Update of Industrial Equipment and its Productivity Implication in Japan in the 1950s: "Industrial Rationalization" in the iron and steel industry

Author Name OKAZAKI Tetsuji  (Faculty Fellow, RIETI) /KORENAGA Takafumi  (Senshu University)
Creation Date/NO. December 2015 15-J-064
Research Project Historical Evaluation of Industrial Policies
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In the 1950s, the Japanese economy was faced with international competition, with old industrial equipment built before and during World War II. In this situation, the Ministry of International Trade and Industry (MITI) launched the "Industrial Rationalization" policy, whose main purpose was updating the equipment of strategic industries such as iron and steel and electricity. In this paper, we investigated the change in the vintage distribution of the equipment in the iron and steel industry in the 1950s and its productivity implication, using equipment-level and plant-level data. It was found that, on average, vintages of the equipment became newer in this period, which raised the total factor productivity. Also, we estimated the average treatment effect of the Japan Development Bank (JDB) loan on the vintages and found that the JDB loan had a significant positive impact on the rejuvenation of the equipment.