Abstract
A number of studies have revealed a negative effect of industrial policy on productivity growth. Is this because industrial policy fails to control the activities of firms or because it can effectively control them? This paper attempts to answer these questions, using firm-level data from the cotton-spinning industry in Japan for the period 1956-64. We determine that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton-spinning firms, which contributed to the establishment of a stable market structure during the period. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative productivity growth in large firms during this period, industrial policy resulted in negative productivity growth in the industry.
| Original language | English |
|---|---|
| Pages (from-to) | 587-609 |
| Number of pages | 23 |
| Journal | Journal of Law and Economics |
| Volume | 53 |
| Issue number | 3 |
| Publication status | Published - 2010 Aug |
| Externally published | Yes |
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ASJC Scopus subject areas
- Law
- Economics and Econometrics
Cite this
Industrial policy cuts two ways : Evidence from cotton-spinning firms in Japan, 1956-1964. / Kiyota, Kozo; Okazaki, Tetsuji.
In: Journal of Law and Economics, Vol. 53, No. 3, 08.2010, p. 587-609.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Industrial policy cuts two ways
T2 - Evidence from cotton-spinning firms in Japan, 1956-1964
AU - Kiyota, Kozo
AU - Okazaki, Tetsuji
PY - 2010/8
Y1 - 2010/8
N2 - A number of studies have revealed a negative effect of industrial policy on productivity growth. Is this because industrial policy fails to control the activities of firms or because it can effectively control them? This paper attempts to answer these questions, using firm-level data from the cotton-spinning industry in Japan for the period 1956-64. We determine that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton-spinning firms, which contributed to the establishment of a stable market structure during the period. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative productivity growth in large firms during this period, industrial policy resulted in negative productivity growth in the industry.
AB - A number of studies have revealed a negative effect of industrial policy on productivity growth. Is this because industrial policy fails to control the activities of firms or because it can effectively control them? This paper attempts to answer these questions, using firm-level data from the cotton-spinning industry in Japan for the period 1956-64. We determine that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton-spinning firms, which contributed to the establishment of a stable market structure during the period. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative productivity growth in large firms during this period, industrial policy resulted in negative productivity growth in the industry.
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UR - http://www.scopus.com/inward/citedby.url?scp=79954471839&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:79954471839
VL - 53
SP - 587
EP - 609
JO - Journal of Law and Economics
JF - Journal of Law and Economics
SN - 0022-2186
IS - 3
ER -