Working Paper: NBER ID: w22865
Authors: Randall Morck; Masao Nakamura
Abstract: Japan’s successful industrialization in the late 19th and early 20th century largely exhausted its then abundant natural resources. Rather than exemplifying rapid development in the absence of natural resources, Japan shows how laissez-faire government and successfully transplanted classical liberal institutions, including active stock markets, exorcised a natural resources curse that undermined its prior state-led industrialization strategy. Japan’s post-WWII reconstruction relied little on natural resources and more on bank financing and state direction, but was not an example of an initial industrialization.
Keywords: Japan; industrialization; natural resources; zaibatsu; economic development
JEL Codes: G3; N25; O14; O53; P28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Japan's commitment to laissez-faire economics (P19) | reduction of political rent-seeking behaviors (D72) |
| reduction of political rent-seeking behaviors (D72) | increased investment in foreign technology (F23) |
| absence of substantial corruption and genuine political competition (D72) | reduction of political rent-seeking behaviors (D72) |
| zaibatsu business groups (L22) | channeling natural resource earnings into industrial expansion (Q33) |
| privatization of state-owned enterprises (SOEs) (L33) | more efficient allocation of resources (D61) |
| more efficient allocation of resources (D61) | Japan's industrial success (O25) |