Japan of over 1000 tons in capacity had a chance

Japan of over 1000 tons in capacity had a chance to get the benefit

of bounties for vessels owned by them twice as great as in the case

of imported vessels in proportion to the magnitude of loading capacity and speed. The enforcement of this law led domestic shipping

traders to change their management from the use of foreign vessels

to the adoption of domestically produced vessels. In this way, the

Japanese ship-building industry, with great assistance from the government, could shift to a new phase of development to the modern

sector around the turn of the century.

Despite the outstanding changes which took place in the modern

sector, there existed a continuously firm demand for wasen in the

traditional sector throughout the Meiji Era. The shipping traders

who had been engaged in traditional businesses had depended upon

indigenous sailing boats since the Edo Era and would not immediately

shift from wasen use to yasen use, but rather continued coastal trade

with the sailing boats of Japanese style. It was risky for many traditional traders to make the shift to the yasen business so early in the

modern phase as the shift required substantial financial funds for

new management as well as for purchasing new ships. In addition, it

was uncertain whether or not the traders would be able to obtain

higher profits after the adoption of modern yasen. When they accumulated enough business funds to hold yasen late in the Meiji Era,

their demand for wasen declined drastically and ultimately led to the

stagnation of the traditional ship-building industry.

FRAMEWORK OF STATISTICAL ANALYSIS

In order to elucidate the process of technological development in the

ship-building industry, it may be effective to propose a hypothesis for

analysis so that an empirical study can be made on the basis of the

hypothesis. The hypothesis to be presented here is simple and (one

hopes) acceptable. It is that technology choice is made with a strong

consideration of profitability. Profitability is expressed in the following formula.

r = (Y - wL)/K (5.1)

where r, Y, w, Land K represent the rate of return on capital, value

added (output), wage rate, labour force and capital stock respectively. The rate of return on capital indicates the magnitude of profitability in regard to the capital stock that is used in the production

process.3 

Accordingly, when there exists an obvious difference in r between the

two sectors, in a situation of no wage rate difference, gaps in capital

productivity (YIK), labour productivity (YIL) or the capital-labour

ratio (KIL) between the two sectors must be looked into carefully.

In particular, the effective utilization of capital stock, which is indicated

by the level of capital productivity, should be recognized as an important factor affecting the difference in r. This is because the shipbuilding business requires huge amounts of capital investment which

represent capital-intensive technology.

The main pieces of data which are utilized in this empirical analysis

were obtained from such historical literature as Fuken Tokeisho (Statistical Reports of each Prefecture), Fuken Kangyo Nempo (Annual

Reports on the Business Recommendation of each Prefecture),

Zosenjo Shashi (History of each Ship-building Company), Zosenjo

Eigyo Hokokusho (Report on the Management of each Ship-building

Company). The production structure and managerial conditions of

the ship-building companies in 9 selected prefectures (Hokkaido,

Tokyo, Kanagawa, Aichi, Mie, Osaka, Hyogo, Kochi and Nagasaki)

are investigated in detail on the basis of this literature. A large number of shipyards were concentrically located in these prefectures

during the Meiji Era,4 so through this empirical study changes in

the development process of the co-existence of modern and traditional sectors in the whole of Japan will be made clear. These prefectures are representative of ship-building regions in pre-war times.

Aichi, Mie and Kochi were responsible for making, for the most

part, traditional ships because quality raw materials of timber and so

on (suitable for wasen) could be procured easily in large quantities

within these regions. On the contrary, Kanagawa and Nagasaki

are prefectures that revealed a drastic change from wasen production

to yosen production in a rather short time, as shares of yosen increased overwhelmingly before the end of the nineteenth century.

The other four prefectures were active in the production of both