& BUSINESS

16th

ANNUAL REPORT

g4sSVTE'lteee,rg B ./k

Ve "v

w

THE RESEARCH INSTITUTE FOR
AND BUSINESS ADMINISTRATIONECONOMICS
KOBE UNIVERSI'IY

1969

KOBE
ECONOMIC & BUSINESSREVIEW
I6th

ANNUAL REPORT<sisl2•THE

RESEARCH INSTITUTE FOR
AND BUSINESS ADMINISTRATIONECONOMICS
KOBE UNIVERSITY

1969

CONTENTS
Page

The Change of Spatial Characteristics ofIndustries in Japan .......,................................,....Minoru BEiKA

1

Functions of Screen Account ..........................................Nobuko NosE

19

On Mr. Stoleru's Optimal Policy for Economic Growth.......................................... Hikoji KATANO

31

A Note on Shorter Working Hours for Seamen ...Hiromasa YAMAMoTo

39

Objectivity Reexamined .......................,...........................Isao NAKANo

47

A Note on the Behavioral Theory of lnnovation ......Hideki YosHmARA

55

THE CHANGE IN REGIONAL CHARACTERISTICS
OF INDUSTRIES IN JAPAN
Minoru BEIKA

I introduction
The necessity of re-examining the "National Regional Development Plan"
begun in 1962, and due to be completed in 1970, has been gradually noticed
because of apparent gaps between the political aims and the actual change.
The government authorities in Japan, having admitted the situation, started
their examination in the spring of 1965 and set forth the interim report in 1966

and the final report in 1967. This year they are trying to publish the "NewNational Regional Development Plan", due to be completed in 1985 on thebasis of these two reports. The writer's concern in this anicle is not in thecontents of these plans, but in how the problem of industrial location, which

has a considerable bearing on the problem, is treated, and in what kinds ofproblems are found in them.
The reports mentioned above pointed out the tendency of industrial location - dividing the industries into two main types --- "foot-tight" and "footloose."

The industries called "foot-tight" here are to a considerable extent limited

by local conditions. These industries include lumber and wood products, paper,
pulp, pottery etc. which are the raw material-oriented industries, and petroleum
refining, chemicals, steels, ship building which are locatedin coastalareas. They
are mainly located in the three central industrial districts in Japan, but are locatedin other local districts as wel!.

"Foot-loose" type industries, or the other hand, are generally taken to be

the high value-added industries which are rather free in location, including
electric machinery, precision engineering and other higher processed engineering industries (so-called growth industries). In the case of Japan, in addition,
their tendency to concentrate strongly in the three central industrial districts is
a distinctive feature.

The final report concludes that foot-loose type industries, which have shown
extreme concentration until the present, ought to be literally foot-loose, and tocontribute to the development of local districts, admitting the notable roles foot-tight industries will play from now on in the development of iocal districts.
.

2

MINORU BEIKA

Having divided Japanese main industries into foot-tight and foot-loose types,

the writer, in this article, intends to focus on the following point: the extreme

concentration of the foot-loose type, contrary to its name, is a remarkabletendency compared with the actual conditions in western countries.
The writer's concern in this area originated from his previous study on theregional characteristics of Japanese industries with British and American ones,
based on the study of Professor P. S. Florence who had grasped the characteristics of industrial locations in U.S. and Britain by the concept of regional con-centration. (P.S. Florence "The Logic of British and American Industries"
1953). The writer has previously published a comparative study between Japanese and British, American industries, focusing on their relation to the businessfeatures of industrial location in Japan using the 1951-52 data, using the methodof Professor Florence (M. Beika "Spatial Characteristics of Industries Relating

to their Business Features" The Kobe Economic & Business Review 2, 1954).
In this article, the writer is going to investigate the change in Japanese industries

on the basis of 1956 and 1966 data. The main point of investigation will be thecharacteristic change of foot-loose type industries during these ten years.

II Study on Change using Florence's method
Professor P.S. Florence, a vvell-known scholar in the studies of industrialorganization and business structure, still working actively in his old age, has agreat influence in Britain on the study of location theory as well. Recently hehas caught the attention of Japanese scholars in this field. In this chapter, thewriter intends to study the regional concentration and management conditionsin Japan by types, and refer to the problems related to regional concentration,

the concept of which prompted this study, as the premise to the main subject.

The term, regional concentration, used here means the comparison between
the regional (prefectural in our case) distribution rate of the workers in a certain

industry and that of the total number of workers in all industries. And its coeMcient is obtained by deducting the former from the latter for each prefecture,and summing up all the plus and minus deviations of the distribution rates ofworkers in a certain industry compared with the distribution rates of workers
in al1 industries. That means the nearer the distribution of a certain industry
is to that of all industries, the nearer the coeMcient is to zero. The more the
distribution differs, the nearer the coeMcient is to 100 per cent. However, whereas

Florence used occupied persons as norms, the writer has used the total numberof industrial workers instead. The writer has adopted Professor Florence's
method of portraying the characteristics of each industry by classifying th.em inTHE CHANGE IN REGIONAL CHARACTERISTICS 3
OF INDUSTRIES IN JAPAN

terms of number of workers, admitting the considerable connection between thefeatures of regional concentration and the business features of each industry.
In addition, the writer has supplemented the data on the actual concentration of each industry in three leading prefectures, fearing that, while such a

coeMcient of localization somehow indicates the extent of concentration ofindustries relatively on the one hand, it might make the overall concentrationunclear on the other.
In conclusion, Professor Florence, relating the coeMcient of localization toplant size, grasped the logic of industries inductively when he compared British

and American industries and found the points of similarity between them. But
it is the writer's finding that the Japanese condition forms a considerable contrast

with British and American conditions, as regards foot-loose type industries,
following the terms used before.

No small change can be found between the data of 1956 and the data of1966.

M The regional concentration in 1956 and plant size
Combining the data gained from the "1956 Census of Japanese Manufactures" and the some indexes noted above, the writer completed Table 1. The
writer only suggests his conclusive viewpoint here because of space limitations.

Seven types were devised by the writer in connection with industrial location
and business features in Japan, and they were put together in Table 1, for wantof space in classifying all industries by types.

Combining each item in the Table and considering the actual conditions ofeach industry, the writer devised seven types as follows:

Type 1. Industries which are closely related each other and are concentrated chiefly in a few central industrial districts

They include large, medium and small plants, for which regional concentration is a prerequisite demand. One distinctive feature of this type is the heavy
concentration in the three central industrial districts, especially in the Keihinarea. Machine industry, electric machinery etc. - all of them are higher processed engineering industries and are typical examples of the foot-loose type.

Type 2. Industries consisting mainly of large plants located both in thecentral industrial districts and other local industrial areas

They are big plants which are located not only in the central industrial
districts but in other local industrial areas, depending upon the local conditions
such as ports, transportation, water, electricity, special raw materials, etc. Sometypical examples are iron and steel, shipbuilding, chemical fertilizer. Pulp,

Table 1.

[ZiM
g.

v=

Group of Industryo fl

CoeMcient of Localization

g o
tLo 8
m
$ th 9.

1

3

4
5
6

7
8
9
10
11

12
13

14
15
16
17
18
19

eo
21

22
23
gm

@ Potteryo Surveying instmmentsware@ Lacquer
Natural resin and wood
@ chemical products@ Optical instruments and lenses@ Silk reeling plants@ Watches and clocks
o Musical instruments@ Clay refractories@ Electric measuring instrument@ Shipbuilding@ Medical instruments@ Pens and pencils@ Electric bulbs@ Communication equipment@ Ropes and nettings@ Drugs and medicineso Bicycles, rearcars@ Paper mills@ Chemical fertilizers@ Sea food products@ Oils and Paints
equipment@ Railroad
Rollingrnills, except smelting and@ steel works

I

72

m

ll

70

eo
es

os

59

Ishikawa

M
61

52
81

Kagoshima Hyogo
Tokyo
Nagano

61

41

61

M

Nagano
Tokyo

60
59

57
54

82
53

Aichi

Gifu

Mie

Tokyo

Shizuoka

Okayarna

53

74
50
70

51

75

50

79

50

78

Tokyo
Hyogo
Tokyo
Tokyo
Tokyo
Tokyo

49

49

Hokkaido

Kagawa"(No. of workers)
Percentage of Workers by Size of Plant

-

as

2

Plant in 1956

3 Leading Prefectureso Perc" entageg•and Size of

49

50-99

47. 4

13. 2

30. 9

I

73. 8
85. 2

14. 8
""---.

36. 8

IL 6

Gunma

Yamanashi

19. 9

6.4

Aichi

Nagano

19. 2

10. 2

Tokyo
Hyogo

Aichi

26. 4

Aichi

13. 1

11. 9

51. 5

""---23. 5

Hiroshima
Hiroshima
Kyoto
Osaka
Osaka

NaganoKanagawa

26. 4

17. 7

25. 7

30. 2

9. 7

3. 6

Saitama

69. 4

Kanagawa
Kanagawa

47. 6

Kanagawa Osaka
Aichi
Mie

26. 2

47. 6

1

12. 5

74. 2

7. 0

12. 5

20. 1

11. 4

25. 2

34.0

11. 6

36. 4

27. 3

12. 9

35. 3

Tokyo

Osaka

Toyama

Tokyo

Aichi

Shizuoka

Holtkaido

Tokyo

19. 4

10. 7

NiigataToyama

1. 4

O.7

Shizuoka

Fukuoka
Hokkaido

Chiba

M.9

74

Tokyo

Osaka

50

Osaka
Osaka

Aichi

Hyogo
Hyogo
Hyogo

Tokyo

N-N-

gg. 4

Osaka

64

2. 2

23. 0

1
30. 6
Lp-NN
45. 4
"e--V

63

43

51. 6
71. 5

73. 6

82
39
30
32

"
"
"

7.7

4. 6
69. 1

Miyazaki
Saitama

as
os

27. 1

Fukushimaosca

1oo4ee 500-999 1000••••••

49. 1
14. 8

28. 5

18. 0
13. 8

10. 7

28. 9

20. 1

20. 9

11. 6

8. 7

77. 6

11. 4

22. 0

1. 7

33. 0

14. 3

32. 5

20. 2

9. 3

4.8

11. 1

7. 1

25. 2

16. 9

40. 0

21. 2

78. 8

17. 9

67. 7

K
E
8
c
tu
m
-x
>

25
26
or
'28

ve
so
31

32
33

st
35
se
37
ss
39
co
41

42
es

"ca
ca
47
os
49
50
51

52
53

@ Sugar@ Paper products@ Textile machinery@ Household electric appliances@ Canned fruits and vegetables@ Industrial inorganic chemicals@ Motor vehicles@ Animal and vegetable oil and fats
@ Metal working machinery@ Tincans@ Dyeing and finishing textiles@ Woven fabric mills@ Heating apparatus@ Toys and sporting goods@ Structural clay products@ Rubber products@ Metal stamping@ Glass@ Agricultural machinery@ Yarn and thread mi11s@ Paper coating@ Rolling of non-ferrous metals@ Table ware and cutlery@ Miscellaneous meta1 products@ Fabricated wire products@ Ofice machines@ Measuring instruments@ Flour and grain mills products@ Electric wire and cable

'

ca

52

Holdcaido

42

71

Osaka

Tokyo
Tokyo

42

57

Aichi

Osaka

42

ca

Ibaragi

Osaka

42

30

41

30

41

57

co

ss

co
39

52
63

Aichi
Tokyo
Yamaguchi Kagawa
Osaka
Aichi
Tokyo
Kanagawa
Kanagawa
Fukuoka
Hyogo
Osaka
Tokyo
Kanagawa
Osaka
Tokyo
Hyogo

39

rs

Aichi

ss

37

Aichi

ss
37

52
59
oo

Tokyo
Tokyo

37
37
37

se
71

ss

oo

15. 1

2.3

Aichi

59. 8

12. 2

Hyogo
Tokyo

32. 6

12. 4

27. 1

8.1

19. 8

16. 1

9. 4

17. 3

23. 0

34. 2

42, 3

18. 8

38. 9

23. 2

12. 8

37. 1

t
8.7

18. 2

23. 5

10. 0

25. 0

6.4

35. 1

Shizuoka

Aichi

Hyogo
Tokyo
Tokyo

1 19. 1

Osaka

63. 5

28. 0

63.0 i

30. 2

6. 8

45. 4

13. 4

35. 0

19. 6

Kyoto

45. 5

13. 1

31. 0

59. 5

16. 0

20. 9

".8

18. 3

23. 3

Aichi

Fukui
Saitama
Osaka

Hyogo
Tokyo

Fukuoka
Fukuoka

88. 7

7. 5

3.8

12. 7

9. 4

38. 9 16. 1

Aichi

73. 9

15. 1

8.0 3.3

Kanagawa
Okayama

30. 0

eo. 6

25. 7 13. 5

40. 2

16. 5

32. 7 10. 6

Gifu

12. 4

4.3

mo. 628. 7

34. 0

Aichi

62. 5

19. 9

"t----v
30. 9

31.1 1 17.4

16. 2

Osaka
Osaka
Osaka

ss

22

Niigata

se

os

Aichi

ss

56

Osaka
Osaka
Osaka
Osaka
Osaka
Osaka

62. 8

26. 0

45. 4

".---v
15. 2
1-

Y.-A3. 7
"t--v
"'pt'
10. 4
13. 6

37. 3

22. 9

10. 2

ss

61

Tokyo
Tokyo

Aichi

49. 2

16. 2

ss

55

Osaka

Niigata

Tokyo

19. 1

16. 4

M
M

62

Tokyo

Osaka

Aichi

67. 9

17. 9

62

Kyoto

57. 7

17. 3

34

Osaka
Osaka

Tokyo

oo

Tolryo

Aichi

69. 9

13. 4

31. 1

33
ss

ss

Tokyo

Osaka

Aichi

38. 6

17. 6

31.6 8.9

23

Holckaido

Aichi

Shizuoka

41. 9

11. 7

gg

54

Tokyo

Kanagawa Osaka

68. 4

6,4

""---15. 7
24.4 12.8 19.9 -""---'
34. 4

H
:

tn

o
:
>
Z

OQ
vm
zz
ge
$9
TO
ez
m>
-v
Zo
H pd-

g.E

Zo
e
m
x
a

tl

8
16. 9

45. 4

ta

M @ Ironandsteel@
56@ Industrialorganicchemicals
57
Knittingmi11s@ Electricalgeneratingandss
o distributingapparatus
59@ Generalindustrymachineryoo@ Seasonings
61@ SawrnillsandPlaningmi!ls
62@ Miscellaneousmachinery63@ Boltsandnuts
M @ Ironcastings
65@ Non-ferrousfoundriesos@ Concreteproducts67@ Beverageindustries
Fabricatedstructuralmetalos@ products
69@ Meatanddairyproducts
70@ Boilersandturbines
71@ Printing
72@ Papercontainers
73@ Specialindustrymachinery
Furniture74@ Bakeryandconfectionery
75@ products
55

Steelforgingsandcastings

33

41

32

42

Hyogo
Tokyo

Aichi

32

ca

Fukuoka

32

49

Osaka

32

as

32
31

M
ee

31

Fukuoka

]8.6

Osaka
Osaka

13.8

8.0

19.8

12.5

Osaka

Tokyo

28.1

5.7

Tokyo

Aichi

68.2

13.1

34.8
16.1

Tokyo
Tokyo

Osaka
Osaka

Aichi

24.1

10.0

17.1

2.6
11.5

17.1

28.1

5.9

Aichi

Kanagawa
Hyogo

34.8

Chiba

62.0

10.5

13.6

21

Holtkaido

Shizuoka

Aichi

82.8

10.2

5.8

30

ca

Osaka

Tokyo

Kanagawa

40.9

12.5

25.6

30
29

M TokyoOsaka
M Tokyo

Osaka

Aichi

Saitama

Aichi

73.9
55.4

13.8
15.8

29
gg
rs
27

19

12. 3

14.5

19.0

t6.

Tokyo
Hyogo
Tokyo

15.3

22. 9

Fukuoka
Osaka

Hiroshima

58.0
48.6

7.9

28.6

Kanagawa

14.7

3L4

5.3

Hold(aldo

Osaka

48.8

29.6

Hyogo
Aichi

29.5
63.0

21.6
9.6

Aichi

63.7

16.9
14.9

Shizuoka

oo.8

17.3

Aichi

80.3

10.6

Aichi

68.0

11.4

23

49
53

Tokyo
Tokyo
Tokyo
Tokyo
Tokyo

Osaka
Osaka
Osaka
Osaka
Osaka

36

1.2

6.5

16.8

Osaka

12

13. 9

M.3

41

en

-

37.3
14.1

Fukuoka

pt

a

25.3

Aichi

Tokyo
Tokyo

49

21.4

Osaka

27

22
16

25.7

Tochigi

se
st

23

45.5

33. 7

4.7

48
21

18.1

112.4

16.4

7

m 26.7"'--"'6.2
2L 4
9
m
9.1
1.6
15.7
3.3
10.8

23.4
13.9

21.

(The writer calculated by the data of 1956 Census of Japanese Manufactures)

K
E

8
(l

e
5

THE CHANGE IN REGIONAL CHARACTERISTICS 7
OF INDUSTRIES IN JAPANchemical fibers, petroleum and cement, which are not listed in the Table forwant of data, also belong to this type. They are typical examples of foot-tighttype industries.

Type 3. Medium size plants which are market-oriented
Many of them are industries in which medium size plants form the majority.
As business enterprises, they are fairly big in scale and show medium regional
concentration. This is the type in which several industries are located in theirown market centers, dividing the whole domestic market into three or fourparts. Drugs and medicines, sugar, and beverage (not in the Table) typify thisgroup.

Type 4. .Medium size plants which orient local markets and local raw
materials
They are almost similar to Type 3 size and in regional concentration, but
one difference is that most of those plants are centered not on general central
markets but on dispersed local markets in some cases, or on local raw materials
in others.

Type 5. Localized industries
They are formed by the concentration of medium or small industries ofthe same group. They are dispersed all over the country and are typical examples

of cases where location depends largely on external economies. The coeMcientof localization ranks middle or high and the actual regional concentration ishigh as well. Pottery, lacquer ware, woven fabric mills are typical examples.

Type 6. Small plants which orient the central markets
Smal1 and petty industries form the majority and they are concentrated
in the Keihin, Hanshin and Chukyo districts. Though the actual regional
concentration is rather high, the coeMcient of localization ranks middle or low.
They fairly resemble in the distribution of the whole industries in general. The

names of the groups are given in the Table.
Type 7. Small size plants depending on local raw materials
Most of them are small or petty industries which have a low coeficient of
Iocalization. One difference from Type 6 is that they orient local raw materials

and some of them orient dispersed local markets as well. Remarkably low
concentration in leading prefectures is a characteristic of this type.

These are the distinctive types, which the writer has devised on the basisof the 1956 census, revising Florence's method in consideration of practicalconditions in Japan.

MINORU BEIKA

8

rv Comparative study of regional concentration between
the 1956 and 1966 data
In order that the picture may be clear, it will be necessary to make adetailed analysis of the industrial scene. Using the minute classification perprefecture given in the "1966 Establishment Census of Japan", the writer proceeds with the study focusing on the change in these ten years.

But in the 1966 census, twice as many groups are noted, and also several
new industries are added due to the rapid development of industrial structures.

The writer proceeds with his study on the change during this decade by looking
at both the coeMcient of localization in 1966 and that of 1956 as shown in TableII.

In this Table, 146 groups of industries are shown according to the relative
orders of coeMcient of localization in the 1966 census and 7S groups in the 1956

census. The writer classifies them into three ranks and surveys the changes inranks and orders - for example, the type which changed its rank from top to
middle, the type which changed its order which is almost the same as changing
the rank, the type which changed its rank from middle to bottom, or the change
in the opposite direction, and the slight change in order, etc.

( 1 ) Those which have a slight upward change in rank (from bottom to middle)
Order in the coef. Concentrationof localization in31eading Typein 1956 in 1966 prefectures

61 63

Sawmills and planing mills 75 '146 210/o•2oo/. @53 85

Electric wire and rope 7s '> 146 540/o '->560/o @55 94

Steel, forgings and castings 75 '146 420/o•430/. (DBoilers and turbines

70 96
75 '146 410/o•36o/. @(2) Those which show a downward change in rank and order (Type 1)(a) Downward change in the top rank

. 234

Surveying mstruments 7s • 146 sso/, ->7so/.

. 524

Optical mstruments and lenses 7s -> 146 810/o '->730/o

735

Watches and clocks 7s "-> 146 840/o->620/o

Table 2. Coedicient of
1966

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

m

as
as

Group of Industry

1956

1oo
ee

Tokushima
Tokyo

co

Chiba

79
71

Kagawa
Mie

72

Aichi

Pulp millsas

Yarnaguchi

Iron smelting with blast furnacesM

ss

Fukuoka

62
62
62
62
62
61
61
oo
oo
59
ss
57
57
i 57
E
56
56
55
1 55

76

Shizuoka

50

Fukuoka

Kanagawa
Tokyo
Hyogo

ss

Fukui

Osaka

Tokyo

ss

Tokyo

Nara

ss

Aichi

oo

Kyoto
Fukushima

Kanagawa
Ehime
Tokyo

MiyazakiOsaka

k8

Ishikawa

Wakayama

ig>>

Tokyo
Aomori

Osaka

Aichi

z2.

Hyogo

Okayama

NiigataToyamaYarnagata

Okayarna

Aichi

Gifu

z

Tokyo
NaganoKanagawa
Kanagawa
Tokyo

Hyogo

Wakayama

8

Gunma
Hyogo
Tokyo

Fukushima
Chiba
Yamaguchi

NaganoSaitama

Fukui
Hiroshima

Ishikawa

Kyoto

Shizuoka

Ibaragi

Rubber scrap productsPotteryMusical instruments

Rubber foot wear
Ophtharrnic goods
Applied electronic equipment
Chemical fibres

Physical and chemical instruments

Lacquer ware
Publishing

Reclaimed rubber
Iron smelting not with blast furnaces
Clay refractories

Leather tanning and finishing
6

Silk reeling plants

Electron tubes and semi-conductor devices
Petroleum refining
5

3

su
81
74
72
71
71
es

Leather gloves

9

of

1

Cigars3

3 Leading Prefectures

CoeMcient
Percentage

Small arms

8

in 1966

Localization

Cut tobacco

1

Localization

Optical instruments and lenses
Other textile goods

Wooden foot wear

39

gg
47

"
M
75
35
59
51

73
39
36

2
Niigata

Kanagawa
Yamaguchi
Hyogo
Kagoshima
Gifu
MiyagiShizuoka
Tottori

Tokyo
Akita

Saga

ToyamaHyogo
NaganoHiroshima

e

g

Sll

E

2$
EE
ge
$9
:9
y] l:

ge

Åë

27

Industrial leather products materials

as

Miscellaneous leather products

M
M

66

Osaka

Hyogo

Tokyo

82

Osaka
Osaka

Saitama

Kanagawa

NaganoKanagawa
Tokyo
Tokyo

Electric measuring instruments

54
53

31

Aircraft

53

82

32
33

Cement53

49

Other petroleum products

532

Surveying instruments

52

67
78

7

51

62

ss

Watches and clocks
Fur goods

51

37

Precious metal products

51

M
61

Tokyo
Tokyo
Tokyo
Tokyo
Fukuoka
Hyogo
Tokyo
Tokyo
Tokyo
Tokyo

ss

Coated steel

50

os

Osaka

Yamaguchi

Sea food products

49

30

Holtkaido

Service industries for printing trade

Shizuoka
Osaka

29
so

34
35

39

Book-binding and printed matters worked
10

21

ro

84
67

49

79

Tokyo

41

11

Shipbuildingas42

Hiroshima

42

16

Ropes and nettings
Coal products

rs

oo

Aichi

rs

Natural resin and wood chemical products

rsM

Leather foot wear

ca

65

Sugar

ca

se

Fukuoka
Tokyo
Tokyo
Tokyo

47

Industrial leather products

as

76

Osaka

as

Carbon and graphite productsas49

Primary smelting and refining of non-ferrous metals

as

M

se

Luggageas77

Kanagawa
Ehime
Tokyo
Tokyo
Tokyo
Ehime

as

"

4

as

25

ca

50

37

51

14

Electric bulbs

ca

61

52

13

Pens and pencils

53

20

Chemiea1 fertilizers

M

pt

Rolling mills, exoept smelting and steel works

ss

Woven fabric mills

"
"
"
"

67

ss

56

Lubricating oils and greases

ng

Aichi

Yamaguchi
Osaka

Kyoto

Kanagawa
Nagano

Osaka

Osaka
Yamanashi

Holtkaido

Hyogo
Mie
Tokyo
Hyogo

Saitama

Hyogo
Tokyo
Aichi

K
H
g

Kanagawaz

HokkaidoeMiyagi

Hyogo
Hiroshima

Osaka
Hokkaido

Nara
Kanagawa

Tokyo
NaganoTokyo

Toyama

Osaka

Hyogo

Kanagawa

Osaka

Osaka

Kanagawa
Yamaguchi

Shizuoka

Shizuoka

Osaka

Tokyo
Hyogo

37

Aichi

Kyoto

Osaka

69

Osaka

Tokyo

Kanagawa

37
65

-o

TolryoI:l57

Miscellaneous non-ferrous metal products

43

49

ss

18

Bicycles, rearcars

ts

67

59

15

Communication equipment
Handbags

caPaper mills

42

M
M
"

Tokyo
Tokyo

58

oo
61

19

62

B

Costume related products

42

Osaka
Osaka

Tokyo
Tokyo
Kanagawa

Kyoto
Shizuoka

Osaka

Tokyo

Osaka
Hokkaido
Osaka

ToyamaShizuoka

Saitama

Tokyo

63

61

Saw mi1ls and planing mills

42

20

Hoklcaido

Shizuoka

Akita

M

"

Yarn and thread mills

42

ng

Aichi

Gifu

or

Textile machinery

41

as

Aichi

ca

12

Medica1 instruments

41

57

TolryoCigarettes

41

67
os

as

Paper products

co

es

m

Tokyo
Tokyo

69
70

eo
as

Dyeing and finishing textiles

co

oo

Aichi

Osaka
Osaka
Osaka
Osaka
Osaka
Kyoto

Osaka

Hyogo

29

co
39

so

71

Railroad equipment
Canned fruits and vegetables

Hokkaido

72

31

Motor vehicles

55

Aichi

Kanagawa

73
74

17

Drugs and rnedicinesoo22

Oils and Paints

39
39
ss

M

Yarnagata

67

Tokyo
Tokyo

Osaka
Osaka

Tokyo
Hyogo

65

75

Misce11aneous electrical machinery

ss

60

Osaka

76

Tyres and tubes

50

77
78

Reclaiming of waste petroleum oils

ss
ss

Tokyo
Tokyo

Religious fumituressHousehold electric appliances

Tyre reclaiming plants
Structural clay products

82
ss

79

28

eo
81

39

"

Ishikawa

Kyoto
Hiroshima
Aichi

Osaka

Tokyo
Tokyo
Tokyo
Saitama

Hyogo
Kanagawa
Osaka
Fukuoka

39

Aichi

ss

52

Osaka

Yamaguchi
Tokyo
Tokyo

ss

Tokyo

Aichi

Niigata

sa

46
sc

Aichi

Hyogo

SaitamaSteel works

ss

ss

37

os

Hyogo
Tokyo

Aichi

Hats

Osaka

Tokyo
Hyogo
Hiroshima

e

g

fi

E

82
EE
ge
sg
S:
gge
ijg
l•

Tokushima
IbaragiM
ss

Abrasive products

37

co

Aichi

Tokyo

53

Electric wire and cable

so

56

Tokyo

Osaka

Kanagawa

ssca

Rolling of non-ferrous metals

sa

53

Osaka

Tokyo

Tochigi

8tAgricultural machinery

ss

as

Osaka

ss

Secondary smelting of non-ferrous metals

ss

59

Tokyo

89
oo

Plywood products

ss

ng

Glass

ss

59

Industrial rubber products

su
sa

55

33

53

43

Misce11aneous iron and steel

sa
33

61

Osaka
Osaka
Osaka

Boilers and turbins

33

Miscellaneous rubber products

sa

se
53

Hyogo
Tokyo

Measuring instruments

31

52

TolryoMiscellaneous chemica1 products

31

oo

87

rs

42

91,

92

50

93

47

Othce machines
Table ware and cutlery

sc

55

Steel forgings and castings

95
os
on

70

57

ToyamaAichi

Hoklcaido

Osaka

Tokyo
Tokyo
Tokyo

Osaka
Aichi

Kanagawa
Hyogo

Osaka

Aichi

Tokyo

Niigata

Saitama

Aichi

Tokyo
Tokyo
Kanagawa

Aichi

Tolryo

Osaka
Osaka

Kanagawa
Kanagawa
Hyogo

os
ee
1oo

49

Fabricated wire products

31

oo

Osaka

Tokyo

101

30

Industrial inorganic chemicals

31

ss

102

Miscel!aneous apparel

31

41

103

Newspapers

31

Tokyo
Tokyo
Tokyo

Osaka
Osaka

104
105

51

M
se

106

Iron castings'

30

58
43

Industrial organic chemicals

so39

Outwearso

42

Knitting mills

so

ss

108

Underwear

29

39

109

as

co

as

59

M

107

57

Shimane

Okayarna
Osaka

Osaka

Tokyo
Tokyo
Osaka
Osaka

Niigata

Osaka
Osaka

Osaka
Kyoto
Aichi

Saitama
Osaka
Osaka

Aichi

Tokyo
Tokyo
Kanagawa

Aichi

Osaka
Osaka

Aichi

Fukuoka

Kanagawa
Okayama
Aichi

110

as

Construction and mining machinery
Miscellaneous metal products

111

37

Heating apparatus

rs

112

os

Concrete products

19

Holtkaido

Tokyo

113

ss

Toys and sponing goods

as
ns

ca

Tokyo

Aichi

Saitama

Miscellaneous textile mills

as

41

Osaka

Aichi

Tokyo

Sliding doors

or
or

%

Tokyo
Hyogo

Hokkaido
Osaka

Wakayama

Beverage industries

114
115
116

67

19

Tokyo
Tokyo
Tokyo

rs

Ishikawa
Aichi

Fukuoka

K
E
8
Åë

w
m
H
x
>

117

oo

Seasonings

26

118

as

Non-ferrous foundries

26

an
ca

Tokyo
Tokyo

119

52

Flour and grain mi11s products

26

23

26

37

121

32

Paper products
Animal and vegetable oil and fats

26

122

as

Paper coating

123

sc

Tin cans

Chiba
Osaka

Aichi

Aichi

Kanagawa

Hyogo

Osaka

Shizuoka

37

Tokyo
Tokyo

Kanagawa

Hyogo

as

40

Osaka

TolryoSaitama

as

51

Osaka

Kanagawa

Misce11aneous stone and clay products

as

as

Tokyo
Tokyo

Aichi

Osaka

ss

Bolts and nuts

25

59

ss

Electrical generating and distributing apparatus

52

127

41

Metal stamping

as
za

Tokyo
Tokyo

Aichi

126

Osaka
Osaka

55

Tokyo

Osaka

Aichi

Misce11aneous transporting equipment

an

ca

Osaka

Aichi

Paving materials

za
pt
za

39

Tokyo

as

Osaka

Tokyo
Kanagawa
Tokyo

50

Tokyo

Osaka

m
ns

zz
52
39
as

Shizuoka

Tokyo

Aichi
Aichi
Aichi

120

124
125

128
129
130
131

132
133
134
135
136
137
138
139
140

62
59
71

73

33

69

145
146

Furniture

as
22
22
21
20
20
19
19
19

Wooden containers

18

Fabricated structural metal products
Bakery and confectionery products
Paper containers

18

Special industry rnachinery

Metal working machinery
Misce11aneous wood products
Metal and dairy products
Miscellaneous furniture

74

143

1"

Printing
Misce11aneous fabrieated textile products

Fabricated plastic products
Miscellaneous industries

141

142

Miscellaneous machinery
General industry machinery
Miscellaneous food products

os
75
72

14
13

rs
32

"26
30
43
en
24
42
30

4

Saitarna:2,

Ibaragi

Osaka

OQ
vw
NN
zz
:e•

Kanagawa

Tokyo

Osaka

Osaka

Tokyo

Hyogo

Tokyo
Tokyo
Tokyo
Tokyo

Osaka
Osaka
Osaka
Osaka

Aichi

Aichi

Tokyo

Tokyo
Tokyo
Tokyo

Hoklcaido

Osaka

Osaka

Aichi

Aichi

Osaka

Osaka

Tokyo

Aichi

Tokyo
Tokyo
Tokyo

Osaka
Osaka
Osaka

Aichi
Aichi

Aichi

Hyogo
Aichi
Sizuoka

ao
mz
ca>
MV
gge
ijz.

- l•

8

Kanagawa(1966 Establis hment Census of Japan)t14 MINORU BEIKA.. 10

Electric measurmg mstruments 7s ->

30
146

740/.

-> 67 0/o(b) Downward change from top to middle

1266
7oo/. .570/o
146

14

51
790/. "610/o
146

Medical instruments.
75

Electric bulbs
+
7S
. 15
Communication
equlpment 7s '

59

18

58

Bicycles, rearcars 7s ->

146
146

780/. •640/o
820/. •670/o(c) Downward change in the middte rank

28

Household electric applianceS 7s -'79
146

45O/o .520/o(d) Downward change from middle to bottom

37

Heating apparatuS 7s -'Tm cans +75
33

Metal working machinery 7s •

111

146
123

146
138

146

520/. •540/o
630/. ->51Q/o

520/.

-"o/o

(Other types)(a) Downward change in the top rank or change

from top to middle(Type)

11

Ship building 7s•

41
soo/.
146

Chemical fertilizers
+
75

53

Ratlroad equipment 7s +

70

. 20

•420/, @3oo/.

->370/. @soo/.

•soo/, @

17

73
630/.
146

.6oo/. @

22

74

.. 23

Drugs and medicines 7s -"Oils and paints 7s•
16

Ropes and nettings 7s •Paper mills ;:.

146

146

146

42
146
61
1z16

740/.

->670/o @49O/. ÅÄ4oo/. @390/o."o/o @

THE CHANGE IN REGIONAL CHARACTERISTICS 15
OF INDUSTRIES IN JAPANNatural resin and wood chemical products

16 44
75 -' 146 520/o•soo/, @13 52

Pens and pencils 7s.146 750/o•670/o @(b) Downward change from middle to bottom
32 121

Animal and vegetable fats 7s +146 360/o•370/o (g)30 101
Industrial inorganic chemicals 7s -> 146 300/o->330/o @38 113Toys and sporting goods 7s -> 146 590/o.450/o @Paper coating

45 12275 •146 560/o-4oo/, @Metal stamping

41 127
72'146 710/o•5so/, @(3) Little change in relative orders
In those 72 industries which are comparable, except for 4 industries whichshowed an upward change and 26 of downward change as stated above, there
seems to be little change in the 42 industries left.

As a whole, we can see that a few industries moved upward in order anda considerable number of them moved downward. One characteristic change
is that there are some industries which have moved to the top rank mainly bydint of the minute classification in the 1966 census, and some have moved into

the top rank owing to the technological development during this decade. The
writer will exarnine the relation between the coeMcient of localization and busi-

ness features by types in the next chapter.

V Change of regional characteristics by types
The writer's concern in this article lies in the field of regional development

and industrial location in Japan and panicularly the central theme is the changeof high concentration of foot-loose type industries in Japan. The writer, therefore, will begin the investigation in this chapter by focusing on Type 1 (foot-loose type) and will then refer to other types. '(1) Change in Type 1 (foot-loose type)
Tentatively the writer assigns 25 industries out of 75 which were in the1956 census to Type 1. The writer is not quite sure if all 25 fit into this type,16 MINORU BEIKA
but they seem to have similar tendencies. The change in the 25 industries
during this decade, as indicated in the above chapter, can be summarized asfollows :(1) Downward change in the top rank in the coeMcient of localization
4 industries

Downward change from the top to the middle rank 4 "Downward change in the middle rank 1 "Downward change from the middle to the bottom rank 3 "(2) Upward change from the bottom to the middle rank 3 "2 industries out of 10 in the top rank

(3) Little change in orders 4 " " 8" middle "3 " " 7" bottom "To summarize the findings, we can recognize several changes, for instance,
a considerable number of foot-loose type industries which had relatively highcoeMcients of localization before have moved downward to the middle rank'

and there have been little changes in the industries which were in the middle

or bottom ranks, and a few of them have moved upward from the bottom tothe middle rank.
We must pay attention to the fact that such industries as applied electronicequipment, physical and chemical instruments, electron tubes and semi-conductor

devices which were not seen in the 1956 census and are thought to Type 1,
have appeared in the very high orders in the coeMcient of localization.

In the more detailed analysis, we come to the conclusion that the same

phenomenon as the rapid expansion of population and industries from urban
to suburban areas and the relative decrease of them in the central districts asa result can be seen in Type 1, foot-loose type industries as well.
In other words, the conclusion will be that foot-loose type industries inJapan are still maintaining their concentric character, and the urbanization ofsuburban areas in terms of population and industries is making the concentration

more or less low.

(2) Change in Type 2 (foot-tight type)In the second type, foot-tight type industries, that is, those which arelocated both in the central and local districts, out of the three industries whichhave moved more or less downward in the coeMcient of localization, only chemical fertilizer has changed its local condition owing to the technological develop-

ment during these years and no distinctive change has been seen in others.
That means that the second type industries are still influential in local
districts.

THE CHANGE IN REGIONAL CHARACTERISTICS 17
OF INDUSTRIES IN JAPAN .

(3) Change in other types
Among other types, some leading industries which have moved downward
in the coeMcient of localization are drugs and medicines, oils and paints, animaland vegetable oils and fats (Type 3), and ropes and nettings, papermills, indus-

trial inorganic chemicals (Type 4).

(a) Type 3 and Type 4
These types in general have shown a considerable trend, but their characteristics in the local condition have changed little within this change.

(b) Type 5 (localized industries)
Type 5, so-called localized industries, has shown little change in the regional

concentration. Therefore these industries are still maintaining relatively highregional concentration. Rather, by dint of minute classification in 1966, moreindustries are picked up distinctly as localized industries, and also many of themrank in the top group. We can assume that this trend is the only result of thefact that the industries which originally had high regional concentration, haveclassified their characteristics owing to the minute classification in 1966.

(c) Type 6 and Type 7
Type 6 and Type 7 industries in which middle, small and petty industries
form the majority, have changed little, except a few of them, as most of themoriginally occupied low orders in the coeficient of localization.

VI Characteristic changes in the decade
The scale of Japanese industrial activities taken up here through ten years
from 1956 to 1966 grew nearly four times as large in production and shipment,

and the number of industrial workers on which this article is based almost
doubled. The extent of concentration of the workers to the main prefectures
shows such a change as indicated in the following table.
Table 3. Change of percentage in 5 prefectures

No. of workers

1956 1966

Total of all prefectures 5, 506, OOO 11, 336, OOOTokyo 15. 0% 16. 3%

Kanagawa 4.7 6.0
Aichi 9.4
Osaka
11.58.5
11.0

Total

Hyogo 6.1
5.3
46. 7 47. 1("Censusof Manufactures, 1956" and "1966 Establishnent Census

of Japan)18 MINORU BEIKA(Source) "Census of Manufactures, 1956" and "1966 Establishment
Census of Japan"
Thus we have examined the features of regional concentration according
to the enlargement of the Japanese industrial scale.

Now we can summarize the characteristic changes as follows:(1) A considerable number of 6hanges has occurred in order in the top andmiddle ranks.
(2) New type industries which occupied heavy positions in the 1966 census,
such as electronic industries of the foot-loose type (Type 1) and chemical

products of the foot-tight type (Type 2), so--called growing industries,

rank relatively high in the coeMcient of localization. Type 1 new
industries out of them are located mainly in the central industrial districts and Type 2 new industries are located both in the central and local
districts. Their typical characteristics have shown little change comparedwith before.
(3) In contrast with them, quite a lot of Type 1 and Type 2 industries taken

up in the 1956 census have moved downward in order in the coeMcientof localization. Type 1 has shown fairly wide permeant developmentin the central industrial districts especially in and around the suburbs of

the capital. Type 2 industries, with a few exceptions, have moved alittle lower in the coeMcient of localization without showing any distinctive change in characteristics.

(4) There seems to have been little change in other types in this decade in
local characteristics.

So far we have surveyed the characteristic changes in industrial locationin this decade. Today when the regional development policy is under reexamination, it is necessary to proceed with our consideration on the basis ofunderstanding the features of industrial location as a propelling power of regional

development. From the public stand point of policy-maker, one should consider well, once at least, the logic of the actual situations of industrial locations,and from the stand point of private business, one also should examine to a large
extent what sort of relation will be made between the present trend of location

being formed by private business itself and the future regional problems ourcountry will necessarily face.

FUNCTIONS OF SCREEN ACCOUNTS
Nobuko NosE

1. Introduction
In the early 1960's the advantages claimed for the screen account, originatedin the French national accounting system were known only by a few social accountants.(i) After that it has come to be felt that a new grand design for
integrating many branchs of social accounts should be introduced and the traditional system of national accounting such as SNA has to be substituted for thesystem of accounts based on the grand design. It is also felt that a new typeof account for recording transaction in detail and for rerouting the transaction

flow from one branch to another is required as a key device in the new system.
The interest in the screen account has been growing and its applications havebeen tried by leading social accountants,
In this article we intend to analyse the specific functions of the screen

account with aids of matrix notation and of account forms proper.

2. The Characters and Functions of the Screen Aecount
There are three basic characters of the screen account which has beenutilized by the French system:i The screen account, an account for transaction categories, i.e. commodity,

factor service and transfer, is linked with the transactor account. Everytransaction is recorded first in the screen account as a sub-account of the transac•-

tor account and we are able to read the operation in detail of any transactor
in the accounting period, otherwise we can not have any information in detail.

ii In any system with screen accounts, direct relationships between sectors
are broken down because the screen account is set between transactor accounts
as a screen in the system and the transaction flows between transactor accounts(or sector accounts) can be closed only via screen accounts as shown in table 1.

The first quadrant of table 1 where rows and columns of screen accounts
intersect together is as empty as the fourth quadrant where rows and columnsof transactor accounts intersect, while it is remarkable that transaction flows are( 1 ) P. Ady and M. Courcier, Systems of National Accounts in Africa, (OEEC, Paris, 1960).
G. Stuvel, Systems of Social Accounts, (Clarendon Press, Oxford, 1965).

NOBUKO NOSE

20

Table 1. The transaction flows in the systemwith transactor

accounts and screen accounts

Commodity

SectorResourcesltransacted(

1

Sector2

Commodity1

tl+1

tl+2

tl

Commodity2

t2+1

t2+2

t2

Commodity

dr

2

1

cr

Sector1

tt-1

t2-1

Sector2

tr-2

t2-2

Useofresources

tlt

tor

system with screen accounts.
Table 2. The macro-acoountmg

TransactoraccountScreenaccountdrProduction
a/c

Incomea/c

Con-

Capitalatc

solida-teda/c'xttcrÅ~'xÅ~

GoodsFactor&setv-.Ices

serv-

Transfer

.Ices

Claim

Goods&'servlce$mE•:gE

Factor-servlces

Sector Sector Sector Sector Sector Sector
1
1
1
2
2
2

52

15

202

31

168

1

ector
1

:aNgeg':gggge-..l.g'6-gooet6o;•en

Sector2
Sector

232

50

5

22

5

Sector
2

Total

18

20

1

W.

4

188

1

R.O.

3

ca

Sector2
Sector"ca:,'ts•

49

9

Claim
p.
OH

4

9
15

Transfer

41

R.O.

W.

20

2

51

4

4

4

329

242

pt

4

254

ca

188

70

concentrated on the second quadrant and the third quadrant respectively.
iii The accounting system with screen accounts can be extended and elaborated

for analyzing an economy as a whole. This system is written in a matrix form
as is shown in table 2.

The functions of the screen account, derived from these characters above
mentioned are as follows:

61

FUNCTIONS OF SCREEN ACCOUNTS
A. Function of serving as a means of showing transaction structure by transaction categories.

There are some convenient ways which are applicable to show the transaction
flow in detail when we are not contented with aggregative information available

from aggregative systems of accounts like OEEC/UN system and when we wish
to get more disaggregative information of the transaction structure for building

the disaggregative model. They are i to deconsolidate of sector accounts, ii
to show individual items in supplementary tables of aggregative accounts, iii

to adopt the semi-articulated system, and iv to adopt the system with screen
accounts. The last one (iv) is a more operational and consistent method thanthe others because they have more demerits, that is, the adoption of i, which isthe best method from the theoretical point of view, is diMcult and infeasible
from the statistical point of view because by deconsolidation of sector accounts
the cells in the matrix concerned increase enormously in numbers and accordingly
the informations to give contents in the cells required also grow larger in numbers; ways ii and iii are more feasible than i, but they have another obstacle,that is, we fail to observe constituent transactions in the state of response of
entries of them and their counter-entries because the individual items of transac-

tion are not connected with its counterpart but are connected only with theaggregates in these systems. This is a common demerit of the systems of ii
and iii. The system with screen accounts has greater virtue than all the others
as it can provide disaggregative informations by transaction categories which arerecorded on the screen accounts as sub-accounts of the transactor account.
In this system it is not necessary to deconsolidate transactor accounts further.
Instead of doing this, screen accounts are built in the system to show transac-

tors' operations by transaction categories. The transaction flow is able to beanalyzed in double view --- aggregative and disaggregative, and the network of
the transaction flow in an economy can be maintained without loose ends because

both accounts - transactor accounts and screen accounts - are linked together
and any transactor account is linked with each other through screen accounts.

The system with screen accounbs is, therefore, a comprehensive systemfor excluding obstacles in observing the constituent elements in the transaction

flow without loose ends. This function of screen accounts was discovered andhas been utilized by the French system.
B' Function of serving as an operational system for articulating the transaction
flow. To get a fu11y articulated system where all transaction flows are recordedon `to whom from whom' basis, is beyond our present statistical ability, because
on the part of the payable flow it is diMcult to ascertain the secter of destination

21

22 NOBUKO NOSE
and on the part of the receivable flow it is also diMcult to do the sector of origin.

For this reason we must abandon the ideal way and are obliged to take a more
operational way as a substitute. As the operational way we have alternative
system: the semi-aniculated system and the system with screen accounts. The
former is limited because it can articulate only the aggregates of transaction
flow but it fails to articulate the constituent elements of the aggregates in thesystem. On the contrary, in the system with screen accounts, the whole transaction flow - not only the aggregative flow but also the elements of the transaction flow in detail - can be closed because the screen accounts serve as record
keepers for the items of the transaction flow which can not find their counter-entry whithin the system. The screen account performs this function as if in
the market where every transaction flow from the sectors of origin and of destination is met and the ex post equality of supply and demand is attainable ineither case where the entry or its counter-entry is identifiable or not in the

numerous transactor accounts. Moreover, from the record of market one canestimate the amounts of the transaction flows that came to the market.
The screen account is, called `market account', by its attribute of market
proper i.e. intermediating sectors of origin to sectors of destination and keeping
records of transactions.

Transaction fiow, composed of individual transactions as constituent elements are thus able to be closed by this accounting device even when entries oftransactions in one transactor account cannot find the counter-entries in another,that is, even when there are many loose ends in the system. This function was

discovered by Dr. Stuvel.
C. Function of serving as a substitute for disaggregating the sector account.

This function, derived as a corollary from the above A and B, has double
merits: i the function of serving for elaborating and decomposing the transaction fiow of the transactor instead of deconsolidating the sector account, and ii

the function to serving for disaggregating the aggregates into separate accounts

according to the many operations performed by a transactor in the accounting
period.

As for ii the screen account is serving in the French system where thebusiness sector is limited not on the establishment basis but on the institutional

basis. And in SAM for the Carnbridge model, they combined the screen accounts and the industry accounts instead of decomposing industries by thecommodities which they produce. The screen account of the commodity iscalled commodity account, and we shall specify it in later.
As for ii, it serves for the system in which the transactors' operations are

FUNCTIONS OF SCREEN ACCOUNTS 23
various and are required to be analyzed by number of transaction categories.
The typical example is the system of flow of funds accounts where it is required

to represent the flow of funds from the viewpoint of the `who owes what towhom' basis. In the system of flow of funds analysts intend to observe thetransaction flow by three dimensions, i.e. transactor, his counterpart, and thecategories of financial claims which ascertain the transactors' portfolio selection.

Hence, the screen accounts are applicable as usefu1 accounting devices in thisflow of funds accounting and we shall refer to this problem later it again.

D. Function of serving as a channel of many macro-accounting systems.
i. Functions of classifying and converting the transaction flow in the input-.
output accountmg.
They are the main functions of the commodity account.
Table 3. Commodity flow in the system with dual classifieationof production accountÅ~
cr
dr ''"-X-.sCommo- Commo- Industry
dity 2dity 1
1

Industry2

Institutional
sectors

The other
all acco-

unts con-

Total

solidated

Commodity 1

Tl1t

Tl21

Tlcl

TIRI

tl

Commodity 2

T212

T222

T2c2

T2R2

t2

Industry 1

Tllt

T122

tl

Industry 2

T2i

T222

t2

Institutional
sectors

The other al1
accounts consotlt

tor

tC

tR

TRI

TR2

TRc

TRR

tll

ti

tic

t'R

lidated

Total

TcR

As for the classifying function, we will get table 3 first, of production accounts

into the commodity accounts and the industry accounts, by deconsolidating.
The four entries (i lliil i;ii2) in the upper middle in the table, are elements of Ti•2of the symbolic SAM i.e. Absorption Matrix and the four entries (;/iii TTti22) inthe left hand side in the table, are elements of T2''.i.e. Make Matrix Tshows agroup of commodities and T shows a group of products produced in industries
respectively.

The products of one industry are not homogeneous because the products(2) G. Stuvel, Systems of Social Accounts, ibid.

24

NosE
NOBUKOof any establishment which is an accounting unit of an industry in input-output

accounting are composed not only of its principal product but also subsidiary
products which should be classified as principal products of the other industries.

The usefulness of table 3 is as follows: it works as serviciable to be anacid test by which one can examine whether an industry's input-output coeMcients are more reliable than commodity-input-output coeMcients, that is to say,whether the assumption of industry technology should be favored or the assump-tion of commodity technology should be. This is because the table shows that
there is one to one correspondence between the products of industries and thecommodities if and when the elements of Tbi and Ti2, the elements which exist
away from the leading diagonal of T2'i, are almost all zero but that there is no

one to one correspondence between then if and where the elements are considerably big, that is, when the share of any commodity spreads over industries.
• As it will be easily understood, the former case is fit for the industry technology

assumption while the latter is for the commodity technology assumption. In
the latter case, Ti'2 i.e. (i;l: TTi:) is required for estimating exact input-output

coeMcients matrix.

Thus the commodity account is a useful accounting device for analyzing
the input-output structure of economy and for showing commodity flow fromthe industry, where commodities are actually produced either as principal products or as subsidiary ones, to the sector of destination where the commodities
are actually utilized.

As for the converting function of the commodity account, it serves for thesystem integrated by the input-output accounts and the other social accounts.
The transaction flows of commodities on the input-output tables are classified
by industry i.e. on industry basis. It should be remarked that the same transac-

tion flows are classified according to the government purposes when they arerecorded in the government account, but that they are classified according to theorder of the private consumers' purposes like a consumer's shopping list when

they are recorded in the private consumers' account. There is no one to one

correspondence between the items classified in the production accounts ofindustries and the items of the expenditure classified in the accounts of general

government or of the account of consumer's sector. Then is required, a common accounting device for c'onnecting the same transactions classified on different

basis with each other and the commodity account is called to serve for thispurpose. By using the commodity account as a common sub-account of manysystems with multiple classifications, the flows of government expenditure andof private consumers' consumption classified on their respective basis are reclassi-

FUNCTIONS OFi SCREEN ACCOUNTS

25

Tabe 4. Conversion of the government expenditure

into the commodity groups.

4 A Government income and outlay a/c

1,611

Defence
Health, education

1,o3e
4,189

4 B Government expenditure

Commodity1
Commodity2
Commodity3
Commodity4

4,189

/

4, 189care 1,548& child

Other

Screenaccounbs

IncomereclassifiedDefence//by cornmodities

and other

Health,education,
childcare

Other

74

ca

41

637

62

98

zz

147

23

266

39
67

Netindirecttax

10

20

14

Theotherallaccounts

839

1,oo7

771

1.611

1548

1,030

converter

matrix (government expenditure)

Defence

Health,education,
childcareconsolidated

Total
4 C CIassification

Other

Commodity1

O.05

O.03

O.04

Commodity2

O.40

o.ca

O.10

Commodity3

O.02

O.09

o.ou

Commodity4

O.Ol

O.17

O.07

Netindirecttax

O.Ol

O.Ol

O.Ol

Theotheral1accounts

O.52

O.65

O.75

consolidated

fied and converted into the categories on the industry basis by every item astable 4 and 5 show respectively.

Table 4A shows the government expenditure classified for government
purposes and table 4B shows the account resulting frorn the conversion of 4A
into commodity account on the industry bdsis. Only after routing through thecommodity account, it is possible to estimate the exact effect of the expenditure

flow of the government on the industries, And tabie 4C, the matrix of classification converters derived from tables 4A and 4B can be applicable to reclassify

the government expenditure. As the coeMcients in table 4C are stable in the

NOBUKO NOSE

26

Table 5. Conversion of the private consumers'
into the comrnodity groups

expenditure

5 A. Consumers' income and outlay
Food, drink, tobacco

7,041

Clothing & household

4.918

Other

4,470

a/c

Current mcome16.429

16,4295 B. Consumers' expenditure
Screen accounts

Food, drink,tobaccoNet indirect tax
accounts

Total
5 C. Classificationby commodities and other
Clothing &household

Other

M7

4, 046

1, 363sc
88
381

1, 478878

2, 5691, 221

353

372

296

1, 294

966

7,041

4,918

4,470

converter

matrlx (consumers' expenditure)

Food, drink,tabaccoClothing &household

Other

o
o

Commodity 1
Commodity 2
Commodity 3
Commodity 4

The other all
consolidated

reclassified

16, 429.

373

Commodity 1

o

O. 13

O. 02

Commodity 2

o

o. os

O. 02

Commodity 3

O. 57

O. 27

o. oo

Commodity 4

O. 21

O. 18

O. 57

Net indirect tax

O. 17

O. 07

O. 08

O. 04

O. 26

O. 22

The other all
consolidated

accounts

short run, by using this classification converter matrix, we can immediately

get the government's final demand on commodity classified on the industry
basis. Table 5 also shows the reclassification of consumers' expenditure into
the demand for the product on industry basis. This is the table for showing
the conversion of the private consumption flow based on the consumer's shopping list into the commodities classified on the industry basis.

This function of classification and conversion is found by Prof. Stone andhis followers in `Social Accounting Matrix' i.e. SAM(3) and is used again in(3) Cambridge, Department of Applied Economics. A Social Accounting Matrix forFUNCTIONS OF SCREEN ACCOUNTS 27`Proposals for revision of the SNA'.(`) ii. Functions of connecting the realaccount with the financial account and of connecting the system of flow accounts

with balance sheet. ' .

These functions of screen account are specified as those of so-called dummy

account.
As for the first function, the dummy account serves to integrate the two
types of sub-account of the capital account i.e. the capital expenditure accountas a real account and the capital financing account as a financial account. To
explain this, let us take the inventory formation as a kind of investment. The

inventory formation is a transaction between commodity account i.e. the account of fuels and low materials and capital expenditure account and is recordedon the cells where the row of the commodity account concerned intersects thecolumn of capital expenditure account. Then, the record of the finance forthis inventory formation, shown in the capital financing account, does not give
any information as to how that purchase for inventory formation by the industry
is financed, because there is no one to one correspondence between the elements

of industry's capital expenditure account classified on the industry basis andthose of business sector's capital financing account classified on the institutional

basis. Therefore in order to integrate the two types of sub-accounts based on
the different criterion, it is required to have the dummy account which links
them up. The items of capital expenditure, i.e. inventory formation and fixed

asset formation, are put into the credit side of the dummy account as uses offunds, and the items of the financing flow, i.e. saving, borrowing from the othersectors, and depreciation, are put into as sources of funds.

The dummy account is also used to give a link between value added, a
sub-account of the production account recorded on the industry basis, and factor
incomes as sub-accounts of income and outlay account of the institutional sector.

As for the second function, the dummy account is introduced for connecting

the capital expenditure account with the sector balance sheet. The sector
balance sheet is, in the present state, provided only with one type i.e. balance
sheet on the institutional basis. It is easy and straight forward to integrate thecapital financing account and the sector balance sheet because both of themare on a common institutional basis and there is a definitional relationship which
1960. N. 2 in A Programme for Growth, 1962. Stone, R. Multiple Classifications in
Social Accounting, in `Mathematics in the Social Sciences and Other Essays', (Champ-

man and Hall, London, 1966).
(4) UN, A System of National Accounts (Proposals for the Revision of the SNA, 1952).
E/CN, 3/320, (UN, New York, 1965). UN, Proposals for Revising the SNA, 1952.
E/CN, 3I345, (UN, New York, 1966). UN, Proposals for the Revision of the SNA, 1952.

E/CN, 3/356, (UN, New York, 1967).

28 NOBUKO NOSE
we denote as Ai=Ao+AF+R and LiEiiLo+AF+R (where A, AF, R, and L
are asset, increment of asset, item of revaluation, and liability respectively andsubscripts O and 1 denote the beginning of the accounting period and the endof the period respectively), On the other hand, in order to connect the capital
expenditure account with the sector balance sheet, it is necessary first to takea more roundabout way of rerouting the flow of real capital formation into thatof capital financing account through the dummy account as above mentioned andthen to sum the amount of capital financing, the amount of revaluation, and theamount of capital in the opening sector balance sheet to get the closing sector
balance sheet.

The dummy account, which converts the elements of the capital expenditure account classified on the activity basis into the elements of the capital financ-ing account classified on the institutional basis, has a pure property of the screen

account. By this dummy account, two different types of accounting system,
namely, sub-accounts of the capital account and the systems of flow accountand stock account (sector balance sheet) are integrated at every transaction.
categorles.

3. Screen Account in Present and in Future
It is in the Social Accounting Matrix that the screen account has been
built to arrange the transaction flow to fit a disaggregative model i.e. the Cambridge model which is composed of various elements such as input-output matrix,

capital matrix, consumption function, Cob-Douglous function, and the required

rate of growth. The model being far from simple and static macro-model,
the informations available from traditional systems of macro-accounts i.e. Blue

Book and Yellow Book (The 1954 input-output tables for the United Kingdom)
were not suitable and so a new elaborated system of accounts with screen accounts i.e. SAM was introduced.
SAM is a big step toward a comprehensive and integral system of social
accounts. After this experience, the `proposals for revision of SNA' demonstrated a revolutionary system based on the grand design attained the integrationof the systems of social accounts and was fit for disaggregative model. In thesystem, the screen account was used again as a key accounting device. The
wider use of the screen account is obviously due to its virtue-ks various
functions as has been explained.

The screen account in future use. The screen account tends to be adopted

wider in social accounting system. There are some reasons to support ourassumption: Firstly, there is a tendency to deconsolidate the type of real

FUNCTIONS OF SCREEN ACCOUNTS 29
account and that type of the financial account move on their basis respectively.
On the other hand, it is also aimed to integrate the two types of account decon-solidated or to give a knot for real-financial dichotomy from a viewpoint of asinthestic dimension. For example we wish to have a statement of capital
goods classified by age of capital goods, kind of capital goods and by industry
as a user of them, and on the other hand we wish to have a balance sheet classi-

fied by size of capital, type of organization of business and the region where
the business is located. And we also wish to have a general integrated balance
sheet out of two different types of balance sheets i.e. the balance sheets on theindustry basis and on the institutional basis. Thus the screen account is required

to provide an indispensable channel between the two accounting systems on
different basis.

Secondly, the proper nature of screen account for showing the operationof transactor in detail is still usefu1 and this function should be applied wider

than now. This is true especially in financial accounting. The financial
activity which any institutional sector performs is observable only in the screen

account of claim where the financial transactions are recorded by kinds ofclaim classified by different degree of liquidity and date of maturity, etc.
Obviously it is an important merit of the screen account of claim to serve foranalyzing how the sector selects his portfolio from among many financial objects

and then to serve for getting the matrix of financial expenditure coeMcients.

The form of accounts which is used by financial accountants is a traditional

form of financial accounts. But it can be expected that the present form ofaccounts will tend to change for a more concise system in matrix form and thesystem with screen accounts for getting better information.

From all of these considerations we conclude that the screen account isapplicable the most useful weapon in many realms of social accounting systems.

References
1. Ady, P & Courcier, M. Systems of National Accounts in Africa, (OEEC,
Paris, 1960).

2. Cambridge, Department of Applied Economics. A Computable Modelof Economic Growth. No. 1 in A Programme for Growth, (Chapman
and Hall, London, 1962).

3. Cambridge, Department of Applied Economics. A Social Accounting
Matrix for 1960. No. 2 in A Programme for Growth, (Chapman andHall, London, 1962). •4. Cambridge, Department of Applied Economics. Input-Output Rela-

30 NOBUKO NOSE
tionship, 1954-60. No. 3 in A Programme for Growth, (Chapman andHall, London, 1963).
5. Cambridge, Department of Applied Economics. Capital, Output and
Employment, 1948-60. No. 4 in A Programme for Growth, (Chapman
and Hall, London, 1964).

6. Cambridge,DepartmentofAppliedEconomics. TheModelinitsEnvironment. No. 5 in A Programme for Growth, (Chapman and Hall, London, 1964).

7. Cambridge, Department of Applied Economics. Exploring 1967. Some
Numerical Results, No. 6 in A Programme for Growth, (Chapman andHall, London, 1965).
8. Mercier, P. R. Comptabilit6 Nationale et Tableaux Economiques, Econometrica, Jul., 1953, pp. 371-389.
9. Stone, R. Multiple Classifications in Social Accounting, in `Mathematics
in the Social Sciences and Other Essays', (Chapman and Hall, London,1966).
10. Stone, R. The Social Accounts from a Consumers' point of view. An

Outline and Discussion of the Revised United Nations System of
National Accounts, the Review of Income and Wealth, No. 1, Mar.,1966. pp. 1-34. '11. Stuvel, G. Systems of Social Accounts, (Clarendon Press, Oxford, 1965).

12. Tice, H. S. Report ofa Conference on Proposals for Revision of theUnited Nations System of National Accounts, the Review of Income
and Wealth, No. 1, Mar., 1967. pp. 36--102.
13. UN. National Accounting Practices in Sixty Countries, (UN, New York,1964).
14. UN. A System of National Accounts and Supporting Tables, series F
No. 2 Rev. 2, (UN, New York, 1964).
15. UN. A System of National Accounts (Proposals for the Revision of
SNA. 1952). EICN, 3/320, (UN, New York, 1965).
16. UN. Proposals for Revising the SNA, 1952. E/CN, 3/345, (UN, New
York, 1966).
17. UN. Proposals for the Revision of the SNA, 1952, E/CN, 3/356, (UN,New York, 1967).

ON MR. STOLERU'S OPTIMAL POLICYFOR ECONOMIC GROWTH
Hikoji KATANo

introduetion
1. Mr. Stoleru [1] has dealt with the problem of optimal investment
allocation between capital goods and consumer goods industries in a developing

country. Using a neW mathematical method (Pontryagin's Maximum Principle),(i) he has achieved the definition of an optimal investment policy.
The purpose of his study is to determine the best way to allocate investment

in a developing country where there is severe unemployment. In this case,he means to make precise the words "best way" by specifying the following
two goals: (1) to reach fu11 employment as soon as possible in such a way thatbalanced growth is possible afterward, and (2) to produce a maximum total
discounted amount of consumer goods.(2)The method of his study is to build a simple two sector model with a capital

goods sector and a consumer goods sector, in both of which a fixed coeficientof production prevails. Then the optimal investment allocation between thetwo sectors is obtained by using the Pontryagin's Maximum Principle. The
general conclusion is to invest in the capital goods sector at the highest rateduring the first phase, and then to shift all investment to the consumer goods

sector in the second phase. Finally, the economy expands along the balanced

growth path (von Newmann path) during the last stage.
We consider this general conclusion to be the completed version of Maha-lanobis [4]-Domar [2]-Dobb [1]'s economic growth theory of developing
countries. These economists have suggested only the investment allocation
pattern in the first stage mentioned above.(s)2. In this paper, we examine Mr. Stoleru's employment problem: to reachfull employment as soon as possible in such a way that balanced growth is pos(1) Cf. L. S. Pontryagin et al. [5].
( 2 ) As a refinement of this criteria, Mr. Stoleru adds the constraint that a minimurn levelof per capita consumption is fixed each year.
(3) M. Dobb has touched the investment allocation pattern in the second stage. But his
consideration is not concerned with the balanced growth path after full employment

is achieved.

HIKOJI KATANO

32

sible

afterward. Our findings are the followings:(1) Full employment can not always be achieved within a minimum
time horizon und,er the condition that balanced growth is possible

afterward.
( 2 ) To reach full employment within a minimum time horizon, appropriate technical choice is needed.

Mr. Stoleru's Growth Model.
3. Mr. Stoleru's growth model is composed of the following relations.
A, Labour Supply: Total labour supply L(t) grows at a constant rate n at
the sarne time the total population grows.

(1) L(t)=L(O) e"`

B. Production Function: The growth model is composed of two sectors,
one producing capital goods and the other producing consumer goods. We
define the following notations:

Capital Goods Sector

OUtPUt Xl

Captal Ki

Employment Ni

ConsumerGoods Sector
X2
K2
N2

Capta1-Output ratio 1/Pi
Labour-Capital ratio ai

1/P,

a2

Then we have the following production functions:(2) X,==P,K, , X,=P,K,(3) Ni=criKi , N2==a2K2'.

C. Investment: There is no foreign aid, nolag between production ofcapital goods and investment, no possible shift ofsector to the other, no depreciation prevailing inexisting capital from one
both sectors.(`) Using thegeneral notations ab==du/dt, we have the equationsof capital accumulation:

Xi=rti+rt2(4). K,)Ok,)o
D. A!locationoflnvestment:

We now introduce a control variable( 4 ) In the original paper of Mr. Stoleru, depreciatien in both sectors have been considered.
But, in this paper, we neglect depreciation for the sake of simplicity.

u(t) definedON
MR STOLERU'S OPTIMAL POLICY 33
FOR ECONOMIC GROWTH
as a ratio of gross investment in the capital goods sector to tota1 gross investment,.
Kl(5) u- . .

K,+K,

E. Balanced Growth: With the above definitions, we have.
(6) i:•;:7giK.i)p,K,

for Osusl.
Let us suppose that fu11 employment is achieved after some time T. Thiscan be written as(7) aiKi+a,K,=L(O) e"'
for t>T. So that we have

(8)k,+k, =P,K,

for t2 T.
aiKi+a2K2==L(o) et

This systems has the solution

K,(t) ==Aent+eC(`-T)[K,(T)-Ae"O

for t)T,(9)
K,(t) = Bet+ eC('- ') [K,( T)- Benb'
where

nL(O)

A=
(Pi-n)a2+ncxi
B.. (Pi-n)L(o)(Pi-n)a2+ncvi
c... .-Pia2

cr2-alA balanced growth is possible only for the specified values of K,(T) and K,(T).

The balanced growth path, known as the von Neumann maximal steady growthpath, is obtained when,io)K.i,['.l-:-Sf.;,and the economy is then expanding at the rate of the growth of population.
After all, Mr. Stoleru restricts his study to the path which reaches the von

Neumann path at some time T and then follows it. Therefore, the growthmodel becomes as follows:34 HIKOJI KATANO
1) Before fu11 employment (tsT),(i) equations.K,=uP,K,. =(1-u)P,K,
K,
where K,(O) and K,(O) are given,(ii) conditions on the control variable

Osu(t)sl ,(iii) path condition

aiKi+a2K,<L(O)e"' for t<T ,(iv) terminal conditions

K,(T)=Ae"T
K,(T)==Be"T .
2) After fu11 employment (t;}iT)
Ki(t) == Aens

K,(t)==Be"t .

'Then Mr. Stoleru's employment problem is to find the policy u(t) which minimi2es
T.

Mr. Stoleru's Optimal Policy.

'
4. The employment problem can be solved by using the Pontryagin's
Maximum Principle. The solution isu(t)=1
O-<tgT(11)
foru(t) == O T-<t:{; T'

where T and T are determined by the system

Ki(T)==K,(O)ePi' ..AenT
K2(T)=K,(O)+K,(O)eP"(T-T)=Be"T.
Thus the optimal investment policy will be to concentrate all invesment tothe capital goods sector in the first stage (Ofgt{T), and then to shift all invest-

ment to the consumer goods sector in the second stage (Tf{:ts{;T). And finally,
the economy expands along the balanced growth path during the last stage (t.< T).

ON
MR STOLERU'S OPTIMAL POLICY 35
FOR ECONOMIC GROWTH
Growth Frontier
5. Taking the optimal investment policy (11), we can find a growth frontier
at time T. The growth frontier is reduced from (11) by eliminating the turning
time point T.

K,(T)-K,(O) K,(T)(13) K,(T) =T-10gK,(o)K,(T)2K,(O)K,( T) ;;i K,(O)This frontier has characteristics to be a concave to the point S[Ki(O), K2(O)],and to extend in itself at a certain rate toward the north-east direction.

6. Mr. Stoleru's full employment situation is located at the point F[Ki(T), K,(T)] on Figure 1. This situation (K,(T), K,(T), T] is determined by
the system (10) and (13). Tangent of the straight line OF is (P,-n)/n. Mr.
Stoleru's optimal growth path is then illustrated by S-)-R .F->E on Figure 1.
K,(t)AK,<t)

E

lIT'T,AK,(t)
RR*

s

K,(t)
K,

o
Figure. 1

Full

Employment Level
7. By neglecting theconditionthat balanced growth is possible after

fu11

36 HIKOJI KATANO
employment is achieved, we can have a fu11 employment situation which is 'attained within a minimum time horizon under the given condition. The fu11
employment situation is expressed by the relation (7). We call this relation thefu11 employment level, which expands at a certain rate toward the north-east

direction. The fu11 employment within a minimum time horizon is attainedat the point whose the growth frontier touches the fu11 employment level. To
reach the fuIl employment situation within a minimum time horizon, the rate
to expand the growth frontier must be larger than the rate to expand the full

employment level. Otherwise, the growth frontier can not come up to thefu11 employment level. Thus the condition that makes it possible to reach fu11

employment within a minimum time horizon is written as

K,(TFK,(O)(14) K,(T) al=1-rEEi
Then the fu11 employment situation within a minimum time horizon [K,(T"),
K,(T)*, T*] is determined by the system (7), (13) and (14).

Balanced growth or Ful1 Employrnent within a Minimum Time'

8. Let us illustrate the full employment situation within a minimum time
horizon by the point Fes on Figure 1. Point F does not always identify point
F*. And when the point F is different from the point F*, time T" is necessarily
less than T. This is verified by the fact that the growth frontier touches thefu11 employment level at the point F* but the former crosses the latter at the
point F.

9. When fu11 employment is attained at the point F*, abalanced growth
can pot be expected afterward. Therefore, the growth path that leads to thepoint F* is not optimal, Thus it is clear that balanced growth contradicts
the term of fu11 employrnent within a minimum time horizon.

Optimal Choice of Technique
10. In the next stage, we have to consider the optimal choice of technique.

If we can expect full employment within a minimum time horizon TW* that isless than Tee after any appropriate choice of technique, we call it the optimal
choice of technique.

Eliminating K,(T) and K,(T) in the system (7), (13) and (14), we have

ON MR. STOLERU'S OPTIMAL POLICY 37
FOR ECONOMIC GROWTH(15) L(O)e"'=a,KI,(O)+a,K,(O)eP'r-('-':;').

So that we havedT(16) dp,<O,dT(i7) d(a,/ai)<O'
Decreasing the time T required for attaining fu11 employment, the optimal choiceof technique is to increase either Pi or a21ai. The appropriate combination ofboth of these makes it possible to decrease the time required for attaining full

*-

K,(t)

E

AK,(t)

E
F

F'

1
1

F"

T

t

:

T

.

R"R

s

AK,
K,( t)

K

o
(a)

K,(t)

E"

AK,(t)

E
F..

:
T'*1

T
1

l

s
o

R#R
(b)
Figure, 2

T-

AK,
K,(t)
K

38 , -HIKOJI KATANO
employment. The optimal situation can be realized at point F**, where thegrowth frontier touches the fu11 employment level andK,(T")-P,*-n-- nK,(Tee*)Thus the optimal growth path is illustrated as S->R*"->F*"-->E** on Figure
2. This optimal path can be realized after the optimal choice of technique.
(October, 1968)

REFERENCES[1] Dobb, M.: An Essay on Economic Growth and Planning, London: Routledge and Kegan
Paul, 1959.
[2] Domar, E. D.: Essays in the Theory of,Growth, London: Oxford University Press, 1957.
[3] Dorfman, R., P. Samuelson, and R. Solow: Linear P)'ogramming and Economic Analysis,

New York: McGraw-Hill Book Co., 1958.
[4] Mahalanobis, P. C.: The Approach of Operational Research to Planning in India, London:
Asia Publishing House, 1968.
[5] Pontryagin, L. S. et al.: The Mathematical Theory of Optimal Processes, New York: John
Wiley and Sons, (Interscience Rublishers), 1962.
[6] Stoleru, L. G.: "An Optimal Policy for Economic Growth", Econometrica, Vol. 33, No.
2, (April, 1965).

A NOTE ON SHORTER WORKING HOURSFOR SEAMEN
Hiromasa YAMAMoTo

After the introduction of the three-shift system on board of ships, the demandof seamen for shorter working hours has not resulted in the actual reduction ofworking hours, as demanded by the seamen, but has produced a shorter standard

working week accompanied by an increase of overtime earnings. Though
seamen of different countries have obtained standard working weeks of different

length, all have in common that they work on a fifty-six-hour regular working

week. This fact may lead to the opinion that the demands of seamen for
shorter working hours in recent years are related only to wage calculation without

any relationship to the regulation on actual working hours. However, thewriter considers that their demands originate, similar to those of workers onland, from the protest against overwork and the desire for more leisure time.
Based on this standpoint the writer will examine the relationship between the

problem of shorter working hours and the early retirement of young seamen
from the industry, as witnessed in many countries, and to propose ways for retaining seamen in the shipping industry.

I
Workers demand shorter standard working-days or working-weeks as one of,
their general demands for the improvementof their working conditions. The
demands are based on the opinion that long working hours bring fatigue which
could lead eventually to diseases and or absence from work. The labour movement of setting up' a eight-hour working day was born as a protest against
unhealthy long hours of work of ten hours and more. This state of affairs was
gradually corrected by the labour movement for shortening working hours andthe enforcement of the factory acts regulating hours of work. The change waspardy due to the change of employers' attitude who recognized that shorter
working days usually resulted in higher productivity of labour and it was notnecessarily accompanied by the reduction of the total output.

With increasing income and shortening of working hours, the demands
or workers for still shorter hours of work derive from a slightly different view-•

point. They put the stress on getting more leisure time not only for resting but

40 HIROMASA YAMAMOTO
for their hobbies, studies and shopping, although some of them who are working

under severe working conditions continue to demand shorter working hours asa requirement for their health.

Sometimes union leaders demand shorter working hours as a weapon against a decreasing demand for labour when a recession causes unemployment
among union members. However, historically speaking working hours haveshown a steadily decreasing trend following the pace set by the economic growth
and the rise of the incorne level.

II
In the present time seamen of most countries work at sea on a basis of a
fifty-six hour working week with a three shift system according to the provisions

in trade agreements or the seamen's acts except in the case of small vessels
where the two-shift system is maintained. Though it is not our intention todescribe the change of working hours at sea in detail,(') it is useful to indicate

it briefly. At the beginning of this century seamen worked at sea on the two-

shift system, and working hours sometimes amounted to seventeen or more
hours without any extra overtime payment. Gradually the three-shift system
was introduced on ocean-going vessels of various countries, and extended tocover smaller vessels. In 1936 the I.L.O. Maritime Convention adopted aconvention according to which the hours of work at sea should not exceed eightin a day nor should they exceed fifty-six hours in a week for the crew on boardof ships of 2,OOO gross tons and over.(2} Later in 1947 and 1957 the I.L.O.
adopted new conventions on hours of work which remedied shortcomings andextended the coverage of the old conventions.(S)After the introduction of the three-shift system on board of ships, themovement by seamen for shorter hours of work has not resulted in an appreciablereduction of working hours at sea though the standard working week has gradually been shortened. For example, in the United States the National Mari-time Union has gained a forty-hour week in 1951.(4) However, men on watch
have still to work eight hours in a day and fifty-six hours in a week, although

day workers are not required to work on Saturdays and Sundays except forminimum routine duties. All works performed during the hours in excess of(1) For this purpose, the documents of I.L.O. Maritime Conventions on hours of workand manning are useful.
(2) I.L.O. Convention, No. 57, Hours of Work and Manning (Sea) Convention, 1936.
(3) I.LO. Convention, No. 93, 1949, I.L.O. Convention, No. 110, 1957.
(4) J.P. Goldberg, Maritime Story, 19S8, p. 229.

A NOTE ON SHORTER WORKING HOURS FOR SEAMEN 41
the standard working week are compensated by overtime payments. In othercountries where the standard working week of seamen is forty-eight, forty-fouror forty hours, the same practice has, without exception, been adopted. In
other words regular hours of work for men on watch are fifty-six hours in aweek even if the standard working week is shorter. In short the reduction of
the standard working week in the shipping industry has not been accompaniedby the reduction of the actual working hours.
The fact that the reduction of the standard working week has not resulted
in the reduction of actual hours of work does not necessarily mean that the shipp-ing companies or seamen's unions have rnade little effort for reducing the total

hours of work. On the contrary some shipping companies have made considerable efforts for keeping overtime work at a minimum level in order to reduce

overtime payments. Unions have often negotiated with managements in orderto reduce excessive ovenime work and demanded an increase of manning.
Unions have also paid attention to minimizing overtime work at sea on Sundays

and holidays. 'However, no attempt has emerged either from seamen's unions or employers
to reduce the actual standard working day or to change the shift-system onboard of ships. Therefore one can say that the demand of seamen for shorter
hours of work is fictitious in the sense that it is not intended to affect the actual

numbers of working hours in a week.(5) Indeed, the problem of shorter hours
of work at sea seems to belong to the system of calculating wages, and to havelittle relation with the regulation of actual working hours. But to the writerit seems necessary to reconsider whether or not the demands of seamen for
shorter hours of work should belong to the system of calculating wages.
Understanding of their demands might lead to an appropriate approach andpolicy for the retaining of seamen in the shipping industry.

m
The demand of seamen for shorter working hours derives, as it is the caseof other industrial workers, from the fear that their health may suffer and also

from the desire to enjoy more off-duty hours. After the introduction of theeight-hour working day and the three-shift system on board of ships the
opposition to long hours of work seems to have become a minor or indirect
factor. Improvement of accommodation and working conditions also provide(5) Sharing this opinion is, for example, the "Final Report of the Court of Inquiry into
Certain Matters conoerning the Shipping Industry," Feb. 1967, pp. 25-27.

42 HIROMASA YAMAMOTO
seamen with more protection for their health. Although shipping companies
introduced the eight-hour working day in face of the fact that fatigue of seamencaused loss of lives, vessels and cargoes, they are reluctant to shorten hours ofwork when the probability of marine accidents become fewer. Recently seamen's unions and employers deal with the volume of work load of the wholecrew or of each member in relation with the manning scale under the three shiftsystem, and not in relation with shortening the hours of work.

Here it should be pointed out that the shipowners' reluctance for the
introduction of shorter working hours is due to the fact that it will result in aconsiderable increase of costs without bringing an appreciable improvement oflabour-productivity. The operation of ships needs constant watchkeeping whichis met in case of the three-shift system on a basis of the fifty-six hours a week.

In addition, the berthing and sailing of ships cannot be timed in hours of thestandard working day and necessitate overtime. Maintenance and repair works
are also important factors requiring overtime. Consequently, in order to introduce a working week shorter than fifty-six hours, a considerable increase of

the number of crew becomes necessary. In the shipping industry increase ofmanning means not only the increase of wage costs as in other industries, butalso the increase of costs for additional food and accommodation on board.
Larger space for accommodation decreases the space for cargo. Therefore,
the actual reduction of the standard working week would burden shipowners
with large expenses, and they rather choose shorter working weeks nominallyand compensate hours of work in excess of the standard working day with over-time payment when unions demand shorter hours of work.
On the other hand, if unions demand shorter working hours for the sakeof extra leisure hours, they tend to accept rather readily the shipowners' coun-

terproposal, i.e., overtime compensation, when the overtime allowance rate ishigh enough, because the working and living conditions at sea are not suitablefor enjoying leisure hours, as will be shown below and they give less value toleisure hours at sea than to those on land.

When working at sea seamen are forced to be separated from their families
and friends and they cannot enjoy home life. On board the contact with otherpeople is confined to the crew, especially to members of the crew belonging to

the same shift. The hierarchy in the crew often hinders friendship between
oMcers and ratings. Hobbies and amusements aboard are also limited. Reading, listening to the radio and talking with companions constitute the main ways

for seamen for spending their leisure hours. Only a small number of ships
have sporting facilities and movies for the crew. When seamen want to study
some special subject, they often encounter diMculties to find correspondenceA NOTE ON SHORTER WORKING HOURS FOR SEAMEN 43
courses. Owing to the existence of all the conditions in the present working
and living circumstances at sea of which some may be removed or relieved andsome are inevitable, seamen cannot enjoy fu11y their leisure hours. Thus, it
seems quite natural that they accept willingly more overtime earnings and paidvacation instead of an actual shortening of working hours at sea.
''rv
Hereafter we shal1 examine the relationship between seamen's wages andhours of work under the general tendency of shorter hours of work.
As workers on land obtain shorter hours of work and improvement in real
income, which enab!es them to enjoy their leisure hours in and out of their homes,

it seems obvious that seamen tend to want more leisure hours, too and at thesame time that they will feel that their working and living conditions at sea are

more disadvantageous. Therefore, seamen do not remain in the shipping industry unless they feel that the increase of their wages earnings is high enoughto compensate for their disadvantageous working conditions. In fact, in the

shipping industry wage rates and overtime rates have shown a steadily
increasing trend, and the wage differential between seamen and workers on
landhas changed favorably for the former.(i) It is expected that in future
this tendency becomes even clearer.
By the way, do seamen consider the present wage rates and earnings as
being enough compensation for their disadvantageous working conditions? The
labour shortage in the shipping industry of many countries can be regarded asa phenomenum due mainly to the dissatisfaction of seamen with regard to theirwages and working conditions. In Japan, for example, the number of applicants

into Merchant Marine Academies and high schools has shown the decreasing
tendency in spite of the growing demand for seamen in Japan. In addition,in the coastwise trade many seamen flow out into other jobs on land and result

short supply of seamen.(2) Indeed, as one of the main factors which induces
the movement of workers from one job to another, the opportunities of finding
jobs should be taken into account in addition to the difference of wages andworking conditions. But in the Japanese shipping companies the number ofavailable jobs has increased in recent years and also there is no institutional( 1 ) H. Yamamoto, "Peculiarities of Maritime Labor", Kobe Economic and Business Review,No. 14, 1967.
(2) Kaiun Hakusho (White Paper on Shipping), 1964, p. 75, 1968, p. 129. In the Unitedg.i.,gdpO.M..e.ar.IYR.'pe.tiiftMFein.t.10fR,Mpar.i,7,IOgun67FpSe.,a.M,es"o,.-esSsP.eciallyofiatingswasreported.

44 HIROMASA YAMAMOTO
hindrance for young seamen to find jobs in the merchant marine. Therefore
we may conclude that the flow out of young seamen from the Japanese shipping
industry is due to their dissatisfaction of not being properly rewarded in com-

parison with their working conditions. Our conclusion shows the urgent
necessity of establishing a policy by the Government and the shipping companies

for retaining seamen in the industry. The problem of shorter hours of work
should also be considered in this context.

v
Seamen are, as has been mentioned, in an unfavorable position on boardof ships with regard to enjoying their leisure hours. What can be done forthe improvement of their state?
As a first step, the improvement of recreation facilities should be considered

as a comparatively easy remedy. Together with the provision of libraries,
indoor game facilities and movie films, provisions of sponing facilities are mostdesirable because in sports seamen are able to spend their leisure time actively

in contrast to the passive enjoyment of other amusements. Deck tennis, table
tennis and deck golf are some of the sports which can be easily played by every

one and can be introduced on board with rather small expenses. Developmentof new types of sport which are suitable to be played aboard are also desirable.

In cooperation with seamen's unions, shipping companies should plan andcarry out recreation prograrns which are adequate to the type of ships and traderoutes. As anext step, correspondence courses for seamen should be improvedand enlhrged in order to give seamen the opportunities for the acquision of higher

licenses and studying other subjects. Through such improvements we can
expect that in the future seamen will utilize their leisure time at sea better.

Furthermore the adoption of a port relief system is desirable in order togive the crew leisure hours in port if we consider the recent situation that owing

to the improvement of loading facilities and a quicker turn round of ships seamen

have to spend busier hours in port resulting heavy work load on them. It isalso necessary to establish in more ports seamen's clubs where seamen can restand spend their leisure hours.
However, so long as seamen work at sea, it is impossible for them to enjoy

their home 1ife if we neglect the exceptional case in which companies allow

wives to accompany their seagoing husbands aboard. The early retirementfrom the shipping industry of young seamen, especially that of newly married
ones seems to be related with this problem. Even if actual shorter hours ofwork at sea are realized, it will not satisfy the seamen's desire for more enjoyable

45
A NOTE ON SHORTER WORKING HOURS FOR SEnmEN

leisure hours. Only vacations will afliord them the opportunity of enjoying
their home life and to have activities which are impossible at sea. Therefore

paid vacations and home leave have far more importance for seamen than forworkers on land. Although shipping companies and unions conclude minuteagreements on vacation, little consideration has been paid to the relationshipbetween the seamen's desire for leisure hours and vacation. If we consider
that vacation is the sole and indispensable occasion for seamen to have a home
1ife, vacations should be provided regularly in shorter intervals, and of longer
duration.

An increase of vacations will induce the increase of labour costs in various

ways. The provision of paid vacations will result in additional wage costs.
Even in the case of vacation on leave wage costs for relief crew become necessary.

However, in any way the supply price of seamen will rise with their increasing
distaste for working conditions at sea, of which the separation from life on landis most keenly felt, and which is beyond the control of the shipping companies.

In order to retain seamen in the industry with a minimum increase of labourcosts it is necessary for the management to reexamine forms in which the labourcosts should be allocated. Whether or not the improvement of new vacation
plan is more effective than a similar expense for wage increases or the improve-rnent of several working conditions depends on. the level of wage earnings andsocial customs, and it is diMcult to come to a clear conclusion. But it can be

expected that the vacation plan tends to become more important for searnen
than the increase of wage earnings, because with rising income their desire formore leisure is getting greater than that for additional wages.

In the foregoing discussion, we have not touched on the relation between
hours of work and the change of working conditions which has been brought by
the technological development in the shipping industry. Today the technological development on board of ships is ig a transit period, and physiological andpsycologicalconcerning work load,
fatigue of labour
research
productivity
andon automated ships remain in a early stage. If the introduction of automation
apparatus on board of ships increases the mental fatigue of seamen, then shorter

hours of work must be reconsidered from a different view point than that ofthis article.

OBJECTIVITY REEXAMINED
Isao NAKANO

1The "objectivity" concept is still regarded as an important criterion for

deciding acceptable accounting principles and methods and for denoting anessential property of accounting informations.(i) However, opinions differ asto the exact meaning of this concept and as to the concrete requirements forachievement of "objectivity". In other words, no precise and uniform definitionof this term has been established,
In this paper various views (or definitions) of the "objectivity" concept will

be examined, their mutual relationships probed, and further, possible ways tosettle existing and misleading interpretations of this concept will be suggested.

2
Five different views on the meaning of "objectivity" will be shown andexamined here.
( 1 ) The definition of "objectivity" as "possibility of substantiation".

The proponent of this definition is Professor H.A. Arnet. Though not
explained by him, the word "substantiate" rneans "insure the accuracy ofby the weight of evidence" according to Kohler's "Dictionary for Accountants".(2} Perhaps with such an interpretation of the word in mind, Professor
Arnet asserts "any data which are considered usefu1 are objective to accountants,

provided they are substantiated or capable of being substantiated by an independent party".(8} Thus, his suggestion is that objectivity of a given datum or

inforrnation exists when it is supported by any valid evidence. Then, when is( 1 ) "Objectivity - of accounting measurements is usually regarded as an important criterion

for choosing among measurement methods." (Yuji Ijiri and Robert K. Jaedicke, Relia-bility and Objectivity of Accounting Measurements, The Accounting Review, July
1966, p. 475).
(2) Eric L., Kohler, A Dictionary for Accountants, 3rd ed., Englewood Cliffs, N,J. 1963,

p. 486.
(3) Harold E. Arnet, What Does "Objectivity" Mean to Accountants?, the Journal of
Accountancy, May 1961, (republished in: Readings in Accounting Theory, edited by
Paul Garner and Kenneth B. Berg, Boston 1966, p. 188 - in this paper quotation will

be made from this. book alone).

48 ISAO NAKANO
meant by "evidence"? On this point he says, "This type of evidence may
range al1 the way from supplier's invoices and mathematical formulas, to data

derived from the use of index numbers and fair market values."(4)This "objectivity" concept is characteristic in that it has been "inferredfrom the practices and assertions of accountants".{5) In other words, it is.
claimed that "if the term `objective' is to be valid at all, it should be applicable

to any and all items that the accountant refiects in the accounts and financial

statements" ,(6) and from this view-point this "objectivity" concept has beendeveloped as that attribute which can (or should) be shared by all items in thefinancial accounting. In this sense this definition tends to justify the accounting
system as it is.

(2) The definition of "objectivity" as "consensus among different measurers" or "repeatability".

According to Professor C.H. Stanley, one meaning of,"objectivity" is the"agreement in the results of experiments made by different experimenters"(7)and this sense of objectivity is attained, "when it is possible for different experi-

menters to perform the same operation with reasonable agreement in theirresults. `Repeatability', then, is the test for determining the presence of thiskind of objectivity."(8} Also Professor W.B. Meigs and Professor Ch. E.
Johnson say, "if a measurement is objective, 10 Åëompetent investigators whomake the same measurement will come up with substantially identical results."(9)Professor Y. Ijiri adopts this concept of objectivity, defining it as "the consensus

among a given group of observers or measurers."(iO)

Strictly speaking, however, the phrase "consensus among different measurers" or "repeatability" seems to be open to the following two interpreta'tuons.

(2a) One interpretation would be that the hypothetical measurers shouldbe able to reach the same results when they follow the same judgements and use

the same accounting methods as were actually adopted by the firm. (Forexample, if a firm has valued a certain item of inventory with the periodic averagemethod, the hypothetical measurers are also assumed to use the same inventory(4) Ibid., p, 188.
(5) Ibid., p. 179.
(6) Ibid., p. 183.
(7) Curtis H. Stanley, Objectivity in Accounting, Ann Arbor, Michigan 1965, pp. 2d3.
(8) Ibid., p. 4.
( 9) Walter B. Meigs and Charles E, Johnson, Accounting, 'Ihe basis for business decisions,

McGraw-Hil1 1967, p. 647.
(10) Yuji Ijiri, The Foundation of Accounting Measurement, Englewood Cliffs, N.J. 1967,

pp. 134-13S.

OBJECTIVITY REEXAMINED
method regardless of the presence of other alternative methods such as the
specific identification method, the fifo method, the lifo method etc).

(2b) The other interpretation would be that the hypothetical measurers
should be able to come to the same measures when the choice of any accounting
method from those available within the accounting system is possible regardlessof the method actually selected by the firm (except when the principle of consistency forces them to follow the same method as that used by the firm). (Forinstance, even if a firm has valued a new item of inventory with the periodic

average method, the hypothetical measurers are assumed to be free to selectany inventory method which appears most appropriate to them).
The proponents of "objectivity" concept as "consensus among different
measurers" or "repeatability" have not made clear which of the above-mentioned

two kinds of "consensus" or "repeatability" they have had in mind. In thissense, their definition seems to lack exactness.

(3) The definition (or interpretation) of the "objectivity" concept as"measurability with (reasonable) accuracy".

Professor F.W. Windal, considering the term "objective", insists that"objective" is the opposite of "subjective" and therefore, in order for an item
to be suMciently objective for recognition, it must appear substantially the same

to all accountants examining it. And "the quality of measurability seems tosatisfy to a large extent the demand for objectivity. If an item can be measured
with reasonable accuracy, it assumes a large degree of objectivity".{ii)But the exact meaning of the term "measurability with accuracy"(i2} is not
(11)
(12)

Floyd W. Windal, The Accounting Concept of Realization, East Lansing, Michigan
1961, p. 75.
Of course, the concept "measurability" is used by Professor Windal not in the sense of"measurability with perfect accuracy" but in the sense of possibility of measurement
within reasonable variation limits, as is indicated by the following quotation: "Thisfactor ("measurability") has a broad connotation: an item is considered to be measurable,
if it can be estimated with a reasonable degree of aÅëcuracy. The depreciation of fixed
assets, for instance, is considered to be measurable even though it is based on an estimate.

Likewise, the income on long-term construction contracts is estimated." (Floyd W.
Windal, op. cit., p. 75).

In the phrase "measurability with (reasonable) accuracy", what is the exact meaningof "accurate" and how is it different from "precise"? "Accuracy" is generally definedas "the success with which the nearness to a true value is attained", while `fprecision"
relates "to the tendency of tests to give the same value even though the value is inaccurate" (Eric L. Kohler, A Dictionary for Accountants, 3rd ed., Englewood Cliffs, N.J.

1963, p. 20). •Further one might question what the difference between "measurability with (reasonable) accuracy" and "accuracy" is. It seems to me that the latter concept refers toa
correspondence of a measurernent object with its valid measurement result (or figure),
but the former concept means freedom from subjective biases in the measurement process jn order for "accuracy" of the rneasurement result to be approached. In other49

50 ISAO NAKANO
clear at all and seems to be open to the following two alternative interpretations.

Moreover we cannot tell which of the two interpretations Professor Windal has
agreed to.

. (3a) One interpretation would be that when several alternative sorts ofjudgements and accounting methods are available as to measurement of one
and the same object within a business accounting system, the possible different

measures (by using each judgement and accounting method) would be all"accurate" (so long as calculated correctly in the arithmetical sense) and therefore

all these measurements would have the quality of "measurability with accuracy".

(For example, when one selects one inventory pricing method from the groupcomposed of the specific identification method, the fifo method, the lifo method,

the periodic average method, the moving average method etc., any measurement
result calculated correctly by applying any selected inventory method to thetotal inventory cost - including the beginning inventory cost - of the period
would be regarded as "accurate" and therefore with respect to one measurement
object one could think of the "measurability with accuracy" by the specificidentification method, the fifo method, the lifo method etc.).

(3b) The other interpretation of the phrase "measurability with accuracy"
would be that since "accurate" means "the success with which the nearness
to a true value is attained"{i3}, only "one" accurate measure would be possible
as to one measurement object within one accounting system (or for one account•ing purpose). If this interpretation is adopted, strict logic would lead to theconclusion that when the result of the calculation by one -say the specificidentification method-of several alternative accounting methods is the "accurate" measurement, then the result by any other method (ex. the fifo method,
the lifo method, the average methods etc.) will have to be regarded as "inac-

curate" even though the latter measurement might have been made correctlyin the arithmetical sense. In other words, according to this point of view the"rneasurability with accuracy" would exist only where one accurately measured

figure can be given to the measurement object concerned. Therefore, whena free choice of an adequate accounting method from several alternative ones
is permitted without any rule or convention to specify which method should
be used in a given situation (except the principle of consistency), no logicalassurance exists that this kind of "measurability" is perfectly attained in practice.

words, the former is concerned with a characteristic of the "measurement proces$" ofaccounting, but the latter means a "relation between a measurement object and its

measured result".
(13) Eric. L. Kohler, A Dictionary for Accountants, op. cit., p. 20. Also see the footnote(12) of this paper.

OBJECTIVITY REEXAMINED 51(4) The definition of "objectivity" as "deductive certainty".

This is the second "objectivity" concept developed by Professor C.H.
Stanley besides his first definition of the term as the "consensus among different

measurers". According to this view, "objectivity" in the sense of "deductive
certainty" may be said to exist when "the relationship between, say, two state-ments is a matter of deductive logic. --where the implications of a statement
are determinable by the application of deductive logic to that statement, allpersons acting as logicians wi11 arrive at the same conclusions, assuming thatthe rules of deductive logic are known and applied correctly. The statementsof mathernatics, for example, are objective in this sense".(i4)The significance of this concept in the context of business accounting ispointed out by Professor Stanley as follows:(a) Accounting theories, he says, are (or should be) developed by theconsistent application of deductive logic to postulates and definitions

which have been established as the starting point. And this way offormation of accounting theories means providing them with the"objectivity" in the sense of "deductive certainty".{i5} Therefore,
one important role of this "objectivity" concept would seem to lie inthat it denotes a desirable feature to be shared by accounting theories

as formal systems.
(b) The "objectivity" concept in the sense of "deductive certainty" would
indicate, he asserts, a characteristic of the double-entry book-keeping.

Namely, he says that this book-keeping system can be developed by
the application of the rules of logic and arithmetics to several prede-fined concepts-in Stanley's explanation four concepts of "time","entity", "asset" and "liability" - and that in this sense the double-

entry book-keeping does possess the "objectivity" as deductive'
certamty.(16)Therefore, in Stanley's book this conceptof objectivity is regarded as denoting

a characteristic of the double-entry book-keeping or of a desirable accounting
theory. However, in the context of objectivity as applied to accounting data,
he uses the term "objectivity" only in the sense of the "consensus among different

measurers" but not of the "deductive certainty". "Objectivity of an accounting
system" as deductive certainty will probably be related with the "objectivityof the accounting data" produced by the system, but the exact relationship(14) Curtis Holt Stanley, Objectivity in Accounting, op. cit., p. 3.
(15) Ibid., p. 17 and p.,106.
(16) Ibid., pp. 20-30.

52

ISAO NAKANO

between the two concepts has not yet been made clear.(i7)( 5 ) The definition of "objectivity" as "freedom from biases against theaccounting purposes".
Professor R.J. Chambers and Professor P.E. Fertig, insist that the "objectivity" concept should be defined as the freedom of actual measurement resultsfrom biases against the really desired figures on the part of the readers of thefinancial statements (therefore, against the accounting purposes) rather thanas the formal "verifiability," since all the concepts and methods of businessaccounting should be developed from the view-point of what is desired by theusers of the financial statements. "If we are to measure such things as `financial
position' and `income', and to obtain objective measures of them, it is n.ecessary,at the outset, to define what we mean by these terms".(i8) "Only if we knowwhat we are setting out to measure, can we have an idea about the biases which

may arise or about the value to which we seek an approximation".(i9) And
based on this standpoint, "the evidence of the purchase cost of an asset may
be highly verifiable evidence, but obviously the statement that this purchasecost is an unbiased (i.e., "objective" in the broader sense of the word) measureof current value is completely unjustified".(2o)•Though such a definition of the "objectivity" concept is theoretically very

attractive, practical application of this concept would require "a consensus onwhat we are setting out to measure, i.e., general agreement on the goals of ac-

counting and the objectives of the users of accounting information. This we(17) Of the possible relationships between the two objectivity concepts one thing is clear:"deductive certainty" as applied to an accounting system cannot always be the suMcientcondition for the objectivity of accounting data (in the sense of "possibility of substantiation", "consensus among different measurers" or "measurability witli accuracy) tobe• attained. For instance, the income concept as a difference between the discounted
present values of future net cash inflows at the beginning and the end of a period istheoretically very consistent and has deductive certainty, but uncertainty about the
future events would deprive the income figure Qf almost al1 "objectivity" concerning
accounting data. (As to this incorne concept, refer to the following ]iterature: Ronald

S. Edwards, The Nature and Measurement of Income, The Accountant 1938; Sidney

S. Alexander, Income Measurement in a Dynamic Economy, The Study Group on
Business Income of the Arnerican Institute of Accountants, Five Monographs on Business

Income, New York 1950, pp. 1-95; G.E. Philips, The Accretion Concept of Income,the Accounting Review, Jan. 1963; David Solomons, Economic and Accounting Concepts of Income, the Accounting Review, July 1951 ; Palle Hansen, The Accounting Concept

of Income, Kopenhagen 1962; Emily Chen Chang, Business Income in Accounting andEconomics, the Accounting Review, Oct. 1962).
(18) R.J. Chambers, Measurernent and Objectivity in Accounting, the Accounting Review,
April 1964, p. 268.

(19) Ibid. p. 268. '(20) Paul E. Fertig, Current Values and Index Numbers: The Problem of Objectivity: in,
R. K. Jaedicke, Y. Ijiri and O. Nielsen (ed.), Research in Accounting Measurement,
American Accounting Association, p. 142.

OBJECTIVITY REEXAMINED 53
seem to lack to a serious degree".(2i) For example, there is still no agreementof opinions upon which of the alternative valuation bases such as the historicalcost, the adjusted cost (on the basis ofa general price index) or the replacement

cost is theoretically most proper for accounting purposes. And as the casestands now, no one can tell to what a degree a given accounting data has attained

the objectivity in the sense of "absence of biases against the accounting purPoses".(22)3
The above analysis has made it clear that among people with different"objectivity" concepts in mind useless differences of opinion might occur as tothe extent of "objectivity" which the present business accounting system will
be able to achieve. To illustrate this state of affairs, a person thinking of the"objectivity" concept in the sense of "verifiability (or possibility of substantia-tion)" (1) would say, "The existing accounting system can attain a suthcientdegree of objectivity", while another insisting upon the "objectivity" concept

as the "measurability with accuracy (3b)" would probably object that "theextent of currently available objectivity is far from enough". Reexaminationof this concept seems necessary for avoidance of such a needless disagreement.

One possible solution would be defining the "objectivity" concept anew
clearly, concretely and unanimously. In this case, if the concept is to be given

the definhion "consensus among different measurers (2)" or "measurability
with accuracy (3)" care must be taken to indicate which of the two alternativeinterpretations (i.e. (2a) or (2b), or (3a) or (3b)) should be followed. Ofcourse,

one could conceive some other definition than the above mentioned five possibilities, since those views on objectivity are mere illustrations.

The other, increasingly influential trend is discarding the abstract andmetaphysical "objectivity" concept in favor of a more concrete and operational

one. For instance, Professor N.M. Bedford has insisted as follows: "The
(21) John W. Wagner, Defining Objectivity in Accounting, the Accounting Review, July

1965, p. 604.
(22) When we compare the "freedom from biases against accounting purposes" with the"measurability with accuracy", the latter concept requires an accurate measurementin accordance with the explicit or implicit accounting principles and procedures in a
specMc business accounting system as it is, while the former would mean the absenceof accounting data from biases against theoretically claimed (valid) accounting purposes

regardless of the accounting principles in the existing accounting system. So, theacquisition cost of an asset may completely meet the requhement of "measurability
with accuracy" (3b), but whether the data has the characteristic of "freedom from biases- - )J -- -agalnst accountmg purposes or not ls qulte uncertam.

ISAO NAKANO

54

term objectivity has been used to designate certain characteristics which will

provide for a standard count of money income by different accountants. The
idea is that only things which can be objectively observed by everyone should
be counted. This approach seems to have promise, but the use of "objective"

may be unfortunate. Unprofitable discussions on whether or not somethingis objective or subjective have been carried on without regard to the problem
objectivity was intended to solve. If an acceptable count is defined as the countthat would result if different accountants were to do the counting, it could wellbe that counting the amount of income would not be such an unsettled issue as

it now is".(23) Abandonment of the abstract and disturbing "objectivity"
concept is claimed here in support of the concept "agreement (of measures)among measurers (accountants)". Further, the AAA's recent monograph, "AStatement of Basic Accounting Theory" does not include the objectivity concept
as a criterion for selecting accounting information, but the content of the concept

has found its way in the monograph under the name of "verifiability".{24} Thus,a recent significant trend may be said to lie in discarding the abstract and distur-

bing concept of "objectivity" in favor of a clearer and more concrete concept,
say, "consensus among measurers (repeatability)".

To sum up, a reexamination of the "objectivity" concept should be carriedout along either direction.

(23) Norton, M. Bedford, Income Determination Theory: An accounting framework,
Reading, Massachusetts 1965, p. 62.
(24) A Statement of Basic Accounting Theory, American Accounting Association 1966, pp.

1O-11.

A NOTE ON THE BEHAVIORAL THEORYOF INNOVATION
Hideki YosHiHARA

I"The behavioral theory of organizational decision- making," as developedby Chester I. Barnard, Herbert A. Simon, and James G. March, have focused
one of its main research interests on the subject of innovation in an organiza-

tional context.<i} And a theory of organizational innovation evolved as one ofits main subtheories. We shall call this parcel of theory "the behavioral theoryof innovation."In this note we would like to do three things regarding the behavioral theoryof innovation, that is, (1) to make clear its basic framework, (2) to add somecritical comments upon it, and (3) to make a couple of proposals for solving
its shortcomings.

The behavioral concept of innovation might be best described in the follow-

ing proposition by March and Simon. They said:
Initiation and innovation are present when change requires the devisingand evaluation of new performance programs that have not previously
been a part of the organization's repertory and cannot be introduced by asimple application of programmed switching rules.{2)Under a relatively stable environment an organization carries out its goals

and tasks smoothly and eMciently with its performance programs. But, whenthe environment changes on a large scale, this becomes diMcult. For, theexisting programs are not effective under the new circumstances. Then, it
becomes necessary for the organization to change the existing programs ordevelop new ones to adapt itself to the new environment. This kind ,of adaptive behavior is defined as an innovative behavior or simply as an innovation.

On the basis of the previous description, we may summarize the core of( 1 ) Chester I. Barnard, The Functions of the Executive (Cambridge: Harvard University

Press, 1938).
Herbert A. Simon, Administtative Behavior (New York: Macmillan Co., 1947, 2nded., 1957).
Jarnes G. March and Herbert A. Simon, Organi2ations (New York: John Wiley &Sons, Inc., 1960).
(2) James G. March and Herbert A. Simon, op. cit., pp. 174-175.

HIDEKI YOSHIHARA

56

the behavioral theory of innovation in the following two propositions:( 1 ) An organization initiates innovative behavior when it fails to satisfy

its goals or anticipates such a failure in the immediate future.

(2) The innovative behavior is directed toward devising new perfor-

mance programs.
We shall examine the behavioral theory of innovation along these twolines in the following sections.

II

Any theory of human behavior has a set of assumptions about humanbehavior. In the case of the behavioral theory of organizational decisionmaking a model which is called "the general model of adaptive motivated behavior" is laid for such a set of assumptions. The model is defined by the following propositions:(1) The lower the satisfaction of the organism, the more search foralternative programs it will undertake.

(2) The more search, the higher the expected value of reward.
(3) The higher the expected value of reward, the higher the satisfaction.

(4) The higher the expected value of reward, the higher the level ofaspiration of the organism.
(5) The higher the level of aspiration, the lower the satisfaction.(B)The model is portrayed in Figure 1.(`)

Satisfaction+

Search+Expected
Value of+

Reward(3)(4)

foid.,

p. 48.

lbi'd.,

p. 49, Figure 3,S.

Level
of
Aspiration

Figure 1

A NOTE ON THE BEHAVIORAL THEORY OF INNOVATION 57
Now, let us pay attention to the first proposition. From it we can derivea relationship of "dissatisfaction.search->a change in programs." And thisrelationship represents an essence of the behavioral theory of innovation. We
may summarize the essential assenions of the theory in the following three propositions :(1) Dissatisfaction (or a problem) induces search.
(2) Induced search results ordinarily in innovation.
(3) Innovation solves dissatisfaction (or the problem).
These three propositions may be portrayed as in Figure 2 which is a slightly

adapted version of Figure 1.

Dissatisfaction+
Search++Innovation+
Expected
Value of

+

Level
of
Aspiration

RewardFigure 2

On the basis of the above argument we may well conclude that the behavioral theory of innovation is built upon the adaptive model of human behavior.

Cyert and March have applied the term "problem-oriented innovation" to the
behavioral concept of innovation that we have just examined.(5) Following theirterminology, the behavioral theory of innovation may be said to have beendeveloped as a theory of problem-oriented innovation.

It must be pointed out here that the theory of problem-oriented innovation has diMculty in explaining and predicting some kinds of innovation inorganizations. Let us show a couple of examples that evidence this.
A recent study of research spending over a ten-year period in five large( 5 ) Richard M. Cyert and James G. March, A Behavioral Theory of the Firm (Englewood
Cliffs, New Jersey; Prentice-Hal1, Inc.j 1963) pp. 278-279.

58 HIDEKI YOSHIHARA
firms revealed that decreases in research activity followed decreases in sales
and/or profits.(6) This empirical evidence appears inconsistent with the theoryof problem-oriented innovation. For, the evidence shows that a problem- in the above case, decreases in sales andlor profits - suppresses rather thanstimulates an innovative behavior of organization - in the above case, research
actlvlty -.

E. Mansfield revealed that it was impossible to confirm empirically the
hypothesis that, other things being equal, relatively unsuccessfu1 firms would
be quicker than relatively successful firms to begin using a new technique.(7)This evidenc,e also appears to cast a doubt upon the concept of problem-oriented lnnovation.
Thus, the theory of problem-oriented innovation as it exists has diMcultyin explaining and predicting some kinds of organizational innovation.{S}As a tentative solution to this diMculty, a new concept of slack innovation

has been introduced by Cyert and March.{")Organizational slack is the difference between the payments required tomaintain the organization and the resources obtained from the environment by
the organization. In general, success tends to breed slack. One of the mainconsequences of slack is a muting of problems of resource scarcity. Slack pro--vides a source of funds for innovative projects that would not be approved in
the face of scarcity but that have strong subunit support. These are not problem-oriented innovations. For, they are not directly linked to any specific pro-blems. They contribute mostly to subunit goals such as professional status
and subunit prestige. These slack innovations are expected to give a rather
reasonable explanation to the fact that relatively successfu1 firms (thus firms with

substantial slack) are more likely to introduce some kinds of innovation.

But the concept of slack innovation seems to have the following shortcomings. One shortcoming is to be found in the treatment of the motive to innovate.

As described above organizations do not have any specific problems to solve.
In spite of this, innovative projects are approved and implemented in organi-zations. Why? Because there are plenty of resources not committed to any
going operations or plans at hand, and subunits strongly demand the approve(6) Richard M. Cyert and James G. March, "Organizational Factors in the Theory of
Oligopoly." Puarterly Journal of Economics, vol. LXX, February 1956, p. 52.
(7) Edwin Mansfield, "The Speed of Response of Firms to New Techniques, "Puarterly
Journal of Economicls, vol. 77, No. 2, 1963, pp. 302-305.

(8) Julian Feldman and Herschel E. Kanter, "Organizational Decision Making," JamesG. March, ed., Handbook of Organi2ations (Chicago: Rand McNally & Company,1965) pp. 622-623, pp. 633-634.
(9) Richard M. Cyert and James G. March, op. cit., 1963, pp. 278-279.

A NOTE ON THE BEHAVIORAL THEORY OF INNOVATION 59
ment of their innovative projects to raise their status in the organization. Thus,
it may be said that in' the case of slack innovation the motive to innovate is ex-

plained largely in terms of subunit group demands.
We are inclined to think that this treatment of motivation is not satisfactory.

Suppose a case in which a certain subunit strongly demands the approvementof its innovative project. It is a large scale one, so its implementation is con-sidered to exert a substantial influence upon the whole organization. In sucha case, to be approved it is necessary for the innovative project to find support

by other subunits and especially by the top management. These inside supports
will likely be given when the project is judged to contribute effectively to thesolution of certain problems that the organization has. If so, to explain the

motive to innovate in terms of resource aflluency and strong subunit groupdemands can not be a satisfactory one. We hold it is necessary to introduce
explicitly the notion of "dissatisfaction (or a problem)" in the treatment of the

motive of slack innovation.
N'ext, we may point out that the theory of slack innovation is not consistent

with the basic assumptions of the behavioral theory of organizational decision-making. It is assumed that dissatisfaction or a problem induces organisms
to undertake search behavior for new performance programs. Whereas, slack
innovation is one which is to be made by relatively successfu1 organisms having

no pressing problems. Thus, the concept of slack innovation is not consistent

with the model of adaptive behavior underlying the behavioral theory.
From the above argument we have learned that it is necessary to re-develop
the behavioral theory of innovation in the direction toward overcoming diMcul-ties or limitations of both the concept of problem•-oriented innovation andthat of slack innovation within the basic framework of the adaptive model.

Now we would like to present one proposal for the re-development of the
behavioral theory of innovation.
We introduce the idea of a hierarchy of motives('O) into the adaptive modelof human behavior. When lower motives such as physiological needs are notsuMciently satisfied, human beings concentrate their efforts to the satisfactionof these motives. In such a circumstance higher-order motives such as esteem-needs or lust for power remain unevoked and therefore exert almost no
effect upon human behavior. But, once lower motives are suMciently satisfied,these higher-order motives are evoked and become the main motivational
forces for actions.

Then, along the lines suggested we may re-develop the behavioral theory(10) A. H. Maslow, Motivation and Personality (New York: Harper & Brothers, 19S4).

HIDEKI YOSHIHARA

60

of innovation in the following way. We assume that we can distinguish typesof innovative behavior. For example, we assume two types. Let one becalled "an innovation for survival," and the other "an innovation for growth."
The former would be induced when the survival of the organization is in danger.

And its function would be to secure its survival. So, in the case of businessorganizations, it would take such forms as cost-reduction projects, disposalof unprofitable plants, reduction of administrative personnel, and curtailmentof research spending. The innovation for survival corresponds roughly to
problem-oriented innovations.
On the other hand, the second type of innovation, an innovation for growth,would be induced when the organization has no pressig survival problems, butdoes not have its motive for growth satisfied yet. And it would take such forms
as diversification strategies, increases in research spending, and capital invest-

ment for modernizing plants. It is approximately equivalent to slack innovations.

As for organizational slack, it should be treated as a resource for innovation.

The more the organizational slack, the easier the implementation of innovation.

llI
In the b'ehavioral theory of innovation, as has been mentioned in the firstsection, a change in performance programs is defined as innovation. This is
the second major distinctive point of the theory. In this section we wi11 examine
this point.

Generally speaking, organizations take innovative actions to adapt themsel-

ves to the changing environment. For example, in the case of business organi-zations the following actions may be taken; changing standard procedures forprice and output decisions, altering inventory control systems, the introductionof new technology, changing the organizational structure and/or the productmarket posture.
Now, we may naturally raise the question whether it is possible to coveral1 these innovations with the behavioral concept of innovation, that is, theconcept of a change in programs.

For example, the change of standard procedures for price and output
decisions is reasonably considered to be a change in prograrns. Similarly, thealteration of inventory control systems may suitably be called a change in pro-grams. Then, what about the introduction of new technology or the change of
product-market posture? Is it reasonable and meaningful to regard these asa change in programs?

A NOTE ON THE BEHAVIORAL THEORY OF INNOVATION 61
A change in programs should be interpreted as a change in decision rules.
This is what March and Simon originally intended to mean. Thus we arriveat the following conclusion. The behavioral concept of innovation developed
largely by March and Simon is concerned with only those innovations which
represent changes in programs. The other innovations are outside of its domain. This is surely a shortcoming of the theory. •To remedy this shortcoming we must substitute some new concept for achange in programs.

KOBE ECONOMIC & BUSINESS REVIEWCONTENTS

NO. 1 (1953)
Present Day Significance of Free Ports..........................................Gi'njiro Shibata

Development of Devaluation-Problem in Post-War Japan. . . . , . . . . . . . . . . . . . . . .Kiyoxo Miyata

Japan's Trade with South and South-East Asian Countries..................Fukuo Kawata
The Exchange Control Policy in Post-War Japan...........................Mastthiro FuJ'ita
On the OHicial Statistics of Foreign Trade in the Post-War Japan.........Hikoji Katano
On Business History.............,....................................................Tadakatsu lnoue

Problems of Regional Industrialization in Japan...,.............................Minoru Beika

A Research of Wage Income in Post-War Japan.................................Nobuko Nose'
Revaluation in Japan...............................................................S#sumu I)Vatanabe

Last-In, First-Out Inventory Method under
the Japanese Tax Law..........................................Munehiro Masttgaki

NO. 2 (1954)
Movements for the Establishment of Free Ports in Japan...............G!i'niiro Shibata
Japan's Trade with Latin America in the Post-War Years..................Fukuo Kawata
The Maritime Competitions in the Early Meiji Era..........................,...Serl'i Sasaki
Two Deflations in the Showa Era..............,.................................Masahiro Fwfita

Estimation of the Effectiveness of Devaluation on
Balance of Payment Deficit in Japan..............................Hiko.ii Katano

The Recovery Method of the Japanese Shipping Industry
in Post-War Period............,................................Hiromasa Yamamoto
Business Accounting and Tax Accounting....................................Susumu Vratanabe
Spatial Characteristics of Industries relative to theirBusiness Features .......................................,..............Minoru Bec'ka
Stages in Factory Organization..................,................................Tadakatsu lnone

Accounting for Fixed Assets Revaluation; Recent Views in Japan...Munehiro Mastcaala'On the Structure of the National Income Distribution in Japan............Nobuko Nose'

NO. 3 (1956)
Indus.trialization and International Trade...,......................................Fttkuo Kawata

Econometric Determination of Foreign Exchange Rate of Japanfor 1926-2953 ............................................................Hikoji Katano
Present Status of Japan's Shipping.............,..................................G!t'njiro Shibata

The Distinction between "Shasen" and "Shagaisen" as Historical
Concepts in Japanese Shipping.,,......................................,Sec:'i Sasaki

The Banking System in the Middle Meiji Era (1870-1910)...............Attasahire Ful'ita
Disposition of Cost Variances in Japanese Tax Law.....................Susumu VVatanabe
Structure of Industrial Districts in Japan.....,....................................M7inoru Beika

Note on the ZAIBATSU Combines,......,.......,.............................Tndakatsu lnoue
On the Model-Building for Social Accounting Design........................Nebako Nose'

NO. 4 (t957)
The Impact of Exchange Policy on the International Economy
of Japan during the Period 1930-1940.....................Laurence P. Dowd
A Note on the Recent Trends of Japan's Foreign Trade.....................Fukuo Kawata

The Development of Overseas Banking System in Japanin the Meiji Era......................................................Masahiro Fuiita

More on the Structure of National Income Distribution in Japan .........Nobuko Nose'
Reconstruction of the Theory of Purchasing Power Parity ...........,......Hikoii Katano
Tramp Shipping Freights and International Trade...........................Gi'njiro Shibata

A Little Study on the Transition from the Sailing Vessel to
Steamer in Japan ............................................................Sec1"i Sasaki

On the Regulating Policy of Japan against the Shipping
Conference - Especially in relation to the Refusal of
the Entry to New Comers .....................,..............Hiromasa Yamamoto
The Price Fluctuation Reserve System in Japan...........,...............Susumu Watanabe

Locational Problem in the New Major Branches of JapaneseIndustries from 1954 to 1956 ........................,.................Minoru Beika
Business Problems in an Internationa! Situation.........................,....Tadakatsu Inoue

NO. 5 (1958)
History of Yen- Its Developments in the Japanese Economy (1).........Hiroshi Shinjo
Fundamental Features of the Accumulation of Capitalin the Late Meiji Era ......................................,.......,.Masahiro Fnjita

Some Aspects of Japan's Trade with South andSouth-East Asia, 1950-1957 .,.......,...............................,Fukuo Kawata

Curves of Diminishing Values of Japanese Merchant Ships
in Proportion to Their Age ..............................,...........Gi'njiro Shibata

The Modernization of Japanese Shipping based on theTransportation of Hoklcaido Marine Products ........................Secl'i Sasaki

Development of the Marine Insurance Industry in Japanin the Meiji Period .............................................Hiromasa Yamamote
A Assirnilagio do Imigrante Japones no Brasil .................................Hiroshi Saito

Rate of Profit and International Spealalization of Production ............Hikoji K;atano
Replacement Cost and Lifo Cost...........,....................................Susttmu VVatanabe
Spatial Problerns of Business Activities...,...............................,.........Minoru Ber'ka

The Nature of the Morgan Control ......,......................................Tadahatsu Inoue

On the Effect of Accelerated Arnonization for Tax Purposes ...............Nobuko NosiNO, 6 (1959)
History of Yen- Its Developments in the Japanese Economy (2).........Hiroshi Sin'nio
The Central Banking Policy in the Meiji Era.................................Masahiro FuJ'ita

Economic Growth, Balance of Payment and Capital Movement .........Hthoii Katano
World Trade and Japan's Export-1953-1957 --..............................Fukuo Kawata
Alguns Aspectos da Mobilidade de Japoneses no Brasil........................Hiroshi Saito
Problems of Emigrant-Transportation in Japan . . . . . . . . . . . . . . . . ; . . . . . . .Hiromasa Yamamoto

Port Labor Conditions in Japan ........,.........................,................Ginjiro Shibata

The Development of the Concept "Operator" in Japan ..,,....................Seiiji Sasaki
Single Industry Towns in Japan......................................................Mineru Ber'ka

On the Application of the Social Accounting
Principle to Business Accounting.......................................Nobttko Nose'
Valuation of Work in Process ...................................................Sztsumu Matanabe

Developmental Stages Relating to Theories
of Stock-Equity Aecounting.............................................Ryt(ji Takeda
On the Rate of Interest in Business Administration .................................Jiro Ono

Various Classes of Data Processing by Means of Electronic
Computer .....................................................................Hideo Kitani

Company Histories in Japan ........................Tadakatsu Inoue and Yoshiro Ikushima

NO. 7 (1960)
Japanese Emigration and Its Effect on International Payments............Ginjiro Shibata

One-to-One Correspondence Between Goods and Factor Prices............Hikeii Katano
The Gold Standard and Banlting Capital in Japan ........................Masahiro Fuiita
World Trade and Economic Growth .............,.......,.......................Fukuo Kawata

Singularity in the Structure of the Seamen's Union of Japan......Hiromasa Yamamoto
Some Reflections on Inter-Comparability of Social Accounting ............Nobuko Nose'
The Meaning of Inventories ...................................................Susumu JVatanabe

Structure of Income Determination on the Balance Sheet ..................Ryt(ji Takeda

On the Value of Stock Rights and Its Significancein Corporate Finance.............................................................Jiro Ono

Business Features and Management Policies of Industrial
Enterprises in Local Districts of Japan..............................Minoru Beika

NO. 8 (1961)
The Industrial System and Industrial Education in Southeast Asia Now on
the Threshold of Reform; and Japan's Position therein......Krlyoxo Miyata
Industrial Structure and Educational System in India.....................Tadao Miyashita
Industrial Education in India.........................,............................Tadao Miyashita

Technical Education in India.........................,............................Tadao Miyashita

Industrial Structure and Vocational Education in Thailand ..................Fukuo Kawata
The Industrial Structure and Industrial Educationin the Philippines ...................................................Tel-ichi Yamasaki

Industrial Structure and Vocational Education in Indonesia,........Hiromasa Yamamoto

NO. 9 (1962)
Problems in Port Adrninistration and Finance in Japan.....................(]i'njiro Shibata
Types of Early Modern Japanese Shipowners...,...................................Sei1'i Sasaki

On the Employrnent System of Seamen in Japan .....................Hiromasa Yamamoto
A Study on Japan's Invisible Trade................................................Fukuo Kawata

Problems of Industrial Location relating to Regional Development inJapan .........................................,.................................Minoru Ber'ka

The System of Inside Contracting................................................Tadakatsu Inoue

A Critique on Professor Mahalanobis Model of Economic
Planning in India .........................................................Hikoii Katano
National Income Concepts: Reconsidered ........,.................................Nobuko Nose'
Some Problems of the Installment Basis ....................................Susumu JVatanabe

On the Purposes of a Going-Concern Valuation and its Natures ...............Jiro Ono
Die Betrachtungsweise der neueren betriebswirtschaftlichen
Kostentheorie......,.,.,.....................,...........................Tetsuo Kobayashi

NO. 10 (1963)
Revised Accounting Provisions of the Commercial Code of Japan-with Special Reference to the
Corporation Incorne Tax Law-.................................Sttsumu VVatanabeSocial Accounting as an Instrument of Policy ..,..,..............................Nobttko Nose'
Industrial Estates for Small Businesses inJapan,................................Minoru Beika
Rise of the Mutual Financing Business in Japan ...........................Taddkatsu Inoue

The Introduction of Europeari-•Style Vessels in Japari:
A Historical Survey .........................................................Ser:'i Sasaki

On Industrial Relations in Japan's Shipping Industry-withSpecial Concern on Personnel Management-............Hirontasa Yamamoto
Regional Disparities in the Brazilian Economy;
A Case Study on the Brazilian Northeast..................Yoshiaki Ndshimuhai
The Basic Concepts of Going-Concern Valuation ....................................Jiro Ono

A Study on the Current Cost Theory of Fritz Schnidt ,...........,..,.....lsao Nezkano

Die Kostenbegriffe ftir die betriebliche Planung..............................Tetsuo Krobayashi

Introducing Prof. Shinjo's "History of the Yen"........................Zentaro Matsumura

NO. 11 (1964)
Accounting Profit and Taxable Income.......................................Susttmu rvatanabe
On Integration in Economic Accounting.............................................Nobuko Nose'
Vber ,,Cost Accounting Standards" in Japan......................,..........Tetsuo Kobayashi

A Note on the Lohmann-Ruchti Effect.............................................Isao Nakano

Management Approach to Regional Development Problems in Japan......Minoru Beika
A Research Report on OMce Automation of Middle-Scale Cities in Japan......Jiro Ono
Die Geschichte der Privatisierung...................................................Masaya Okada

Recent Trends in the Balance of Payments of Japan........................Fukuo Kawata
Long-Term Finance in Post-War Japan (1)..,.................................Masahiro Ful'ita

A Chronological Table of Modern Japanese ShippingNo. 1; 1600 rv1799 .........................................................Sei'i Sasaki

The Continuous Employment of Seamen in American Shipping
Industry .........................................................Hiromasa Yamamoto

Some Problems of the Brazilian Economic Development Plan
(1963-1965) .,....................................................Yoshiaki Nishimukai

NO. 12 (1965)
Special Depreciation and Reduced Entry....................................Sttsttmu IJVatanabe
Electronic Data Prooessing System in Japan....................................Minoru Bet'ka

A Chronological Table of Modern Japanese ShippingNo. 2, 1800tv1912.........................................................Sei'i Sasaki

Overseas Operations of Japanese Business Enterprises in Brazil.........Tadakatsu Inoue
A Note on Economic Accounting for Government Sector.....................Nobuko Nose'
International Liquidity and tlie Tokyo Meeting of the International
Monetary Fund.,.......................................................Masahiro Fnjita

Intersectoral Transaction Table with Endogenous Foreign Trade Sector
in the Indian Economy: 1955/56....................................Hikoji Katano'lhe System of Reserved Members for Seamen before World War II- The Employment System of Searnen in Japan -. . . . . .Hiromasa Yamamoto
On the Automation of Banking in Japan...................................................Jiro Ono

A Presente Etapa do Desenvolvimento Econ6mico do Japio......... Yoshiaki Nishimukai
Kostentheorie und dispositiver Faktor..........................................Tetsuo Kobayashi
Grundprobleme der Privatisierung...................................................Masaya Okada

NO. 13 (1966)
Annual Income under the Corporation Income Tax Law...............Susumu Matanabe
Trade Controls in Occupied Japan (1945Av1949)..............................Fttkuo Kawata

Patterns of Domestic Shipping Services-Characteristics of Japanese Coastwise Shipping-............Serl'i Sasaki
Approaches to the History of Individual Business Units..................Tadakatstt Jnone
Cumulated Cost Ratios for the Japanese Economy in 1955.....................Nobuko Nose'
Accelerated Growth of National Income..........................................Hikoji Katano

Technological Development and Labour Relationsin the Japanese Shipping Industry........................Hiromasa Yamamoto
Brazilian Position in the Latin American Free Trade Association.. .... Yoshiaki Nishimukai

Inforrnation Specification for Business Management (I)-A Case Study -............................................................Jiro Ono
Die Privatisierung der PTeuBag......................................................Masaya Okacla

NO. 14 (1967)
A Return on the Confirmed Settlement of Accounts.....................Susumu VVatanabe

Problems of Regional Industrial Development
Relating to National Planning in Japan...........................Minoru Baika

The Development of Japanese Trade with the British
Commonwealth in Asia........................,,......................Fukuo Kawata
On the Kihansen (Japanese Wooden Coastwise Vessels)........................Serl'i Sasaki
Approaches to Company History...................................................Tadakatsu Ineue

Cumulated Cost Ratios for the ECAFE Countries.....,........................Nobuko Nose'
International Liquidity Controversy in Japan (1)...........................Maschiro Fuiita
Investment Criterion for Maxirnizing
the Rate of Capital Accumulation.................................Hikoji Katano

Peculiarities of Maritime Labor-with special reference to the
Supply of Maritime Labor-...,..........................Hiromasa Yamamoto
Los Estudios Del Brasil En El Jap6n-Con Referencia a ras Ciencias Sociales...............Yoshiaki Nishimukai

NO. 15 (1968)
Characteristic Approach for Regional Development in Western Europe
and U.S.A.-Relating to the Case in Japan..................Minoru Beika
Export Patterns of Leading Industrial Countries........................,.....Fukuo Kawata
The Early Developrnent of Kobe Port................................................Sei'i Sasaki
Rise of Modern Shipbuilding in Japan and Promoters. . . , . . . . . . . . . . . . . . . . . . . . Tadakatsu Inoue

A Note on the Redistribution of Profits.............................................Nobuko Nose'

International Liquidity Controversy in Japan (2)...........................Mas`rkiro Fuiita

Factors to Deterrnine the Relative Share: The Case of India............Hikoii Katano
Maintenance of Capital based on Earning Power......................................Jiro Ono
Recent Changes in Japan's Trade with Latin America and Brazil...... Yoshiaki Ndshimukai
Some Inventory Accounting Problems..........,.....................................Isao Nahano
Organizational Slack and Adaptive Behaviour in the Firrn..................Hideki Yoshihara

KOBE UNIVERSITY ECONOMIC REVIEW 1968'
Edited by Faculty of Economics,
Kobe University, Kobe, JapanCONTENTSThe Commercial Banking and Mixed Banking Principles in Japan,..............Jiro Yao
Industrial Organization Poli(ry and Economic Growthin Postwar Japan .............,..........................,..........,..Konjiro Niino

Two Models of Farm Problem in the Open System ........................Osamu Tanaka

The Impact of Changing Food Habits on Imports andthe Future Land Use Pattern in Japan ...........................Tohru Ishimitsu

Aid and Trade-A Proposal for Integrated Assistance
Policy- ............................................................Atsushi Murakami.-dltlt+--..-j'..,-tlltlit'..-tP'.,4illttl--..-F-..,-ti-11ii-'.,l-,-nyillllllt+,.tl-',--illllLi-,.-ti'-,-ldlltt-'..l"'..t-itlltt---..l--..-i[L:1-q"-tl-...q-lttlt--..-e-.-.-lsttllt'..ll'.-titllldi--..-ti,.-itlileli,

THE ANNALS OF THE SCHOOL OF
BUSINESS ADMINISTRATIONKOBE UNIVERSITY 1968
Edited by the School of Business Administration,

Kobe University, Kobe, JapanCONTENTS
Investitionsvolumen und Abschreibungen ..........................................Horst Albach

The History of Stock Price Analysis and the Search
for an Investment Value Criterion ...........................Saichiro Suminoe
Medium and Small Industrial Capitals and Labor,.............................Noboru lnaba
Grundlagen der LIFO-mdssigen Abschreibung .......,................,........Rynji Takeda

A Structural Model of Personal Influencein the Diffusion Process of a New Product ...............Masaneri Tamura-.rl-t,qidllSLti'.,ql--tqdlltSt4i'L.ll',-d-lllltL--.--t-,.diltlllt--,-dP'.,-iltltlii/i,dli,-tit:tt:1----tl,-,diLltlllLt-.-S--,--s:ltl---,,sP-,,-itil:t-t-,.tl-.-4dtLtll--..del4,,d-111Itd-..,li----dt]11t-tqiilh--ddllt

KOBE UNIVERSITY LAW REVIEWInternational Edition 1966

Edited by Faculty of Law,
Kobe University, Kobe, JapanCONTENTS
Seventy-years of Japanese Private International Law:
A Historical Review ..........,.....................................Taro Kawakami
Discovery in Japanese Crirninal Procedure .................................Shigetstrgu Sttmtki

THE RESEARCH INSTITUTE FOR ECONOMICS AND
BUSINESS ADMINISTRATION, KOBE UNIVERSITY

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HISTORICAL SKETCH
In 1919, a research organization named the Institute for Commerce wasfounded in Kobe Higher Commercial School, one of the chief pfedecessors ofKobe Universiry, with a gift made by F. Kanematsu & Company, a leading
mercantile firm in Kobe. The organization was designed to carry on and facilitate integrated research on business and commerce and to formulate andpublish the results of these studies and investigations in such form as to makethem available to the business community.

With the founding of Kobe University of Commerce, successor of Kobe
Higher Commercial School, in 1929, the Institute extended its research activities by adding several divisions. One was the famous Latin-American
Library, which soon became the center of research in this field in Japan. A
room for statistios equipped with various computing machines was establishedand began publication of "Juyo Keizai Tokei" monthly and "Sekai Boeki Tokei"
annually. A filing roorn was prepared to deposit press clipping fles systematicallyarranged by topics and dates. Another room was designed to become the centerof all possible original records and data having to do with the beginning andprogress of Japanese business.

On the campus of Kobe University of Commerce, another organization
named the Institute for Business Mechanization was founded in 1941 utilizing

business machines donated by the IBM Corporation and others. With
Professor Yasutaro Hirai as its head a broad and forward-looking plan forbusiness mechanization in Japan was developed.

In 1944, Kobe University of Commerce changed its name to Kobe University of Economics. After the war, however, the University was consolidated with three other colleges in Hyogo Prefecture to become Kobe University.

With this development, the two Institutes were also amalgamated into the
Research Institute for Economics and Business Administration, Kobe University. At present, the Institute, with its seventeen fu11-ime professional
staff members, carries on studies and investigations in international economy,business administration, and business mechanization in Japan.

BUILDINGSLOCATION AND
The Research Institute for Economics and Business Administration is
located on the campus of Kobe University, Rokko, Kobe. It is a three-storiedbuilding named the Kanematsu Kinenkan and has a floor space of about 2,900
square meters, which includes a president's room, forty-one oMces, six rooms
used as a library, a room for statistics, three conference rooms, etc. Adjoining
is a one-story building recently built to install business machines.

ORGANIZATION
Under the directorship of the president, the Institute operates with two

research groups, each has five sections respectively. Each research groupand its sections are as follows:

A Group of laternational Economy(1) International Trade(2) Economy of Latin-America(3) Maritirne Economy(4) International Finance(5) International Law of Economy

B Group of Business Administration(1) Business Administration and Business Mechanization(2) Accounting(3) International Management(4) Business Statistics(5) International Labor Problems
Besides the regular work of the Institute organized in this manner, researchcommittees may be created to carry on any special work requiring the joint
study of academic and business circles. At present, there are three coitmittees,that is, the Finance Committee, Latin-America Committee, and International

Economy Committee.
For convenience and greater eMciency in carrying out its research activities,
the Institute has a general oMce which is responsible for, 1) the collection andpreservation of a comprehensive collection of books, periodicals, pamphlets,and original records and data of finance, trade, commerce, industry and businessgenerally; 2) the classification, cataloguing, indexing, arranging, annotation andcompilation of these research materials; and 3) the formulation and publicationof the results of the investigations and studies accomplished by the professional

staff members of the Institute.
As an affiliated institute, the Documentation Center for Business Analysis
has been recently established. It is the first systematic information facility
in the field of business administration in Japan that has been recognized andauthorized by the Ministry of Education. The purpose is to collect and to
make intensive control of all kinds of materials on business administrationand to make them available to scholars, universities, governments, and businessworld with the aid of modern documentation techniques.

ittt-i---tLtt--.....t.t.tt..t J - ; '" -THE RESEARCH INSTITUTE FORECONOMICS & BUS[NESS ADMINISTRATIONKOBE UNIVERSITY

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Director: Minoru BEIKA

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Secretary: Hirotalce SAKAI

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ECONOM]CRESEARCH i ADMINISTRATtONRESEARCH

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Professorof lnternstional i Minoru B!tKA Professer of Business
tf Fukuo KAwATA

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Trade Dr. of Economics I Administration andl• Seiji SAsAKIi Business Mechanizationl Dr. ef Business
Professor of Maritime /i Administration

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Dr. of Economics li: Tadaketsu INouE Profcssor of lnternationaliii

Economy 1'

il Managementii Jiro YAolProfessor of International i

FinancG Dr. of Economics iill Nobuko Nosi Professor of Accountingi

I Dr. of Business Adminis-

f of Regional'
Professor
I tration

ÅÄ Masahiro FuJITAiilStudy on Latin America ili[ Hikoji KATANO Associate Professor of : Business Administrationil Jiro oNo AsBociate professor of[International Trade l and Business Mechani-iiIi zationiii
Maritime Economy
l, I$aO NAKANo Associate Professor of: HiromasaYAMAMoTo Associate Professor of illii Aecountingiil Yoshiaki NlsHIMuKAL
Associate Professor of Re. igional Study on Latin l Hideki yosHIHARA Research Associate of

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America I International Management :,:OMce: The KaneTnatsu Mernorial Hall.

THE KOBE UNIVERSITYROKKO, KOBE. JAPAN

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