Textiles, particularly cotton spinning and weaving, was the first industry in Japan to successfully absorb the Western technology to establish modem large-scale operations. It is most appropriate, therefore, to start our series of case studies with this industry. The Japanese textiles industry, as will be presently shown, was at first dominated by less expensive and higher-quality imports from England and other countries, but started to catch up within two decades of the Meiji Restoration. By the early 1890s, the domestic production overwhelmed the import and, by the late 1890s, the export started to dominate the import. It was the most important Japanese export industry before World War II, replacing England during the 1930s as the largest producing country after the USA, and causing a number of trade frictions in many markets around the world--just as Japan's automobile and electronics industries now. The industry lost its dominance after the war, and it now imports more than it exports. Thus, just as it was the first industry to catch up with the West, it was also the first major industry to mature and then decline.
In this chapter, we will trace the history of this industry, mainly cotton-spinning, to see how the Japanese acquired and accumulated the necessary technologies and skills, and how they utilized them to establish and expand the industry. Throughout the discussion, we will see how entrepreneurship and technological capabilities interacted complementarily to foster entry, investment, and productivity increases.
A few years before Japan ended Seclusionism, Shimazu Nariakira, the lord (daimyo) of Satsuma Clan, who was known as one of the brightest and most open-minded of the lords, was given some woollen thread made in England. 1 He was impressed by the quality and became worried that the Japanese cotton industry might lose competition against