Infant Industry Policy: A Case of Japanese Automobile Industry Before 1945

Abstract

This paper analyzes the effect of policies on the Japanese automobile industry before 1945. Japan achieved import substitution of trucks before World War II. It also exported small size passenger cars then. In the process of the development of automobile industry, the government policies seemed to have both positive and negative effects. The promotion policy was indispensable for manufacturers to acquire the skills and knowledge to manufacture automobiles. The heavy procurement of trucks by the Army in the late 1930's delayed the progress of manufacturing capabilities for passenger cars.

Keywords: Japanese automobile industry, Infant industry argument

JEL Classification: 020, L62