Education)
• First President: Henry Dyer (British engineer) with philosophy
“judicious combination of theory and practice”
• Preparatory course (2 years), specialized studies (2 years), internship (2
years) + government-funded overseas study for top students
• 8 courses: civil engineering, mechanical engineering, shipbuilding,
telecommunication, chemistry, architecture, metallurgy, mining (classes
in English)
• Producing top-class engineers (import substitution)—Tanabe Sakuro
(designer of Biwako-Kyoto irrigation canal & power generation);
Tatsuno Kingo (builder of Tokyo Station, BOJ, Nara Hotel, etc.)
Parallel development or
“hybrid technology”
Manufacturing: Share of Output
100%
Indigenous
industries
80%
60%
Factory size
Employment Str uctur e of Pr ewar Japan
100%
Indigenous (trade &
service)
80%
60%
Indigenous
(manufacturing)
40%
Modern industries
20%
Agri, forestry,
fishery
1930-35
1925-30
1920-25
1915-20
1910-15
1905-10
1900-05
1895-00
1890-95
1885-90
0%
1935-40
1930-35
1925-30
1920-25
1915-20
* indicates hybrid status
1910-15
M
1905-10
M*
1900-05
Modern
0%
1895-00
I*
20%
1890-95
I
Indigenous
Modern
industries
Large
1885-90
Technology
Small
40%
PP.65-67
PP.79-80
Neoclassical Labor Market
Duration of Male Employment in Manufacturing
Japanese workers:
Source: Ministry of Agriculture and Commerce,
Survey of Industrial Workers, 1901.
35
30
1902
25
Percent
--Too much job hopping, do not stay with
one company
--Lack of discipline, low saving
--Barrier to industrialization
1912
20
15
10
5
0
Female domestic workers:
<1
1
2
3-4
5-6
7-9
10>
Years
--Urban industrialization and rural poverty and labor surplus
 female migration from villages to cities
--End of Meiji to early Showa were the peak period of jochu (housemaid)
--17.5% of non-farm female workforce, second largest after textile workers (1930)
--5.7% of households hired jochu (1930)
--There were both young and old jochu, some living-in and others commuting
--International comparison (female non-farm employment share): UK 1851
(11.4%), US 1910 (11.8%), Thailand 1960 (10.6%), Philippines 1975 (34.3%)
Source: Konosuke Odaka, “Dual Structure,” 1989.
Wage: Gender Gap
Farm employment
Sen per day
Male Female F/M %
Textile weavers
Sen per day
Male Female F/M %
Domestic servants
Yen per month
Male Female F/M %
1885
15.1
9.7
64.2%
12.3
7.5
61.0%
1.38
0.75
54.3%
1892
15.5
9.4
60.6%
12.0
8.4
70.0%
1.55
0.82
52.9%
1895
18.5
11.3
61.1%
18.3
11.6
63.4%
1.64
0.90
54.9%
1900
30.0
19.0
63.3%
33.0
20.0
60.6%
2.70
1.56
57.8%
1905
32.0
20.0
62.5%
34.0
13.0
38.2%
3.22
1.79
55.6%
1910
39.0
24.0
61.5%
49.0
27.0
55.1%
4.56
2.96
64.9%
1915
46.0
29.0
63.0%
46.0
30.0
65.2%
4.97
3.13
63.0%
1920
144.0
92.0
63.9%
175.0
95.0
54.3%
28.86
22.68
78.6%
Source: Ministry of Agriculture and Commerce, "Table of Wages."
Note: 1 yen = 100 sen.
Konosuke Odaka: World of Craftsmen,
World of Factories (NTT Publishing, 2000)
• In Japan’s early factories, traditional shokunin (craftsmen) and
modern shokko (workers) coexisted.
• Craftsmen were proud, experienced and independent. They
were the main force in initial technology absorption.
• Workers received scientific education and functioned within
an organization. Their skills and knowledge were open, global
and expandable.
• Over time, craftsmen were replaced by workers. Experience
was not enough to deepen industrialization.
Prof. Odaka proves these points by examining the history of
concrete firms in metallurgy, machinery and shipbuilding.
Prof. Odaka’s Working Hypotheses
• In the early years of factories, Japan’s traditional
craftsmen in mechanics and metal working played key
roles in absorbing new technology. Farmers and
merchants were not suitable for factory operation.
• However, trained engineers, not craftsmen, created a
modern production system suitable for Japan.
– Adaptation of imported system to Japanese context
– Production management system, including hired labor
– Skill formation system based on formal education and OJT
• The gap between craftsmen’s skill and modern
technology had to be bridged. Hired foreigners, then
Japanese engineers, provided this bridge up to WW2.
PP.65, 179-181
Monozukuri (Manufacturing) Spirit
• Mono means “thing” and zukuri (tsukuri) means “making” in
indigenous Japanese language.
• It describes sincere attitude toward production with pride,
skill and dedication. It is a way of pursuing innovation and
perfection, often disregarding profit or balance sheet.
• Many of Japan’s excellent manufacturing firms were founded
by engineers full of monozukuri spirit.
Sakichi Toyota
1867-1930
Konosuke Matsushita
1894-1989
Soichiro Honda
1906-1991
Akio Morita (Sony’s
co-founder)
1921-1999
Toyota Techno Museum in Nagoya
displays textile machines in actual
operation, including Sakichi Toyota’s
1924 invention. It also explains
Toyota’s car history.
www.tcmit.org/english/index.html
Meiji Mura (Meiji Village) is an
open-air museum of Meiji
architecture and culture, Inuyama
City, Aichi Prefecture
www.meijimura.com/english/index.html