(1) Research topics
Except for industrial technology policies, the research on technological advance in Japan before World War II have probably been conducted using the following two methods: the calculation of total-factor productivity (TFP) or the rate of technological advance, and case studies. The former studies the whole country or the major industrial categories, while the latter is geared towards individual industries, individual periods, and individual enterprises. Based on the results of these two kinds of research, it can be said that technological advances in Japan before World War II can largely be explained. However, the former shows the “surplus” after the contribution of factor inputs to output growth is eliminated. It is, in a sense, a black box and cannot account for the specific content of technological advances. In other words, it does not explain what specific factors constitute the TFP, although it is generally recognized that it includes technological advance, economies of scale, improved management, and improved proficiency. The endogenous growth theory that emerged after the 1980s gets rid of this weakness of using technological advance as an exogenous variable, while human resources, research and development (R&D) and other factors become endogenous. Considerable progress has been made in this regard. However, this endogenous growth model may be applicable to developed countries or middle-income countries, but not to countries that have yet to see economic take-off or are just seeing the start of modern economic growth, because good education resources and technology, a mature market, pioneering entrepreneurs, and a promising government are absent in these countries. Compared to this type of research, the accumulation of case studies is vital, but a drawback of this kind of research is that it is hard to produce a universally applicable theory. Therefore, the combination of theory and practice, and macro and micro perspectives offer the best solution. Nevertheless, due to a lack of data, this is extremely difficult. This is also the top subject in the research in this field, namely how to overcome these difficulties and the approach truth as far as possible.
The second subject is that previous research on technological advances before World War II concerned technology choice rather than technological innovation, and comprehensive studies were few and far between. The reasons are twofold: first, Japan achieved technological development before World War II mostly by importing technology from advanced countries, studying it, then making some improvements. All in all, this is imitation. Because the overall technological level in Japan at that time was low, it was hard to produce high-level innovation and, as a result, research had a low value. However, compared to technological innovations, the import or the popularization of technology is more closely related to economic activity, and is therefore more appropriate for economics research. Second, in comparison to the technology choice and the popularization of technology, the data on technological innovations is scarcer. For instance, data on R&D expenditures and R&D personnel at the industries and enterprises are practically nonexistent, and information on new products and processes is also few and far between.
This book attempts to study the two topics above. It is an analysis of the relationship between industrial development and technological innovation in Japan before World War II, in the hope of figuring out the type of relationship between economic development on the one hand and industrialization and technological innovations on the other hand, as well as the underlying reasons and conditions. We believe that economic development in Japan before World War II was, in large measure, linked to technological advances and technological innovation. We hope to perform studies from the perspective of the entire industry and specific sectors.
(2) Research perspective
Economic development always follows on the heels of changes in the industrial structure. The most basic logic and empirical rule about changes in the industrial structure is Petty-Clark’s law,3 which is verified by the fact of economic development in the vast majority of countries.4 Moreover, W.G. Hoffmann divided the manufacturing sector, a main sector of the second industry, into consumer goods and investment goods. Through the measurement of added value, it has been concluded that the higher the proportion of investment in the goods sector, the lower the consumer goods sector. This is called the “Hoffmann ratio.”5. Moreover, the approach of dividing the manufacturing industry into light industry and heavy industry is similar to Hoffmann’s idea. This classification was popular in the early days, especially in socialist countries and Japan.6 Nowadays, the manufacturing sector is often classified using labor-intensive and capital-intensive approaches, but this is not absolutely accurate, in that some industries have a dual character and are both capital- and labor-intensive, such as the electronics sector. Some industries have a high technology content, resulting in a technology-intensive category.
“Dual structure” is often mentioned in development economics, especially when studying the developing countries in the early days and the present developing countries. The so-called “dual-structure” theory divides the economy into traditional and modern sectors. Traditional sectors include those which have low productivity without using modern machinery and equipment such as agriculture and handicraft. Modern sectors are those which have high productivity by using machinery and equipment. It is generally recognized that as the share of modern sectors increases in economic development, the share of traditional sectors will dwindle.7 In addition, the concept of dual structure is sometimes applied to other sectors, such as large enterprises and SMEs in manufacturing, and traditional and modern industries.
Furthermore, research on traditional industrial theory emerged in Japan after the 1970s. These scholars chiefly researched the issues of traditional industries in the early days of economic development. These scholars including Takeshi Abe (1989), Takafusa Nakamura (1997), and Masayuki Tanimoto (1998) mainly researched the issues of traditional industries in the early days of economic development as far back as the Edp period?
(3) Insights
This book conducts analysis from the viewpoint of dual structure. This is chiefly based on the reality in modern Japan, which had been pressing ahead with modernization and industrialization since the Meiji period. On the one hand, it imported modern industries and technologies from Western Europe. On the other hand, traditional sectors played an important role. The two coexisted for a long time. Research results are abundant from this perspective, but most of these are attributed to the field of labor economics.8 There were also some studies from the angle of technological advance, albeit they are small in number. Closely related to this book are those by Susumu Hondai (1992), Yukihiko Kiyokawa (1995), and Husao Makino (1996). The research by Susumu Hondai is geared to the manufacturing sector, which is divided into large enterprises and small and medium enterprises (SMEs). Analysis was conducted using the data contained in the Statistics Table of Factories, especially the problem of organizational innovation issues caused by the division of labor among enterprises. Yukihiko Kiyokawa’s research chiefly concerns the issue of technology popularization in traditional industries, including the agricultural sector. The research of Husao Makino selected some representative industries from traditional sectors and modern sectors for comparison. The analysis focuses on technology choice and technology popularization.
As distinct from the perspectives of the above researches, this book mainly divides the manufacturing industry into traditional and modern industries, and carried out quantitative analysis of the manufacturing industry. It is concluded that this plays a greater role in traditional industries in modern Japan. On this basis, by gleaning and analyzing patent data, the author analyzed industrial development and technological innovation, and concluded that technological innovation has played an important role in industrial development.