Economic Development with Special Reference to East Asia: Proceedings of a Conference held by the International Economic Association

448 Pages·1964·45.397 MB·English

by  Kenneth Berrill (eds.)

INTERNATIONAL ECONOMIC ASSOCIATION
CONFERENCE VOLUMES, Numbers 1-50
NUMBER 10
Economic Development with Special
Reference to East Asia
ECONOMIC
DEVELOPMENT
WITH SPECIAL REFERENCE TO
EAST ASIA
Proceedings of a Conference
held by the International Economic Association
EDITED BY
KENNETH BERRILL
M
S
TOCKTON
P R E S S
®1}
ISBN 978-1-349-00076-0 ISBN 978-1-349-00074-6 (eBook)
DOI 10.1007/978-1-349-00074-6
© International Economic Association 1964
Softcover reprint of the hardcover 1st edition 1964
All rights reserved. No reproduction, copy or transmission
of this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied
or transmitted save with written permission or in accordance
with the provisions of the Copyright Act 1956 (as amended).
Any person who does any unauthorised act in relation to
this publication may be liable to criminal prosecution and
civil claims for damages.
First published 1964
This 50-volume set reprinted 1986 jointly by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
and
YUSHODO CO. LTD
29 Saneicho, Shinjuku-ku
Tokyo 160 Japan. Tel: [phone]
Distributed exclusively in Japan
through Publishers International Corporation (P .I. C.)
Published in the United States and Canada by
STOCKTON PRESS
15 East 26th Street, New York, N.Y. 10010
50-volume set ISBN 978-0-333-40626-7
This volume ISBN 978-0-333-40638-0
CONTENTS
PAGE
LIST OF PARTICIPANTS vii
AcKNOWLEDGEMENTS viii
INTRODUCTION. Kenneth Berrill ix
PART I
FACTORS AFFECTING GROWTH
CHAP.
1. GROWTH MODELS :
OF GoLDEN AGES AND PRODUCTION FUNCTIONS. Trevor
W. Swan 3
2. LAND:
THE EFFECTS OF RESOURCES ON ECONOMIC GROWTH. Hollis
B. Chenery 19
3. LABOUR:
POPULATION TREND AND ECONOMIC GROWTH IN }APAN.
Minoru Tachi 53
4. CAPITAL:
CAPITAL SuPPLY AND EcoNOMIC GROWTH: SouRCES OF
SAVINGS. Shu-chin Yang 71
CAPITAL SUPPLY AND GROWTH: SOURCES OF SAVINGS.
C. N. Vakil and P.R. Brahmananda 98
5. ENTREPRENEURSHIP:
THE SUPPLY OF ENTREPRENEURS AND TECHNOLOGISTS.
Luc Fauvel 135
SUPPLY OF ENTREPRENEURS AND TECHNOLOGISTS WITH
SPECIAL REFERENCE TO INDIA. P. S. Lokanathan 156
6. FOREIGN TRADE :
FoREIGN TRADE PROBLEMS IN PLANNED EcoNOMIC DEVELOP-
MENT. Hiroshi Kitamura 191
FoREIGN TRADE IN A DEVELOPING EcoNOMY. Austin
212
Robinson
7. HISTORICAL EXPERIENCE:
THE PROBLEM OF EcoNOMIC ' T AKE-0FF '. Kenneth Berrill 233
v
Economic Development with Special Reference to East Asia
PART II
POLICIES AFFECTING GROWTH
CHAP. PAGE
8. PRICE STABILITY:
THE CONFLICT BETWEEN GROWTH AND CONTROL OF INFLA-
TION. Howard S. Ellis 255
9. FISCAL POLICY :
FISCAL POLICY AND INDUSTRIALIZATION IN JAPAN, 1868-95.
Motokazu Kimura 273
FISCAL PoLICY IN A DEVELOPING CouNTRY. John H. Adler 287
10. AGRICULTURAL POLICY:
THE RoLE OF AGRICULTURE IN EARLY EcoNOMIC DEvELOP
MENT: A STUDY OF THE JAPANESE CASE. Kazushi Ohkawa 322
THE PLACE oF AGRICULTURE IN EcoNoMic DEVELOPMENT.
William H. Nicholls 336
11. CHOICE OF TECHNIQUES :
CHOICE OF TECHNIQUES: JAPAN'S EXPERIENCE AND ITS IM-
PLICATIONS. Saburo Okita 376
CHOICE OF TECHNIQUES OF PRODUCTION : WITH SPECIAL
REFERENCE TO EAST AsiA. Amartya Kumar Sen 386
12. TECHNICAL AsSISTANCE:
THE TRANSFER OF INDUSTRIAL KNow-How TO NoN-INDus
TRIALIZED COUNTRIES. lngvar Svennilson 405
INDEX 429
vi
LIST OF PARTICIPANTS
Dr. J. Adler, International Bank for Reconstruction and Development,
Washington, D.C., U.S.A.
Professor H. Aoyama, Kyoto University, Japan.
Professor K. Ara, Hitotsubashi University, Tokyo, Japan.
Professor K. Baba, Hitotsubashi University, Tokyo, Japan.
K. Berrill, King's College, Cambridge, England.
Professor H. B. Chenery, Stanford University, U.S.A.
A. Dalisay, Department of Agriculture, Manila.
Professor H. S. Ellis, University of California, Berkeley, U.S.A.
Professor L. D. Fauvel, University of Paris, France.
Professor S. Fujii, Kobe University, Japan.
Professor M. Fukuoka, Keio-Gijuka University, Japan.
K. Henmi, The National Research Institute of Agriculture, Japan.
Dr. R. Hsia, University of Hong Kong.
ProfessorS. Iemoto, Kobe University, Japan.
Professor Y. Itagaki, Hitotsubashi University, Tokyo, Japan.
Professor M. Kaji, Tokyo University, Japan.
Y. Kaneko, Economic Planning Agency, Japan.
ProfessorS. Kawano, Tokyo University, Japan.
Professor M. Kimura, Hitotsubashi University, Tokyo, Japan.
Professor K. Kitagawa, Nagoya University, Japan.
Professor H. Kitamura, ECAFE, Bangkok, Thailand.
Professor K. Kojima, Hitotsubashi University, Tokyo, Japan.
Professor R. Komiya, Tokyo University, Japan.
Professor H. Kumagai, Osaka University, Japan.
P. S. Lokanathan, National Council of Applied Economic Research,
New Delhi, India.
Professor K. Matsuno, Kobe University, Japan.
Professor M. Morishima, Osaka University, Japan.
Professor H. Myint, Rector, University of Rangoon, Burma.
Professor I. Nakayama, Hitotsubashi University, Tokyo, Japan.
Professor W. H. Nicholls, Vanderbilt University, Nashville, Tennessee,
U.S.A.
Professor K. Ohkawa, Hitotsubashi University, Tokyo, Japan.
Professor H. Ohshima, Washington University, U.S.A.
S. Okita, Economic Planning Agency, Tokyo, Japan.
Professor E. A. G. Robinson, Sidney Sussex College, Cambridge, Englana.
M. Sadli, Institute of Economic and Social Research, Djakarta, Indonesia.
vii
Economic Development with Special Reference to East Asia
ProfessorS. Sakai, Nagoya University, Japan.
C. Sakharet, Budget Bureau, Office of the Prime Minister, Bangkok
Thailand.
Dr. A. K. Sen, Trinity College, Cambridge, England.
Professor M. Shinohara, Hitotsubashi University, Tokyo, Japan.
Professor T. Shionoya, Nagoya University, Japan.
Professor T. H. Silcock, University of Malaya, Singapore.
Professor I. Svennilson, Socialvetenskapliga Institute, Stockholm, Sweden.
Professor T. W. Swan, Australian National University, Canberra, Aus-
tralia.
M. Tachi, Ministry of Health and Welfare, Tokyo, Japan.
Professor R. Tate, Tokyo University, Japan.
Professor T. Uchida, Tokyo University, Japan.
Professor C. N. Vakil, UNESCO Research Centre, Calcutta, India.
Professor I. Yamada, Hitotsubashi University, Tokyo, Japan.
S. Yang, ECAFE, Bangkok, Thailand.
Professor T. Yasui, Tohoku University, Japan.
H. M. Phillips (Observer), UNESCO, Paris, France.
Dr. H. Berger Lieser, Secretary, International Economic Association.
ACKNOWLEDGEMENTS
THE International Economic Association wishes to thank
all those who did so much to ensure the success of the
Conference at Gamagori, Japan. Special gratitude is due
to the Japanese Organizing Committee :
Professor I. Nakayama
Professor T. Takagaki
Professor T. Aoki
Professor A. Kubota
Professor K. Akamatsu
Professor Y. Yamada
Professor H. Arisawa
ProfessorS. Tohbata
viii
INTRODUCTION
THE Round Table Conference at Gamagori, Japan, was a particularly
enjoyable international gathering. For many years the International
Economic Association had been urged by their Japanese members
to hold a Conference in Japan and at Gamagori the hospitality and
efficient organization was beyond praise. As this was the first I.E.A.
Conference to be held in the Far East, it was almost inevitable that
the theme of the Round Table should be the broad topic : 'Economic
Development with special reference to East Asia'. In accordance
with the usual practice at these meetings, the papers were not read
out at the Conference table but circulated beforehand. At each
session the author of the paper summarized briefly the main argu
ments in his paper, then the meeting was open for general discussion
and the author was given the opportunity of having the last word.
At some sessions two papers on a similar topic were discussed
together, with both authors introducing their papers and having the
chance to reply. The pages which follow contain both the papers
submitted to the Round Table and a summary of the discussions.
The papers at the Conference fall into two groups : those which
deal with a general development problem with applications far wider
than East Asia and those dealing with a specific topic in an Asian
context. As Asia is a vast and varied area the exact context taken
depended on the background and experience of the authors concerned
and in practice this meant a high concentration on conditions in
India and Japan.
To the outsider, the economic development of Japan has been so
spectacularly successful that economists and planners in all develop
ing countries ask how it was done. The papers at the Conference
based on the Japanese experience dealt with some of the questions
most often asked : what was the role of agriculture ; how did the
Japanese economize in the use of capital ; how did the Government
use the tax system to provide the capital for industry ; how did the
Government deal so successfully with the population explosion after
the Second World War.
Professor Ohkawa's paper on Japanese agriculture does not
attempt to explain how its productivity increased so continuously
with such a small input of capital (a trick which every poor country
would like to learn). His aim is to underline the major part played
in Japan's early industrial growth by increased output from agri
culture and from the traditional handicraft and service industries.
Indeed, heavy industry was for many decades a subsidized burden
on the rest of the economy supported by the buoyancy of the tradi
tional sectors. Dr. Okita's treatment of the choice of techniques in
A2 !X
Economic Development with Special Reference to East Asia
the Japanese economy reminds us of their frugal use of capital in
housing, transport, and agriculture and also of the persistence in
present-day Japan of small manufacturing workshops with their low
capital per worker. Indeed, all the Japanese economists present at
the Conference emphasized the continued dualism of their country's
economy. The small workshop remains in production because it
pays wages which are a fraction of the rate paid in large plants. As
workers move from small to large plants their productivity takes a
great step forward and it is this process which is part of the explana
tion of the continued fast growth of Japanese industrial output.
In the field of public finance there has been a tendency for Western
observers to credit Japanese Governments of the late nineteenth
century with remarkable fiscal skill in instituting a land tax-reform
which provided the cash for Japanese industrialization. Professor
Kimura's paper is a valuable corrective to such a rosy picture. He
does not dispute the importance of the reform, particularly in that
it introduced national uniformity in land registration and land taxa
tion, but he does show the slowness and difficulties of the land reform
and the financial problems of the Government from 1868 to 1895.
They had to borrow wildly to finance military expenditures and
staggered from violent inflation to violent deflation. He shows, too,
how the land tax was soon eroded by inflation and gave way to the
more conventional indirect taxes as the main source of government
revenue.
Population growth as a major obstacle to a country's development
is such a common experience that we look with fascination at the
Japanese statistics. In 194-7 the Japanese birth rate stood at the
dangerously high figure of 34- per thousand : ten years later it was
halved. The discussion in Professor Tachi's paper made it clear that
the Japanese Government first attacked the problem by providing
legal abortion facilities for those who could not afford larger families.
But these measures were distasteful both to the Government and
the public and so the Government then set up hundreds of public
clinics and subsidized the sale of contraceptives with the result that
birth control is quickly taking the place of abortion. It was generally
agreed at the Round Table that Japanese conditions were special in
this respect and that the birth rate could not be reduced at this speed
in any other Asian country, if only because the desire :for family
limitation was seldom widespread in rural districts.
The two papers which drew most on Indian experience led to
some clear-cut differences of opinion. These papers were concerned
with the supply of savings and the supply of entrepreneurs. Professor
Vakil and Dr. Brahmananda in their treatment of Sf!Vings in India
emphasized the unexpectedly large part supplied by the small saver.
There was general agreement that Governments in under-developed
countries often neglected the possibilities of encouraging small savings
but there was considerable debate on the meaning of the Indian
X