The Rise and Fall of Industrialization and Changing
Labor Intensity: The Case of Export-Oriented Silk
Weaving District in Modern Japan
Tomoko Hashino
Keijiro Otsuka
January 2015
Discussion Paper No.1501

GRADUATE SCHOOL OF ECONOMICS
KOBE UNIVERSITYROKKO, KOBE, JAPANThe Rise and Fall of Industrialization and Changing
Labor Intensity: The Case of Export-Oriented Silk
Weaving District in Modern Japan*
Tomoko Hashino† and Keijiro Otsuka‡
January 5, 2015

Abstract

The production of simple silk fabric, called habutae or habutai, expanded rapidly from 1890 to theend of the 1910s in Fukui prefecture, and it was exported to Europe and the U.S. Habutae was initiallywoven by hand looms in cottage enterprises and, hence, its production was labor intensive. It

gradually became capital intensive with the introduction of power looms since around 1905 but its

production as well as export declined precipitously since the late 1910s. We attribute such rising andfalling production and export to Japan’s changing comparative advantage of habutae production ininternational markets associated with changes in production technology from labor-using to*Earlier version of this paper was presented at the Fourth Asian Historical Economics Conference inIstanbul on 20th September in 2014 where we received constructive comments from Steven
Broadberry, Giovanni Federico, and Bishnupriya Gupta, among others. We would like to thankTakeshi Abe for valuable and insightful comments on the earlier version of this article. We are also
grateful to Tetsuji Okazaki, Taro Hisamatsu, Yukichi Mano, Masaki Nakabayashi, Kentaro Nakajima,
Yasuo Takatsuki, and other participants in seminars on economic history in Kobe University andOsaka University for helpful comments. First author also would like to thank Masami Harada forvaluable discussion in the earlier stage of this study. The financial support from Grant-in-Aid for
Scientific Research (C) 25380425 and (A) 22243022 is gratefully acknowledged.
†
Kobe University; hashino@econ.kobe-u.ac.jp‡
National Graduate Institute for Policy Studies; otsuka@grips.ac.jp
1capital-using direction.

1. Introduction
The issue of the Great Divergence between the West and the East has received increasing
attention among economic historians, which has led to a proliferation of studies on Asian
economic history with a view to drawing a fuller picture of global economic history (Vander Eng 2004; Broadberry and Van der Eng 2010; Broadberry and Hindle 2011; Brandt,
Ma, and Rawski 2014). In spite of this growing body of research, however, the actual
catch-up process of the East and changing comparative advantage in industrializing
process have not been fully explored presumably because of a lack of long-term
micro-level data necessary to investigate how specific industries or regions within
Eastern countries learned new technologies from the West, adapted them, and expanded
production.
It is well known that the textile industry has played an important role in the earlyprocess of industrialization in developed countries as well as in contemporary developing
countries based on technology imports from advanced countries. This industry is unique,as it consists of diverse industrial sectors—from the production of yarns to a variety offabrics—some of which use traditional or indigenous technologies, while others use
modern technologies. The cotton spinning industry in the 19th century Japan typified acapital-intensive modern industry characterized by large-scale production with imported2mechanized technologies (see, for example, Otsuka et al. 1988), whereas the weaving
industry used a mixture of traditional labor-intensive and modern capital-intensive
technologies. According to the literature review conducted by Hashino and Saito (2004),
most Japanese economic historians had generally believed until recently that the rise ofmodern sectors, which directly imported the western technology, contributed to economic
growth more than the modernization of traditional sectors. It was Nakamura (1983), whoargues that traditional sectors employed a larger share of workers and contributed moresignificantly to economic growth in Japan from the late 19th through the early 20th
century. His argument strongly suggests that the modernization of traditional industries
depended on the successful introduction of new technologies from the West. In fact, notonly local and central governments but also local entrepreneurs developed various
institutions and organizations to introduce and absorb such technologies (Hashino 2012;
Hashino and Kurosawa 2013). Yet, quantitative studies on the modernizing process of
traditional industries in Japan are scant.
The aim of this study is to explore the development process of the silk weaving
district in Fukui prefecture by from 1890 to 1921. The case of Fukui’s development
offers a good example of a traditional industry which was successful in export-led growth.
Saito (2014) argues that Meiji growth was largely export-led by traditional
manufacturing sectors in rural areas with some interactions with the emerging modern
sectors. Initially almost all habutae was produced by hand looms and exported to the3United States and European countries such as France and the United Kingdom, where thedemand for silk products increased due to the “democratization” of silk, i.e., changes inthe silk products from luxury for the rich to ordinary commodity for mass consumption.
Fukui’s development can be regarded as a typical case of labor-intensive industrializationconsistent with the endowment of cheap labor in Meiji Japan as argued by Sugihara(2007). However, labor-saving technologies, such as power looms, were rapidly
introduced in response to the rising wage rate in the first decade of the 20th century.
While habutae production initially increased with the diffusion of power looms, it
became stagnant gradually and finally decreased precipitously from the end of the 1910s.
We hypothesize that the silk weaving industry was characterized by high labor intensity
until around the turn of the century, so that being labor abundant economy Japan had
comparative advantage in this industry and that because of the shift from labor-intensive
to capital-intensive production systems, corresponding to change from hand looms topower looms since the late 19th century, particularly in the U.S., Japan lost comparativeadvantage in this industry.
The rest of the paper is organized as follows. The next section provides an
overview of the growth of habutae export from Japan and the accompanying
development of the Fukui weaving district. In particular, we examine the conditions
which facilitated the geographical expansion of habutae production from Fukui city tosurrounding rural areas, the introduction of power looms, and the fall of habutae
4

production in the Fukui silk weaving district. Section 3 provides an overview of changes
in production, the number of firms, firm size in terms of the number of workers per firm,and labor productivity in the Fukui direct. In Section 4, hypotheses that the introductionof power looms boosted habutae production significantly in the early phase but such
effect was weakened in the later phase are tested. We conclude this paper bysummarizing the main findings of the paper and drawing implications for future researchin the last section.

2. A Brief History of Rise and Fall of Industrial Development in Fukui
2-1. The rise of habutae production in Fukui prefecture
Because of the lack of a major manufacturing sector within Fukui prefecture, theprefectural government made various attempts to promote new industries, particularly forthe sake of ex-samurais who found themselves without employment after the Meiji
Restoration (1868). For example, the government first tried to stimulate the production of
hosho-tsumugi, traditional plain silk fabrics for the domestic market, using the modern
production techniques. To this end, the prefectural government sent a few people to
Kyoto to learn advanced methods of weaving and dyeing. Hosho-tsumugi had long been
produced mainly in Fukui city; however, it was not such promising industry because
demand was limited. Local people wanted to start producing fabrics which had larger
market and export potential. A small group of ex-samurais established the weaving
5

workshop, ‘Shokko-gaisha’, which was equipped with ten hand looms with flying
shuttles, to produce silk handkerchiefs and umbrella material for export. This was thefirst weaving workshop in Fukui prefecture (Fukui Prefecture Silk Fabric Association
1921, pp. 182-189), but its success was by no means guaranteed. The workshop faced anumber of problems regarding management and struggled to stay open. Thus, newindustries with more promising market opportunities were continually sought by trials
and errors.
It was habutae production which started in Fukui city in 1887 that seemed toafford the most promise. Local people learned the basic production methods from
Naohiro Koriki, an engineer in the Kiryu silk weaving district located 500 km away, who
was invited by the Fukui prefectural government to conduct a three-week training session
in Fukui city (Harada 2002, pp. 25-26). An estimated 100 people attended.1 Kiryu had
been the first exporter of habutae, beginning around 1877, and several prefectures
including Fukui had directly introduced Kiryu’s habutae production methods. The Kiryu
district, however, decreased habutae production and concentrated on the production of
more sophisticated products, such as kimono, rather than just simple habutae (Hashino
and Otsuka 2013).

1

Unfortunately, the content of the training and participant demographics are not well reported. It is
known that prefectural officials and workshop owners decided that each participant had to pay 0.15
yen per person (per hand loom) to Koriki for his training services, and that he received 15 yen in total.
This suggests that about 100 people received training (Fukui Prefecture Silk Fabric Association 1921,
pp. 188-89). It is interesting to note that the recent development of the garment industry in Bangladesh
and Tanzania also started with training program (Mottaleb and Sonobe 2011, Sonobe and Otsuka
2014).
6

After the introduction of the flying shuttle from Kyoto and following thethree-week training program, production of habutae grew rapidly in Fukui city. Though
Shokko-gaisha was not profitable, it played a significant role in diffusion of habutae
production in Fukui city by providing a series of short-term training programs (Fukui
prefecture 199, p. 543)2. It is said that in 1892, shortly after foreign merchants from
Yokohama opened local branch offices in Fukui city, more than fifty new hand looms
entered into operation every day in this city (Mikami and Debuchi 1900, p. 7). Although
there is no specific evidence to this effect, it might well be that many foreign merchants
identified Fukui as promising new center of habutae production in Japan. The productionof habutae quickly spread from Fukui city to surrounding rural areas through promotion
activities both by county governments and local producer groups entrepreneurs (Fukui
prefecture 1994, 543). Export of habutae produced in Fukui prefecture increased sharply
and surpassed Kiryu’s habutae export in mere several years after production had firstcommenced.
Figure 1 shows the map of the Fukui weaving district, with its center in Fukuicity. Habutae production geographically expanded initially from Fukui city toneighboring counties: Ohno county started production in 1886 (Fukuiken Yushutsu
Orimono Kensajo 1991, p.7), Imadate county in 1887, Asuwa and Yoshida counties in
1888, Sakai county in 1889, and Nanjo county in 1890 (Fukuiken Yushutsu Orimono
2

Not only prefectural government but also private sector were keen to diffuse habutae production.
Many private training centers were established in Fukui city and rural people came there to learn
technologies for launching habutae production at home (Fukui prefecture 1994, p. 543).
7

Kensajo 1911, pp. 5-9; Fukui Prefecture 1994, p. 542).3 As will be shown later, thehistory of the export-led growth of the Fukui weaving district accompanied thegeographic expansion of production.4

2-2. Changes in habutae export
Figure 2 shows the growth in real value of total habutae exports from Japan, habutae
production in Fukui prefecture and its exports, and exports of habutae to Europe and the
U.S. The real value of habutae exports rose sharply in the 1890s. After stagnant growthin the mid-1900s, export again took off in the 1910s. The share of habutae as a fractionof total Japanese exports increased to nearly 12 percent in 1904, which indicates theimportance of this commodity at the early stage of Japan’s modern economic
development. At the same time, habutae production in Fukui prefecture occupied asignificant place in the Japanese export, especially in the 1890s and 1910s.5
As intermediate goods, habutae fabrics had to be very light, even, and uniform(Hashino 2010, p. 488). Most of the habutae was shipped in its grey state and thenprinted or dyed in European countries and the U.S. to be used for ladies’ dresses, blouses,
linings, trimmings, and various ornamental purposes (Crowe 1909, p. 33). Japanese
habutae that shipped to France was supplied not only to the French domestic market but
3Starting year of production in Nyu county is unknown, but production probably began later than inother northern counties.
4
As the weaving industry did not become popular in the southern part of Fukui prefecture, consistingof Mikata, Oi, Tsuruga, and Onyu counties, we focus only on Fukui city and seven northern counties
in this study.
5
Almost all of the habutae produced in Fukui was exported, as is indicated in Figure 2.
8also beyond it. Japanese habutae became popular throughout Western countries, where
demand had increased for cheap silk fabrics worn by the general public, thanks tomodern production techniques. This was the so-called great “democratization” of silk
(Federico 1997, pp. 43-44). Cheap silk fabrics, in solid colours and piece-dyed prints,
became much more fashionable than expensive figured or pre-dyed fabrics. They werethin to save material costs (Tamura 2009, p. 191). The production of such fabrics ishighly labor-intensive, and Fukui was suitable for producing them because cheap labor
was available for weaving habutae on hand looms outfitted with flying shuttles.
According to the Silk Association of America (1921, p. 72), in 1913 daily wage of maleweavers ranged from $10 to $30 in the U.S., whereas that of female weavers ranged from$0.07 to $0.22 in Japan. In addition, thin raw silk for producing light fabric was available
from Yokohama. It appears that the raw silk was too thin to produce habutae by powerlooms in those day.6
According to survey data from the Ministry of Agriculture and Commerce (1911,
pp. 8-9) in 1895, more than 60 percent of Japanese habutae was exported to the U. S., 20
percent to France, and 6 percent to the U.K.7 Habutae export to the U.S., however,decreased beginning in the mid-1890s due to tariffs protecting their nascent silk weaving
industry. The number of power looms increased from 5,321 in 1880 to 44,257 in 1900
(Sugiyama 1988, p. 102). The use of power looms and the import of cheap and uniform

6
7

Even in the U.S., hand looms were used in the 1880s (Silk Association of America 1920, p. 100).
Ministry of Agriculture and Commerce (1911), pp. 8-9. The figures were reported on a value basis.
9

Japanese raw silk, rather than habutae, enabled American silk weaving industry to growrapidly. Thus, the European market became more important for Japanese habutae in theearly 20th century. In 1910, around 30 percent of Japanese habutae was exported toFrance, 20 percent to the U.K, and only 13 percent to the U. S., where the production ofbroad silk fabrics roughly doubled from 1900 to 1910 (Sugiyama 1988, p. 101).
The above figures do not necessarily mean that Japanese habutae was always
competitive in the European market. In 1896, a Japanese inspector pointed out that noproduct could compete with Japanese habutae except Chinese pongee in the major silkmarkets such as Patterson, Manchester, Geneva, Zurich, and Lyons. However, when thesame inspector visited the European market again in 1900, he found a number of worthy
competitors: pongee, mixed goods with silk and cotton produced in Lyons, American
light silk, Chinese pongee, and English satin with silk and cotton (Tamura 2009, p. 192).
In fact, habutae export as well as its production in Fukui prefecture drasticallydeclined in the 1920s (see Figure 2). It appears that the silk weaving industry in the U.S.
rapidly developed due to the use of power looms to produce thin silk fabrics, as well as
mixed fabrics with silk and cotton, which were cheap enough to outcompete Japanese
habutae. Interestingly, when habutae export to the U.S. declined sharply (Figure 2),
Japan’s raw silk export to the U.S. increased dramatically (Figure 3). Table 1 indicatesthat the real value of capital as well as consumption of raw silk became almost doubled
every ten years in the U.S. Thus, it is clear that silk manufacturing industry rapidly
10

developed in this country. from the late 19th century to the 1920s8. This development
accompanied the emergence of large scale silk weaving firms. For example, more than
100 power looms were equipped in 9 firms out of 51 newly-established silk fabricproducing firms in 1914 (Silk Association of America 1915, p. 57, p. 60).9 In contrast,
only 10 to 20 power looms were used in factory systems in Fukui.
The Silk Association of America (1915, p. 54) reported that habutae was“originally and still largely made in Japan, and now also in the United States.” This
statement suggests that the U.S. was able to produce thin silk fabrics, such as habutae, byusing power looms by 1915. Observing the production of silk fabrics in the U.S., Matsui(1930, p. 185) indicated that habutae imported from Japan was no longer competitive
with the American products. Furthermore, Japan imported power looms for silk fabricproduction from the U.S. (Silk Association of America 1918, pp. 39-40)10 It may well bethat because of the capital-using (or power loom-using) technological change in the U.S.,
Japan’s comparative advantage in the production of simple silk fabric was lost. This
incidence is reminiscent of sharp reduction in output in the labor-intensive cotton
spinning industry in India due to the advancement of the capital-intensive cotton spinningindustry in the U.K. (Broadberry and Gupta 2009)8

The figures in rayon industry as well as silk manufacturing industry are included in Table 2. It is
plausible to assume that these figures pertain almost exclusively to the changes in silk manufacturingindustry because it was the middle of the 1920s that rayon industry in the U.S. started developing.
9
It is also important to consider the significant shift to rayon, which was much cheaper than silk;rayon fabric production soon outpaced that of habutae in the late 1920s in Japan.
10
According to the same article, prominent silk manufactures in the U.S. were keen about export ofpower looms from the U.S. to Japan, as it may boost habutae export from Japan. Such a pessimistic
view, however, turned out to be incorrect, as habutae export from Japan actually declined.
11

2-3. Production growth in Fukui prefecture
How did silk fabric production grow in Fukui prefecture, leading it to become the top
exporter of habutae in Japan soon after the industry first developed? Table 2 shows thereal value of habutae production, the number of firms, the average number of workers
per firm, labor productivity, and the number of hand and power looms in 1905 and 1915
by location. Several important findings can be made. First, Fukui city was by far the mostimportant center of production, accounting for nearly 50 percent of the district’s
production in 1905. Its production share, however, decreased significantly over time,
implying that the habutae production subsequently increased in surrounding counties. In
this respect, Fukui’s development resembles that of the silk fabric industry in Lyons,France, in which production spread from urban to rural areas in the 18th century(Federico 1993). Second, total production in Yoshida and Imadate counties was fairly
large in 1905. Taking advantage of their geographic proximity to Fukui city (Figure 1),
these counties seem to have begun habutae production relatively early on. Third, somecounties, such as Sakai and Ohno, caught up with and even surpassed the Yoshida andImadate counties over time. It appears that the production of habutae was technicallyeasy and unskilled labor-intensive, so that the production area expanded smoothly tohitherto underdeveloped rural area. In fact, the labor productivity was comparable among
Fukui city, Asuwa, Yoshida, Imadate, and Ohno counties in 1905. In 1915, however,12

labor productivity became much higher in Fukui city, because the adoption rate of powerlooms was higher. Fourth, power looms were not used in 1905 only with a few
exceptions, but it dominated over hand looms in 1915. Actually the number of powerlooms increased from 1905 to the end of the 1910s (Figure 4) 11 , which roughly
corresponds to the growth of labor productivity. Fifth, according to Figure 4, the numberof workers and the number of looms were roughly the same, indicating that typically one
worker operated one loom, be it hand or power looms. Sixth, the firm size in terms of thenumber of workers in 1905 was relatively small; only 5 to 6 workers per firm except inFukui city, where 15 workers worked per firm. Later on, however, 10 to 20 workers
worked per firm in counties where the adoption of power looms was widespread, such as
Yoshida, Sakai, and Ohno counties.
It is the purpose of this study to explore why such unique patterns ofdevelopment emerged in the Fukui silk weaving district by using the available
county-level data from 1890 to 1921.12 We cover this period because reliable data are
available during this period.13

3. Descriptive Analyses
11

The number of power loom workers shown in Figure 4 was estimated by subtracting the number ofhand looms from the total number of workers, assuming that one hand-loom worker used one handloom.
12
Detailed county data are available from statistical survey from 1905 to 1921 by prefectural
government. This survey covers firms which produced habutae for export.
13
The large-scale production of rayon fabrics became common in the 1920s (Hashino 2007, pp.
31-32), an analysis of which requires a separate approach focusing on how new products’ production
techniques were acquired.
13

3-1. An overview of development
In order to identify the major components of growth in industrial production, we
decompose the real value of production (Q) into the number of firms (N), firm size interms of the number of workers per firm (L/N), and labor productivity (Q/L) according to
the following formula:
Q = N × (L/N) × (Q/L).
Taking the logarithm, the above equation can be rewritten as:
Ln (Q) = Ln (N) + Ln (L/N) + Ln (Q/L).
Using this relationship, changes in logarithms of the indices of Q, N, L/N, and Q/L are
shown in Figure 5.14 It should be noted that indices in this figure are set to be unity in1890 and pertain to the production of only habutae.
It is interesting to observe that the development patterns of this industrial district
are markedly different in at least three periods. It was primarily an increase in the numberof firms and labor productivity growth that brought about a rapid growth in production
from 1890 to around 1905. Presumably the number of firms increased due to the entry of
imitators and labor productivity grew due to learning effects. Gradually, however, thenumber of firms stopped growing and began declining after 1910. On the other hand,labor productivity did not increase appreciably from 1900 to 1907, when it began
increasing sharply. Labor productivity, however, did not grow or even declined in the

14‘Firms’ include (1) workshops employing more than 10 workers, (2) workshops employing lessthan and equal to 9 workers, (3) weaving manufactures-cum-contractors, and (4) out-weavers.
14

later period of the 1910s. The average firm size in terms of the number of workers
increased from 1893 to 1901 but stagnated or decreased thereafter except in the 1910s.
Based on these observations, we may divide the entire study period into threephases: (1) Phase I (1890-1905), in which the increasing number of firms and laborproductivity growth were major sources of growth; (2) Phase II (1906-15), in which thenumber of firms declined but the labor productivity increased; and (3) Phase III(1916-21), in which labor productivity, average firm size, and the number of firms
remained largely unchanged or declined. Why such characteristically different phases ofdevelopment emerged is a major question to be addressed.

3-2. Regional expansion of production
Figure 6 shows changing shares of habutae production in Fukui city, neighboring
counties, and the remaining counties.15 It is clear that the production centre shifted from
Fukui city to other areas, particularly to neighboring counties in Phase I. Considering that
it was an increase in the number of firms and labor productivity growth that were themain sources of production growth in Phase I, and that the decentralization of the
production base took place rapidly, it seems reasonable to hypothesize that there were nostrong Marshallian agglomeration economies. 16 In fact, if strong agglomeration

15

In this figure neighboring counties refer to Asuwa and Yoshida counties, whereas remaining
counties refer to Sakai, Ohno, Imadate, Nyu, and Nanjo counties (See Figure 1).
16
We do not totally deny the presence of the agglomeration economies. In fact, it is difficult to
explain the rise of the Fukui silk weaving district without considering such economies.
15

economies are present, production expansion would take place in locations where thetotal size of production was large from the beginning.17 Similar arguments can be madefor the number of weaving firms. Although we do not have concrete evidence, the mostimportant reason for the industry’s geographical expansion was the lower wage rate
outside Fukui city, which may correspond to the predictions of the product cycle theory(Vernon 1966).
It also seems sensible to conjecture that scale economies at the workshop or
factory level were weak. If they are strong, the firm size tends to increase over time.
According to Table 1, however, the firm size expansion was not pronounced only in
Yoshida, Sakai, and Ohno counties where power looms were actively adopted. If scaleeconomies were strong in the Fukui district, the initial capital requirement would havebeen large, which, in turn, may have discouraged the entry of new firms into the silk
weaving business outside Fukui city. Actually, hand looms were almost exclusively useduntil 1909 (see Figure 4) and, roughly speaking, one worker used one hand loom in thisperiod, which indicates that the habutae production during this period was very labor
intensive.
It is also interesting to observe from Figure 6 that production shares of theremaining counties, located in the far north and east, gradually increased in Phase II and

17

Usually, industrial districts or clusters are geographically concentrated in small areas. Thus, thecase of the Fukui silk weaving district is exceptional. See Sonobe and Otsuka (2006, 2014) andHashino and Kurosawa (2013) for a discussion of the expansion of industrial clusters and Marshallian
agglomeration economies in contemporary East Asia and Africa and modern Japan, respectively.
16III. Why this happened is another interesting question. As is shown in Table 2, thesecounties were characterized by the higher adoption rate of power looms and larger firmsize. It is reasonable to conjecture that the comparative advantage of hand-loom based
production had been weakened over time.

3-3. Structural transformation of industrial districts
After wage rate began increasing rapidly in the first decade of 20th century, the adoptionof power looms has increased sharply, first in Fukui city, followed by the neighbouring
counties and subsequently by the remaining counties. Figure 7 confirms this tendency:
there was positive correlation between wage rate and adoption rate of power looms, i.e.,
proportion of power looms in the total number of looms in 1910 and 1916. Furthermore,
the average real wage rate of female silk weavers in Fukui city deflated by the consumer
price index generally increased from 1910 to 1916 (Figure 7). Real agricultural wage rate
in Fukui prefecture also increased in the same period. Consistently wage rate in Japanese
economy as a whole began increasing rapidly in the 1910s (Fei and Ranis 1964).
Although we cannot claim that high wage rate caused the high adoption of power looms
due to possible reverse causation, the evidence shown in Figure 7 is at least consistent
with capital-labor substitution induced by increasing wage rate.18
The differences in the adoption rate of power looms in Phases II and III are

18

While the data in 1910 and 1916 are shown in Figure 7, essentially the same tendency is observedin 1913.
17

largely consistent with changes over time and differences across regions in terms of thenumber of firms and the average firm size, shown in Table 2; the number of firms tended
to be larger in areas where the hand looms were used, while the firm size tended to belarger in areas where the adoption rate of power loom was higher. In fact, the number offirms generally decreased, whereas firm size generally increased during the same period.
In Phase II, a structural transformation took place along with the introduction of powerlooms—first in Fukui city and followed by the neighboring and remaining
counties—which destroyed a large number of small firms and increased laborproductivity. Even though such changes took place, the number of workers per firm
remained small, ranging from ten to twenty in major habutae producing counties.
Furthermore, the number of power looms operated by one worker was relatively small,slightly more than one on average (Figure 4). Thus, although the habutae production
became more capital-using over time to the extent that power looms were more
expensive than hand looms,19 highly capital-using, large-scale production organization,
as was observed in the U.S., has never emerged in the Fukui weaving district.

4. Hypotheses and Empirical Methodology
4-1. Hypotheses
We have found that the whole development process of the Fukui silk weaving district can

19

According to Hashino and Otsuka (2013), the price ratio of hand looms to power looms was in thevicinity of ten in the early 20th century.
18

be divided into three phases: (1) one of geographical expansion (1890-1905); (2) one ofstructural transformation (1906-15); and (3) one of production stagnation and contraction(1916-21). Although it appears reasonable to hypothesize that the growth in the habutae
production accompanied the geographic expansion of the industry in Phase I because
agglomeration economies were weak, scale economies at the workshop level were weak,
and the imitation of existing technology was easy, it is difficult to test this hypothesis
statistically essentially because of the difficulty in quantifying the supposed effects.
Regarding the latter two periods, we would like to postulate and test the following
hypotheses:
Hypothesis 1: The introduction of power looms in Phase II, which would havebeen induced by increasing wage rates, brought about a structural transformation inwhich the number of small firms decreased, and the real value of production, firm size,and labor productivity increased in areas where power looms were actively introduced.
Hypothesis 2: Compared with Phase II, the impacts of the use of power looms
on production and the structural transformation became weaker, as the production of silk
fabric became more capital intensive internationally and consequently Japan lost
comparative advantage in the habutae production.

4-2. Empirical methodology
In order to test the validity of the above hypotheses, we estimate the following function
19

by growth phase using the ordinary squared regression method:
Zit =  + iPLRit + iDj + tYt + where Zit refers to the logarithm of the value of production, the number of firms, the firm
size (or the number of workers per firm), and labor productivity; PLR refers to the ratioof the number of power looms to the total number of looms; Di is a county dummy inwhich Fukui city is the base of comparison; Yt is a year dummy; ssand s areregression parameters; and  is an error term. Although PLR is endogenous, theendogenuity bias is expected to be lessened by controlling locational fixed effects bycounty dummies.20
Hypothesis 1 on the structural transformation can be tested by examining
whether a positive association exists between the adoption of power looms and the valueof production, firm size or labor productivity, and whether a negative relationship exists
between the power loom adoption and the number of weaving firms. Testing Hypothesis
2 is a more subtle exercise, because it asserts weak or even insignificant effects of thepower loom adoption on the dependent variables.

4-3. Regression results
Now let us examine the results of regression analyses shown in Table 3 for Phase II andin Table 4 for Phase III. It is clear from Table 3 that power loom ratio had significantly
20

The estimation bias will remain because of the selection effect, e.g., location adopting power looms
may have greater potential in the habutae production, as well as possible time-varying location
specific effects.
20

positive effects on the value of habutae production, firm size, and labor productivity, andsignificantly negative effect on the number of firms, which are consistent with the
Hypothesis 1. That is, the introduction of power looms boosted the habutae production
by increasing firm size and labor productivity, and by decreasing the number of small
firms. It must be also pointed out that almost all county dummies have negative andsignificant coefficients in all the regression functions, implying that Fukui city was still
the center of habutae production with the larger number of larger firms, which achieved
higher labor productivity. Among the seven counties, the value of production, firm size,and labor productivity are generally higher in Yoshida, Sakai, Ohno, and Imadate
counties than Asuwa, Nyu, and Nanjo counties. The former counties adopted powerlooms faster than the latter counties, according to Table 2, which suggests that swift
adoption of power looms promoted the habutae production in this phase. Overall, theestimation results in Table 3 confirm significant effects of the adoption of power looms
on the firm structure and productivity of habutae production.
In sharp contrast to the regression estimates in Phase II, the power loom ratio
does not have significant effects on the value to production and labor productivity inPhase III, as is shown in Table 4. It is somewhat surprising to find no significant effect ofpower loom adoption on labor productivity, because power looms are labor-saving and,hence, labor-productivity enhancing technology. The insignificant effect suggests the
sluggish demand for habutae produced by power looms. The power loom ratio, however,21continue to have negative and significant effect on the number of firms and positive andsignificant effect on the number of workers per firm. These findings indicate that the
adoption of power looms conferred the advantage of large-scale production, even though
it did not increase the total value of habutae production and labor productivity in theregion as a whole. Thus, it is reasonable to conclude that the Fukui silk weaving district
had no longer comparative advantage in the production of habutae using power looms,
which supports Hypothesis 2. Considering the fact that the silk weaving industry in the
U.S. was able to produce thin silk fabrics, this is also consistent with the argument of Ma(2005) that the world silk markets were well integrated across the Pacific in the early
20th century and even before then.
Similar to the results shown in Table 3, coefficients of counties dummies are
generally negative and significant in Table 4, indicating the Fukui city was still center of
habutae production in the Fukui silk weaving district, even though its production sharedecreased (Figure 6). There are, however, exceptions. The coefficients of Yoshida, Sakai,and Ohno dummies are positive and the former two are significant in the firm size
regression, indicating that scale advantages had emerged in these counties. Recall thatthese are counties where the adoption rate of power looms was high (Table 2). It is also
clear from Figure 6 that the production share of these counties sharply increased in Phase
III. Thus, the use of power looms in relatively large factories seems to have been
relatively efficient within the Fukui silk weaving district. Even if this is the case, however,22the use of power looms failed to prevent the falling production of habutae in Phase III.21

5. Conclusions
This study attempted to explore the rise and fall of the Fukui silk weaving district, whichbecame the main exporter of habutae in Japan shortly after it had introduced production
technology from more advanced Japanese weaving districts in the late 1880s. Major
factors underlying the successful development of this district were found to be distinctly
different in three phases: (1) initially the geographical expansion of the industry took
place with an increasing number of firms and a reliance on hand loom technology; (2)subsequently a structural transformation occurred, marked by a declining number offirms, but increased firm size and labor productivity through the introduction of powerlooms; and (3) finally habutae production decreased without accompanying increases inlabor productivity.
Before habutae was introduced, even though people in Fukui city had attempted
to establish a weaving industry, it was not successful and, hence, skilled workers in theweaving industry were quite scarce. Thus, the finding that habutae production rapidly
expanded from Fukui city to rural area without reducing labor productivity strongly
indicates that its production was easy and, hence, unskilled-labor intensive. Since21

In contrast to the common view of the day that higher tariff imposed by the U.S. in the early 1920s
reduced the export of Japanese habutae (Matsui 1930, pp.162-163), our result shows the decline of
habutae production already in the late 1910s in Fukui. Further research is needed to analyze thestructural changes in Fukui silk weaving district after the adoption of power looms from the viewpointof micro-level factory operations.
23

unskilled labor was abundantly available, the Fukui silk weaving district must have had acomparative advantage in producing habutae. 22 Indeed, the Kyoto and Kiryu silk
weaving districts, which had long traditions of producing complicated silk products, suchas kimono, by using skilled workers, did not undertake habutae production on a large
scale. Also, power looms were most rapidly introduced to Fukui among the three silk
weaving districts (Hashino 2007; Hashino and Otsuka 2013), presumably because
machineries could be easily substituted for labor engaged in simple tasks carried out by
unskilled workers in the habutae production process. Thus, following its comparativeadvantage seems to be the key to the successful development of this weaving district.
When wage rates increased, however, the comparative advantage of habutae
production using hand looms and unskilled labor must have weakened. It is also true thatthe quality of domestically produced power looms improved and their prices declined
significantly (Minami and Makino 1983, p. 3; Suzuki 1996, Chapter 9). As a result,power looms were rapidly introduced in the Fukui weaving district beginning in the 20th
century. Such shift in technology—from hand looms to power looms—is consistent withthe argument of both Broadberry and Guputa (2006; 2009) and Allen (2012), whichindicates the significance of factor prices in explaining the large divergence intechnology choice and productivity growth between Europe and Asia.
The dominant use of power looms implies that this silk weaving industry was no22

Since there were other areas in which there was not a strong weaving tradition, the question of why
Fukui particularly developed a silk weaving industry remain puzzling.
24

longer unskilled-labor intensive by the 1910s; it became more capital-intensive. Thissuggests that Fukui lost its comparative advantage in producing habutae, so far as thebasis for its comparative advantage lay in the availability of cheap unskilled labor. The
sharp decrease in habutae production after the late 1910s is likely be a manifestation ofsuch a fundamental change in the comparative advantage.
In fact, given that the silk weaving industry in the U.S. grew rapidly, Japanese
habutae production had to compete with its American counterpart by using power looms,
some of which were imported from the U.S. Thus, it seems reasonable to conjecture thatthe development of capital-intensive weaving industry in the U.S. reduced thecomparative advantage of habutae production in Fukui silk weaving district. Sucharguments strongly suggest that the development of export-oriented industries in Asia
cannot be analyzed adequately in isolation from that of corresponding industries in the
U.S. and Europe.

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31

Table 1: Changes in the real value of capital in silk manufacturing industry andconsumption of raw silk in the U.S. (in 1929 price)
Real value ofcapitalImport of raw Material-capital
silk
ratio
in million
in thousandin million dollars
poundspounds
1889
92
5.8
63.0
1899
171
11.7
68.4
1909
276
22.1
80.1
1919
580
44.3
76.4
1929
926
85.9
92.8

Source: Carter et al. (2006), p. 691, p.694.
Notes: Real value of capital is based on ‘capital’ in silk and rayon industry in Carter et al.
(2006) , p. 691. Though capital both in silk and rayon industry is included, it
can be considered that the value in rayon industry was negligible except in
1929. For import of raw silk, we used ‘unmanufactured silk imoport for
consumption’ in Carter et al. (2006), p. 694. We calculated material-capitalratio by dividing import of raw silk by real value of capital.

32

Table 2: An overview of production and employment in the Fukui silk weaving districtby location

City orCountyCity orcountycode

Total
Average
Number of
Labor
Number of
habutae Number of number of
power
productihand looms
production
firms
workers
looms
vity in yen
in 1000 yen
per firm

1905
Fukui
Asuwa
YoshidaSakai
Ohno
Imadate
Nyu
Nanjo

Fukui
N-1
N-2
R-1
R-2
R-3
R-4
R-5

6317.8939.22317.81266.8900.42463.2
303.9
690.8

556
294
308
401
174
547
169
260

14.70
4.50
7.64
5.94
5.59
4.85
3.67
4.77

772.8
709.4
985.5
531.8
926.4
929.1
490.1
556.6

7,958
1,315
2,233
2,387
947
2,678
620
1,232

5
0
0
0
0
0
0
0

1915
Fukui
Asuwa
YoshidaSakai
Ohno
Imadate
Nyu
Nanjo

Fukui
N-1
N-2
R-1
R-2
R-3
R-4
R-5

14943.9664.2
3127.06996.93479.05378.8277.5
1826.1

165
94
77
89
90
417
447
203

14.78
6.94
17.74
21.45
12.52
4.22
1.55
2.82

6129.61018.82289.23665.23087.03054.4401.6
3186.9

193
495
332
358
36
463
559
178

2,926
159
1,283
2,295
1,237
1,469
79
243

Sources: Fukui Prefecture (1905 and 1915) Fukuiken tokeisho.
Notes: A value of production is deflated by the habutae price index. For making deflator,
we used price index of habutae in manufactured goods by commodity (1902=100),
Ohkawa et al. (1967), p.199, p. 201.

33

Table 3: Estimation results of the effect of power-loom adoption on value of production,
number of firms, firm size, and labor productivity, 1905-15

powerloom-handloom ratio

asuwa_dyoshida_dsakai_dohno_dimadate_dnyu_dnanjo_dd_1906d_1907d_1908d_1909d_1910d_1911d_1912d_1913d_1914d_1915Constant
Observations
R-squaredln (value of
production)
0.0360***(0.00984)-2.232***(0.128)-1.151***(0.127)-1.163***(0.126)-1.858***(0.131)-1.052***(0.127)-3.048***(0.128)-2.079***(0.128)0.214(0.148)-0.180(0.148)0.192(0.148)0.331**(0.148)0.364**(0.148)0.424***(0.148)0.363**(0.148)0.527***(0.148)0.229(0.152)0.401**(0.168)15.65***(0.134)88
0.926

ln (no of firms)

ln (firm size)-0.00157(0.0132)-0.416**(0.171)-0.367**(0.170)-0.110(0.169)-1.189***(0.175)0.447**(0.170)-0.137(0.171)-0.365**(0.171)
0.192(0.198)0.170(0.198)0.254(0.198)0.368*(0.198)0.476**(0.198)0.252(0.198)0.0456(0.198)-0.169(0.199)-0.364*(0.204)-0.669***(0.225)6.002***(0.179)880.707

0.0153(0.0110)-0.857***(0.143)-0.417***(0.142)-0.580***(0.141)-0.304**(0.146)-1.132***(0.142)-1.535***(0.143)-0.955***(0.143)-0.0800(0.165)-0.0713(0.165)-0.0852(0.165)-0.127(0.165)-0.370**(0.165)-0.315*(0.165)-0.354**(0.165)-0.232(0.166)-0.168(0.170)0.110(0.188)2.492***(0.150)88
0.753Standard errors in parentheses***p<0.01, ** p<0.05, *p<0.134

ln (labor
productivity)
0.0208*(0.0111)-0.962***(0.145)-0.359**(0.143)-0.476***(0.143)-0.348**(0.148)-0.366**(0.144)-1.361***(0.145)-0.745***(0.145)0.125(0.167)-0.300*(0.167)0.0122(0.167)
0.0984(0.167)0.258(0.167)0.484***(0.167)0.678***(0.167)0.928***(0.168)0.747***(0.172)0.956***(0.190)7.152***(0.151)88
0.810

Table 4: Estimation results of the effect of power-loom adoption on value of production,
number of firms, firm size, and labor productivity, 1916-21

powerloom-handloom ratio

asuwa_dyoshida_dsakai_dohno_dimadate_dnyu_dnanjo_dd_1917d_1918d_1919d_1920d_1921
Constant
Observations
R-squaredln (value of
production)-0.000374(0.000486)-2.793***(0.147)-1.601***(0.146)-0.693***(0.158)-0.625***(0.166)-0.310**(0.147)-3.122***(0.147)-1.779***(0.147)0.267**(0.127)0.637***(0.127)0.366***(0.129)0.247*(0.130)0.0372(0.132)15.93***(0.132)48
0.963

ln (no of firms)

ln (firm size)-0.000563(0.000466)-0.952***(0.141)-0.951***(0.140)-0.973***(0.152)-0.311*(0.159)0.524***(0.141)0.747***(0.141)-0.186(0.141)0.0881(0.122)
0.234*(0.122)0.472***(0.123)0.282**(0.125)
0.0960(0.126)5.250***(0.127)48
0.912-0.000437(0.000412)-0.264**(0.124)0.405***(0.124)0.890***(0.134)0.245*(0.141)-0.477***(0.124)-1.895***(0.124)-1.274***(0.124)-0.0187(0.108)-0.0912(0.108)-0.128(0.109)-0.131(0.110)0.0555(0.112)2.439***(0.112)48
0.956Standard errors in parentheses***p<0.01, ** p<0.05, *p<0.135

ln (labor
productivity)
0.000665(0.000528)-1.575***(0.159)-1.051***(0.159)-0.615***(0.172)-0.573***(0.180)-0.364**(0.159)-1.973***(0.159)-0.324**(0.159)0.165(0.138)0.480***(0.138)-0.0159(0.139)0.0727(0.141)-0.136(0.143)8.262***(0.144)48
0.894

Figure 1: The map of Fukui prefecture and Fukui silk weaving district

Fukui silk weaving district

Source: http://www.freemap.jp/itemDownload/fukui/fukui/1.png
Notes: The area areas show Fukui Prefecture.

36

Figure 2: Changes in total habutae export from Japan, export to the U.S. and the Europe,
habutae production in Fukui, and export from Fukui from 1892 to 1923
(three-year moving averages, in thousand yen)
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923

0

Total export

Export to the U.S.

Export to the Europe

Habutae production in Fukui

Habutae export from Fukui

Sources: Data: Yokohamashi (1965), p. 313, for total export, export to the U.S. and theEurope (U.K. and France); The Ministry of Agriculture and Commerce (various
years) Noshomu tokeisho for Habutae production in Fukui; Fukuiken
Kinuorimono Dogyo Kumiai (1922), pp. 196-97, for habutae export from Fukui.
Note: For deflator, we used price index of habutae in manufactured goods bycommodity (1902=100), Ohkawa et al. (1967), p. 199.

37

Figure 3: Changes in export of raw silk from Japan to the U.S. and the Europe from 1892
to 1923 (three-year moving average, in ton)
25,00020,00015,00010,000

5,000

1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923

0

total

US

Source: Nakabayashi (2003), pp. 470-72.

38EuropeFigure 4: Changes in the number of handlooms, power looms, total workers, andestimated number of power-loom workers from 1905 to 1921
25000

20000

15000

10000

5000

0
1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921
power looms

hand looms

total workers

estimated number of power-loom workers

Sources: Fukui Prefecture (1905-1920) Fukuiken tokeisho.
Note: The number of power loom workers was estimated by subtracting the number ofhand looms from the total number of workers, assuming that one hand-loom
worker used one hand loom.

39

Figure 5: Indexes of production, the number of firms, firm size, and labor productivity in
Fukui habutae weaving district from 1890 to 1921 (1890=1)
100

10

1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921

1

0.1
Production

Number of firms

Firm size

Labor productivity

Sources:(1) Production: Fukui Prefecture (1890-1901) Fukuiken kangyo nenpo for data from 1890
to 1901; Fukui Prefecture (1993) Fukuikenshi shiryohen 17: tokei, for data from 1902
to 1904; Fukui Prefecture (1905-1921) Fukuiken tokeisho for data from 1905 to 1921.
(2) Number of firms and workers: Mikami and Debuchi (1900) for data from 1890 to
1892; Fukui Prefecture (1893-1900) Fukuiken kangyo nenpo for data from 1893
to1900; Fukui Prefecture (1901) Fukuiken noshoko nenpo for data in 1901; Fukui
Prefecture (1905-1921) Fukuiken tokeisho for data from 1905 to 1921.
Notes: A value of production is deflated by the habutae price index. See the note of Table
1 for deflator. Linear interpolation was used for data of number of firms andworkers from 1902 to 1904.
40

Figure 6: Changes in regional share of value of habutae production from 1890 to 1921
(%)

100
90
80
70
60
50
40
30
20
10
Fukui city

Neighboring counties

Remaining couties

1890
1890
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921

0

Sources: Fukui Prefecture (1890-1903) Fukuiken noshoko nenpo for data from 1890 to1903; Fukui Prefecture (1905-1921) Fukuiken tokeisho for data from 1905 to1921.
Notes: We categorized capital city and seven counties into following three groups. Fukui
city; Fukui; Neighboring counties; Yoshida and Sakai; and Remaining
counties; Sakai, Imadate, Ohno, Nyu, and Nanjo. Liner interpolation wasused for data for 1893 and 1904.

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Figure 7: Relationship between real wage rate and power-loom ratio by location in 1910
and 1916

Ohno

100
90
Powr-loom ratio (%)

80

1910

Fukui

YoshidaImadate

1916

Sakai

70
60
50

Ohno
Nanjo

40
30

Asuwa

20
Imadate

Sakai
Yoshida

Fukui

10
Nyu

0
0

10

20

Asuwa

30
40
50
Real wage rate of female workers (sen/day)

60

Sources: Fukui Prefecture (1910 and 1916) Fukuiken tokeisho.
Notes: Daily wage rate is deflated by the consumer price index of all items in Ohkawa etal. (1967), p. 135. The wage rate of individual firms with more than 10
workers is available. We calculated weighted average wage rate of female
workers in each counties by dividing the total wage paid for female workers
by the total number of female workers. A hunred sen is equivalent to one yen.

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