Pacific Rim Research Program

From the 1890s to as late as 1960, industrial policy provided vital aid to the development of the Japanese iron and steel industry. Japanese industrial policy proved successful in steel even though public support was much prolonged, subject to political influence, and based on limited forecasting power ex ante, particularly with regard to recurrent raw material problems. Policy success in steel within different time periods suggests that specific targeting mechanisms were less important than the prevalence of market failures within a context of underdevelopment, broad support for industry, and dedicated and capable governmental bureaucracy. By implication, industrial policy in recent years faced greater difficulties insofar as it attempted narrower targeting and operated in a more mature economy.