Econometrica: Jan, 1962, Volume 30, Issue 1
The Pattern of Japanese Growth, 1914-1954
Hollis B. Chenery, Shuntaro Shishido, Tsunehiko Watanabe
The paper presents a comprehensive method for analyzing structural change in a developing economy. The total change in output in each sector is expressed by means of an interindustry model as a function of four factors: (i) the change in the composition of domestic demand; (ii) the change in the volume of exports; (iii) the change in the volume of imports; and (iv) changes in technology and organization. The model is then applied to explain the process of industrialization in Japan from 1914 to 1954, during which period its economy was transformed from that of a typical underdeveloped country to that of an advanced society. The results show that less than a quarter of the increase in the share of industry in total output is due to increases in exports and changes in domestic demand, while more than three quarters is traceable to changes in supply conditions, including substitution of domestic manufactures for both imported manufactures and primary products. Changes in technology and in labor productivity are also examined briefly.