Storz-FM.qxd 3/11/05 6:45 PM Page i Institutional and Technological Change in Japan’s Economy Institutional and technological change is a highly topical subject. At the theoretical level, there has been lively debate in the field of institutional economics, and technological change has become a key issue in endogenous growth theory. At a practical policy level, arguments about how Japan and the Japanese economy should plan for the future have been particularly prominent. In this book, leading economists and economic historians of Japan examine a range of key issues concerning institutional and technological change, making extensive use of discipline-based analytical tools and drawing important conclusions as to how the process of institutional and technical change has actually worked in the Japanese context. In focusing on issues which are currently being much debated in the country itself, these chapters make a major contribution to a broader understanding of the world’s second-largest economy. Janet Hunter is Saji Professor of Economic History at the London School of Economics and Political Science. She is the co-editor of a volume on the application of new institutional economics to developing economies, and has published widely on modern Japanese economic history, particularly on the development of the female labour market. She is currently working on the history of communications. Cornelia Storz is Professor of Japanese Economics at the Faculty of Economics and the Centre for Japanese Studies, University of Marburg. Her research focuses on the comparison of economic systems, genesis and change in institutions (especially institutional change in Japan), comparative institutional analysis, and entrepreneurship and the modern Japanese economy. Storz-FM.qxd 3/11/05 6:45 PM Page ii Routledge Contemporary Japan Series 1 A Japanese Company in Crisis Ideology, strategy, and narrative Fiona Graham 2 Japan’s Foreign Aid Old continuities and new directions Edited by David Arase 3 Japanese Apologies for World War II A rhetorical study Jane W. Yamazaki 4 Linguistic Stereotyping and Minority Groups in Japan Nanette Gottlieb 5 Shinkansen From bullet train to symbol of modern Japan Christopher P. Hood 6 Institutional and Technological Change in Japan’s Economy Past and present Edited by Janet Hunter and Cornelia Storz Storz-FM.qxd 3/11/05 6:45 PM Page iii Institutional and Technological Change in Japan’s Economy Past and present Edited by Janet Hunter and Cornelia Storz I~ ~?io~;!;n~~~up LONDON AND NEW YORK Storz-FM.qxd 4/11/05 2:21 PM Page iv First published 2006 by Routledge Published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2006 Janet Hunter and Cornelia Storz, selection and editorial matter; the contributors, their own chapters Typeset in Times New Roman by Newgen Imaging Systems (P) Ltd, Chennai, India The Open Access version of this book, available at www.tandfebooks.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 9780415368223 (hbk) Storz-FM.qxd 3/11/05 6:45 PM Page v Contents List of figures vii List of tables viii Notes on contributors ix Acknowledgements xii 1 Introduction: economic and institutional change in Japan 1 JANET HUNTER AND CORNELIA STORZ 2 Technology and change in Japan’s modern copper mining industry 10 PATRICIA SIPPEL 3 Professionalism as power: Tajiri Inajiro and the modernisation of Meiji finance 27 KATALIN FERBER 4 Investment, importation and innovation: genesis and growth of beer corporations in pre-war Japan 43 HARALD FUESS 5 Managing female textile workers: an industry in transition, 1945–75 60 HELEN MACNAUGHTAN 6 Japanese inter-firm relations: on the way towards a market-oriented structure? 75 ANDREAS MOERKE 7 Global finance, democracy, and the State in Japan 91 TAKAAKI SUZUKI Storz-FM.qxd 3/11/05 6:45 PM Page vi vi Contents 8 Change and crisis in the Japanese banking industry 120 MARIUSZ K. KRAWCZYK 9 International mergers and acquisitions with Japanese participation: two cases from the automotive industry 140 SIGRUN CASPARY 10 Environmental protection and the impact of institutional changes in Japan 170 ILONA KOESTER 11 Changes in conducting foresight in Japan 188 KERSTIN CUHLS Index 206 Storz-FM.qxd 3/11/05 6:45 PM Page vii Figures 4.1 Beer production (koku) and beer price in Japan, 1880–1944 52 6.1 Inter-firm networks in Japan 77 6.2 Stable shareholding and cross-shareholding 79 6.3 Ratio of stocks to total capital. (a) Core and vertical firms. (b) Independent and horizontal firms 80 6.4 Ratio of trade receivables to trade notes and accounts payable. (a) Core and vertical firms. (b) Horizontal firms 82 6.5 Growth rate of sales. (a) Core firms and vertical firms. (b) Horizontal and independent firms 83 6.6 Comparative rates of return. (a) Core and vertical firms. (b) Independent and horizontal firms 84 6.7 Network ratio of director dispatch (horizontal dimension). (a) Networks with group firms. (b) Networks with non-group firms 86 6.8 Network ratio of director dispatch (vertical dimension). (a) Networks with group firms. (b) Networks with non-group firms 87 7.1 Public sector lending and deposit taking in Japan, 1989–2002 102 8.1 Asset prices in Japan (1983 ϭ 100) 122 8.2 Breakdown of financial assets in the household sector 129 9.1 OUT-IN cases in Japan, 1985–2003 143 9.2 Types of organisational and quasi-organisational architecture 148 9.3 Groupings in the world car industry in 1985 150 9.4 Groupings in the world car industry in 2002 151 9.5 Structure of the alliance of Renault–Nissan (as of 31 December 2002) 159 9.6 Mitsubishi Motors R&D organisation change by June 2002 160 11.1 Genealogical tree of Delphi 194 11.2 Who was involved in Japan’s science and technology policy in 2003 197 11.3 The four methodological pillars of foresight in Japan 201 Storz-FM.qxd 3/11/05 6:45 PM Page viii Tables 2.1 Mineral output in Japan, 1874–1908 11 2.2 Exports of copper and coal, 1868–95 (in 1000s of yen and % of total exports) 12 2.3 Value of output from Japanese mines 21 2.4 Output and ownership of the main copper mines 1913 21 4.1 Breweries among the 200 largest Japanese industrial firms, 1918 and 1930 49 4.2 Market share of major breweries in Japan, 1890–1949 (%) 50 6.1 Unwinding cross-shareholding (% of all shares) 79 6.2 Decreasing business transactions within keiretsu groups 81 6.3 Coefficient of variation, growth rate of sales 84 7.1 Comparative index of union strength 95 7.2 Fiscal stimulus packages, 1992–2000 97 7.3 General and Central government financial balances 98 7.4 Bank recapitalization ratio, March 31, 1999 101 8.1 Credit ratings of major Japanese banks 126 8.2 Consolidation of the banking industry 128 8.3 Loss on disposal of bad loans in all banks (billion yen) 131 9.1 Barriers to foreign M&A in Japan 144 9.2 Recent legal changes promoting international M&A in Japan 146 9.3 Market shares of Japanese companies 153 9.4 Percentage of shares in Japanese companies held by foreign companies 153 10.1 The typical prisoner’s dilemma 172 10.2 Instruments for environmental policy – pros and cons 174 11.1 Summary of some major differences between forecasting and foresight 192 Storz-FM.qxd 3/11/05 6:45 PM Page ix Contributors Sigrun Caspary has since 1997 been an Associate Professor at the Institute for Comparative Research into Culture and Economic Systems at the Faculty of Management and Economics of Witten/Herdecke University. She holds a PhD in Japanese Studies with Economics and Political Science from Bonn University. Her working, research and teaching experience includes the Yamaichi Bank, Frankfurt (1997), Hitotsubashi University (1992–97), the Institute of International Economic Studies, Tokyo (1996) and Trier University (1992–93). Her recent work on international M&A with Japanese participation extends her previous research on the international aerospace industry, Japanese industrial policy and industrial districts. Kerstin Cuhls is Project Manager at the Fraunhofer Institute for Systems and Innovation Research (ISI) in Karlsruhe. She obtained her doctorate from the University of Hamburg, lectures at the Hochschule Bremen and has acted as the scientific project coordinator for the German–Japanese foresight projects. As well as foresight and Delphi work, her research focuses on innovation strategies, research and development strategies, and comparison of Japanese and German research and technology policies. Her most recent publications are ‘Evaluating a Participative Foresight Process: “Futur – the German research dialogue” ’ (with Luke Georghiou) (Research Evaluation, 2004) and Participatory Priority Setting for Research and Innovation Policy (with Michael Jaspers) (IRB Verlag, 2004). Katalin Ferber graduated in economic history from Karl Marx University in Budapest, Hungary, and has worked as a comparative economic historian in various countries. She is currently Associate Professor at Waseda University in Tokyo. Her primary research interest is the comparison of the Japanese financial and fiscal system and its counterparts in Central Europe. Her recent publications include an article on the origins of the Deposit Fund in Japan (Japanese Studies, September 2002), and she is the author of Origins of the Contemporary Japanese Economic and Financial System (in Hungarian) (Budapest: Balassi Kiado, 2006).