The Role of Agriculture in the Early Phase of Industrialization: Policy implications of Japan's experience

The paper presents a brief theoretical and historical explanation of the transformative process of the Japanese economy from a stagnant agrarian society to a modern industrial one. Specifically, it analyzes the role of agriculture in the early stage of Japan's development in the last three decades of the 19th century, when the Meiji Government carried a determined political campaign to strengthen the country and to catch up with the West. By the time of World War I, the country had managed to be recognized as a significant industrial power, the then only non-Western case. Initially, the Government allocated fairly large amounts of financial resources to the agricultural sector, which resulted in a rapid growth in it. Much of the increased output or income was then transferred - through the application of a land tax by the Government and as a result of the savings and investment patterns of landlords - to the manufacturing sector in order to finance its rapid expansion. The paper also highlights various elements of particularity that the Japanese Government had to face at the initial stage of industrialization, and to contrast them with the present situation of typical commodity-producing countries.