The aim of this article is to analyse empirically

The aim of this article is to analyse empirically the development

technology choice.  

developed Western countries. In the ship-building industry, both the

Tokugawa Bakufu (the feudal government) and some powerful feudal clans tried to introduce Western technologies with the intent of

ships (wasen) throughout the pre-modern era. After the establishment of a new government (the Meiji government) in 1868, there

appeared several big new private ship-building companies in addition to the government-owned companies, all of which were equipped

with modern technology. However, in spite of the gradual growth in

the modern ship-building industry (modern sector) during the Meiji

Era (1868-1911), the indigenous ship-building industry (traditional

sector) was able to survive for a long time.  . This history is called

the dualistic development of the ship-building industry.

The subjects to be analysed here are chiefly the following. First,

how modern ship-building technologies were introduced and diffused

in Japan. An examination of this information will make clear what

factors empirically brought about the success or failure of technology

transfer in the modern sector. Second, how the traditional sector

originally existed and inevitably disappeared from the market during

the long process of the development of the modern ship-building

industry. Third, we shall try to discover what the relationship was

between the modern sector and the traditional one and specifically

how the two different sectors competed or co-existed with each other

during the same period.

In order to analyse these three subjects, the following hypothesis

is proposed concerning technology choice. Namely, technology will

be chosen in relation to its foreseeable profitability. In other words,

if all other conditions are equal, the most profitable technology will

be selected over less profitable technologies. Thus, a study of profitability becomes essential in this analysis. The hypothesis of profitability will be discussed later in detail.

DEVELOPMENT OF THE DOMESTIC SHIP-BUILDING

INDUSTRY

Figure 5.1 shows the historical change in output of the ship-building

industry during the initial period of Japan's economic development

(Meiji and TaishO Eras). From the graph, the following distinctive

points are indicated. First, the production of yasen (Western-type

ships) became remarkable in the late 1870s and a steep increase in

the number of new ships took place. This was caused primarily by

the Seinan War, a major internal war among ruiers, which naturally

produced a large demand for yasen. Second, there appeared to be

another great expansion of output of ships in the late 1890s, two

decades after the first boom in production. This may be explained by

the enactment of new laws, such as the Promotion of Navigation and

Ship-building laws, as well as by the outbreak of the Japan-China

War in 1894. Third, the next boom in yasen production occurred

during the First World War. This boom reflects the big demand for

yasen made in Japan by European countries where fierce fighting

was carried on.

This information clearly depicts the three phases of notable expansion of yasen production that appeared over half a century. The

last phase revealed a most conspicuous upturn contributing to the high

growth of the total economy. The expansion of yasen production was

inextricably linked to the development of the modern ship-building 

industry, as yosen were produced basically in the modern sector using

modern Western technologies.

Looking back on the history of ship-building technology in Japan,

the beginning of the seventeenth century can be pinpointed as the

time that the technology of Western-style wooden sailing ships was

introduced into Japan from Europe. Tokugawa Ieyasu, the first shogun

(ruler) of the Edo feudal government, ordered William Adams, an

Modernizing the traditional ship-building industry was undoubtedly the

Tokugawa's aim. However, this new modernization policy ended in

failure when the third shogun, Tokugawa Iemitsu, adopted a strong

national isolation policy in 1639. Consequently, modern Western

technologies could not be adopted well in Japan not only in :this

industry, but indeed in almost all other industries.

A new movement towards modernization across the board was

inaugurated in the middle of the nineteenth century, when the

Tokugawa Bakufu relinquished its isolation policy under the threat

of invasion from advanced Western countries. In the case of the shipbuilding industry, the Bakufu initially established modern shipyards

in such places as Ishikawajima, Uraga and Yokosuka, and attempted

to produce yosen by depending on hired foreign engineers. In addition, several powerful clans such as Choshil, Satsuma and Saga

started introducing Western ship-building technologies shortly

thereafter. A central aim in the establishment of modern shipyards

by both the Bakufu and the clans was to repair and produce warships

of Western type so as to strengthen their military capacity as quickly

as possible in order to defend themselves from the Western menaces

of the time.

In spite of the adoption of a quick modernization policy in the

ship-building industry, the results were quite contrary to their expectations. Most of the clans' shipyards had to cease trading before

the new Meiji government was established. Moreover, the shipbuilding business of the Tokugawa Bakufu and those of the Meiji

government, which had subsequently inherited the shipyards from

the bakufu, fell into great difficulty due to heavy losses with regard

to revenue and expense. Most of the unprofitable shipyards owned

by the new government were quickly sold to private companies at

very cheap prices.

From Table 5.1, it can be observed that the steep rise in yosen

production in both the late 1870s and late 1890s was derived from the

increase in the number of sailing ships of Western type. On the other