Learning by doing, export subsidies, and industry growth: Japanese steel in the 1950s and 1960s

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jinteco.2004.06.008 Byline: Hiroshi Ohashi Keywords: Learning by doing; Export subsidies; Knowledge spillover; Industry growth; Steel industry Abstract: The paper examines the Japanese steel industry to evaluate the role of export subsidy policies. Export subsidies can be instrumental in increasing an industry's cost competitiveness in the presence of learning by doing, a characteristic of production in the steel industry. Using a dynamic estimation model, this paper identifies a significant learning rate of above 20% with little intra-industry knowledge spillover. Simulations made with the model indicate that the subsidy policy had an insignificant impact on industry growth. The paper finds that the export subsidy had a small effect in stimulating industry growth, because the estimated steel supply function was relatively inelastic. Author Affiliation: Department of Economics, University of Tokyo, 7-3-1 Hongo, Tokyo, Japan Article History: Received 29 April 2003; Revised 15 June 2004; Accepted 25 June 2004