"Role of Local Communities in Economic Development: A Survey Focusing on the Export Industries in Nineteenth Century Japan"(in Japanese)

Tetsuji Okazaki, Esuke Taniyama and Masaki Nakabayashi
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Tetsuji Okazaki: Faculty of Economics, University of Tokyo
Esuke Taniyama: Graduate School of Economics, Osaka University

No CIRJE-J-133, CIRJE J-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: In this paper we survey the literature on the role of communities in the development of a market economy in Japan. The role of communities has long been explored implicitly as well as explicitly in the literature on the Japanese economic history. In this survey we focus on the export industries in the early stage of the modern economic development. In the late 19th century, when the traditional legal and private institutions which had governed transactions, collapsed, and at the same time the modern institutions were still underdeveloped, it was highly possible that problems due to information asymmetry between sellers and buyers were serious. In fact, we can find many evidences of moral hazard and adverse selection in the documents of this period. On the other hand, since just after the opening up of the international trade in 1858, large amount of products including silk and tea, were exported to foreign countries. This implies some mechanisms worked to resolve the problems stemming from information asymmetry. In the case of silk industry, private associations based on local communities, prevented from moral hazard and adverse selection by establishing brands, which, in turn, were protected by the local government. This case suggests that a market economy was complementary with local communities, and that the function of local communities, in turn, was complemented by the role of local governments.

Pages: 23 pages
Date: 2005-06
New Economics Papers: this item is included in nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:tky:jseres:2005cj133

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