A Graphic Model of the Effects of Sectoral Technical Change: The Case of Japan, 1880–1970

Abstract

This paper estimates the effects of technical change on sectoral output growth and resource transfers in Japan over the period 1880–1970. It provides a graphic model to explain the process by which agricultural resources are pushed and pulled to the non‐agricultural sector by agricultural and non‐agricultural technical change.Cet article évalue les effets des changements techniques dans l'accroissement de la production par secteurs et les transferts de ressources au Japon pendant la periode 1880–1970. Ilfournit une representation graphique afin d'expliquer le processus selon lequel les ressources agricoles sont poussées et tirees vers le secteur non‐agricole par des changemenls techniques à la fois dans le domaine agricole et non‐agricole.SummaryThis paper combined growth accounting with a two‐sector model to measure the effects of agricultural and non‐agricultural technical change on sectoral resource use and output growth in Japan over the period 1880–1970. The growth accounting results of the model can be summarized as follows. Regarding agricultural output growth in Japan, the contribution of agricultural technical change ranged from a high of 91 percent in the first decade studied (1880–90) to a low of 73 percent in the third decade studied (1900–10). These estimates are less than those of conventional growth accounting. The contribution of non‐agricultural technical change, although small, was negative, given that it draws resources from the agricultural to the non‐agricultural sector.Regarding non‐agricultural output growth, the contribution of non‐agricultural technical change ranged from ‐13 percent (1910–20) to 56 percent (1890–1900). These estimates are higher than those of conventional growth accounting. The contribution of agricultural technology was small, but unlike the contribution of non‐agricultural technical change to agricultural output growth, it was positive, given that it pushes resources from the agricultural to the non‐agricultural sector.A graphic version of the two‐sector growth accounting model was provided to explain the process by which sectoral technical change affects demand factors and causes intersectoral resource flows. Agricultural technical change increased demand and output in the non‐agricultural sector while non‐agricultural technical change decreased demand and output in the agricultural sector. This asymmetry in the cross‐effects of agricultural and non‐agricultural technical change arose from the relatively low price and income elasticities for agricultural products. The result was a shift in labor and capital from the agricultural to non‐agricultural sector. Finally, some policy implications suggested by the results were noted.