Table Of ContentCOMPARATIVE TECHNOLOGY CHOICE IN
DEVELOPMENT
Also by Gustav Ranis
DEVELOPMENT OF THE LABOR SURPLUS ECONOMY: Theory and Policy
(with John Fei)
GROWTH WITH EQUALITY: The Taiwan Case (with John Fei and Shirley Kuo)
THE GAP BETWEEN RICH AND POOR NATIONS (editor)
GOVERNMENT AND ECONOMIC DEVELOPMENT (editor)
SCIENCE, TECHNOLOGY, AND ECONOMIC DEVELOPMENT: A Historical
and Comparative Study (editor with W. Beranek)
JAPAN AND THE DEVELOPING ECONOMIES (editor with Kazushi Ohkawa)
Also by Gary Saxonhouse
TECHNIQUE, SPIRIT AND FORM IN THE MAKING OF THE MODERN
ECONOMIES (editor with Gavin Wright)
LAW AND TRADE ISSUES OF THE JAPANESE ECONOMY (editor with
Kozo Yamamura)
COlDparative
Technology Choice in
Development
The Indian and Japanese Cotton Textile
Industries
Keijiro Otsuka
Associate Professor of Economics
Tokyo Metropolitan University
and Visiting Scientist
International Rice Research Institute, Manila
Gustav Ranis
Frank Altschul Professor of International Economics
Yale University
Gary Saxonhouse
Professor of Economics
University of Michigan
M
MACMILLAN
PRESS
© Keijiro Otsuka, Gustav Ranis and Gary Saxonhouse, 1988
Softcover reprint of the hardcover 1st edition 1988 978-0-333-44385-9
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First published 1988
Published by
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and London
Companies and representatives
throughout the world
British Library Cataloguing in Publication Data
Otsuka, Keijiro
Comparative technology choice in
development: the Indian and Japanese
cotton textile industries.
1. Cotton trade-Japan-Technological
innovations 2. Cotton trade-India
Technological innovations
I. Title II. Ranis, Gustav
Ill. Saxonhouse, Gary
338.4'567721'0952 HD9886.J3
ISBN 978-1-349-19142-0 ISBN 978-1-349-19140-6 (eBook)
DOI 10.1007/978-1-349-19140-6
Contents
Preface Vll
1 Introduction 1
2 Differential Initial Conditions and Performance:
An Overview 5
3 The Japanese Cotton Textile Industry 21
Early performance of the spinning industry 21
Cotton mixing-ring diffusion linkage 30
The labour-using bias of ring technology 35
Ring technology and total productivity 42
The weaving industry 45
4 The Indian Cotton Textile Industry 53
Early performance 53
The ring spindle and cotton-mixing linkage growth 55
Growth and change of the output mix 60
5 Analysis of the Causes 67
Factor price distortions 67
The organisational and institutional environment 71
Quality of the labour force 84
Industrial associations 87
The textile machinery industry 91
Patenting activity 97
An overview of patenting trends 119
Growth-productivity linkage 125
Sources of innovative activity 132
Japan 132
India 153
Relative factor prices, substitution and innovations 164
Attribute differences 176
The analytical framework 179
The data 180
Variable quantities 180
Fixed quantities 182
v
VI Contents
Data sources 183
The implicit prices of the attributes of Japanese cloth
and yarn 184
The estimation of derived product attribute supply
functions and derived input demand functions 189
Summary 198
6 Conclusions 204
Appendix A Data Source and Estimation Method of
Productivity Indices in Japan, 1880-1900 206
Appendix B Effective Protection Estimates for Cotton Spinning
and Weaving in Japan and India, 1896-1936 218
Appendix C Note of Qualification on the Data for the Indian
Cotton Textiles Industry 229
The Measurement of Total Factor Productivity 229
References 231
Index 242
Preface
This book is part of the product of a major research effort begun at
Yale's Economic Growth Center in the early 1980s focused on an
investigation of the 'International and Domestic Determinants of
LDC Technology Choice: Contrasting Agricultural and Industrial
Experience'. The principal objective of this research activity was to
establish the conditions under which the existing wide potential for
exercising alternative technology choices in developing country set
tings is, indeed, utilised, and to better understand why, given such a
wide range of alternatives, the range of technologies actually used
usually varies so little between developed and developing countries.
To this end we have subjected the historical development experi
ence of the Indian and Japanese cotton textile industries to extended
analysis. We have found that the care exercised both in technology
choice and in the level and direction of investment and research
activity focused on technological change depend to a significant
extent on the type of general environment and specific inceI1tives
faced by decision-makers at the firm level. The variables we found
especially important in determining the quality of this environment
and in shaping these incentives include, most importantly, industrial
structure and the related 'openness' or 'closedness' of government
macroeconomic policy. Our research has been particularly designed
to capture the importance of the influence of these variables.
This project was supported by a grant to Yale's Economic Growth
Center from the National Science Foundation for which we express
our deep appreciation. We have also received related support from
the Committee on Comparative and Historical Research on Market
Economies (CCHROME) of the University of Michigan, from the
Ford Foundation, from the Center for Advanced Study in the Beha
vioral Sciences, and from the Economic Planning Agency of Japan.
Many other individuals have contributed to this study but none more
than Paul Sullivan whose Yale PhD dissertation is concerned with
this overall general topic and for whose assistance we are grateful.
Our data collection was much facilitated by the good offices of
Tadashi Ishii of the Japan Patent Office and by the help of Hiroshi
Yasuhira, among others, at the All Japan Spinners' Association.
Others to whom we wish to express our gratitude include Robert
Evenson, John Fei, Yujiro Hayami, Yukihiko Kiyokawa, Ryoshin
Minami, Kazushi Ohkawa, Gavin Wright and Toru Yanagihara.
vii
viii Preface
Among the many research assistants who helped us with the manu
script and with the work on the large and rather unusual data base we
accumulated we would particularly like to thank Albino Barrera,
John Brown, Cheryl Doss, Noboru Hamaguchi, Naoki Murakami,
Koji Nishikimi, Susumu Saito and Rosemary Sweeny.
We would also like to thank Barbara McCann, Irita Grierson and
Michiko Otsuka who worked diligently in producing the various
drafts of this volume.
KEIJIRO OTSUKA
GUSTAV RANIS
GARY SAXONHOUSE
1 Introduction
The importance of improving the quality of LDC technology, with
direct consequences for productivity and growth as well as the achieve
ment of a more equitable or a more employment-intensive growth
path, has for some time been recognised by analysts and policy
makers both within the developing countries and outside. Indeed,
few subjects have received more attention in the recent literature on
development. While concern with the role of science and technology
has been mounting, progress in providing answers has lagged behind
considerably. This should not be surprising, in view of the deficiencies
of our understanding of the subject even in the developed country
context. For this reason, any effort even to marginally improve our
understanding of how 'appropriate' technology! is chosen and devel
oped, is clearly bound to have a high payoff. This is especially true in
the context of societies critically short of conventional inputs, a
scarcity lying at the heart of their state of underdevelopment.
The potential for a large payoff is illustrated by the dramatic
performance of a small set of contemporary developing countries.
Despite poor natural resource endowments, economies such as Taiwan
and Korea have not just managed to grow rapidly since the 1950s, but
have at the same time experienced considerable equity in income
distribution. This stands in sharp contrast to many other developing
countries. Fast growing Latin American nations like Mexico and
Colombia, in spite of more favourable natural resource endowments
at the end of the Second World War, have failed to do as well, either
in terms of growth - though this, until recently, has been respectable
- or in achieving distributional, employment, and poverty-alleviating
goals.
The inability of these countries to ease painful tradeoffs between
output, employment, and distributional objectives seems to be associ
ated with considerably less technological flexibility or the ability to
innovate adaptively in labour-using directions, compared with the
Asian examples. There are marked differences not only in the
agriculture/industry intersectoral composition of output at the aggre
gate level, with more initial attention being paid to agriculture in the
Asian countries, but also in the greater scope for labour-intensive
technologies within each sector afforded by an export-oriented in
dustrial output mix. As a consequence, in contrast to most Latin
1
